During her visit to China, United States Treasury Secretary Janet Yellen emphasized the need for market-based reforms to aid the world’s second largest economy. She warned that China’s strategy of exporting its way to rapid growth is not sustainable, highlighting the need to reduce excess industrial capacity that is affecting other economies.
Yellen acknowledged that Beijing provides support for manufacturing to meet domestic development objectives, but she raised concerns about state subsidies leading to production capacity that exceeds both China’s domestic demand and global market needs. She specifically mentioned the impact of excess factory capacity and growing exports on trade tensions.
In talks with Chinese Vice Premier He Lifeng, Yellen highlighted the challenges posed by China’s ambitious growth targets and the need for investment in high-technology sectors. Despite China’s target growth rate of 5 percent in 2024, the International Monetary Fund forecasts a lower GDP growth rate for the country in the coming years.
Yellen pointed out the intensifying issue of excess manufacturing capacity in China, particularly in sectors like electric vehicles, batteries, and solar energy products. She stressed the importance of market-based reforms to address overcapacity and revive past successful growth strategies that lifted millions out of poverty. Additionally, Yellen promised to address concerns raised by American and international companies about the deteriorating business climate in China. She noted issues like unfair treatment compared to local competitors and pledged to advocate for a more level playing field for all businesses operating in China.
