Janet Yellen in China: overcapacity high on the agenda as secretary takes swipe at exports
- US Treasury secretary Janet Yellen brought up excess industrial capacity in first stop of China trip, indicating the likely sticking point in coming talks
- Topic was also high on agenda in meetings between Chinese commerce official and counterparts in Washington, with pressure unlikely to let up
Overcapacity is expected to weigh heavily on Janet Yellen’s weeklong trip to China after the US Treasury secretary admitted on Friday that the issue was not new, but had intensified – especially in emerging sectors where China has rapidly captured market share.
She also met Guangdong governor Wang Weizhong, who runs the provincial powerhouse which hosts one of the biggest clusters of US companies – including ExxonMobil, Procter & Gamble and Amway – but is also home to some of China’s largest electric vehicle (EV) makers, including rising juggernaut BYD.
China is too large to export its way to rapid growth
“Direct and indirect government support is leading to capacity significantly exceeding China’s domestic demand, as well as what the global market can bear,” Yellen said at an American Chamber of Commerce in China event on Friday.
“Overcapacity can lead to large volumes of exports at depressed prices, undercutting American firms and workers as well as those around the world, including in India and Mexico.
“And it can lead to overconcentration of supply chains, risking global economic resilience … China is too large to export its way to rapid growth.”