US raised industry oversupply concerns in talks with China, Janet Yellen says

Treasury secretary tells reporters she discussed the issue with Chinese Vice-Premier He Lifeng in San Francisco
Two sides also endorsed notion that they should have a level playing field and fair trade relations, according to Yellen

US-China relations

Igor Patrickin San Francisco

Published: 3:00pm, 14 Nov 2023

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Washington has expressed concern to Beijing about the risks of oversupply in key industries in the Chinese economy, US Treasury Secretary Janet Yellen said on the sidelines of the Apec summit in San Francisco.

Yellen said she had discussed the issue with Chinese Vice-Premier He Lifeng during their meeting in San Francisco last week and both sides had also endorsed the notion that they should have a level playing field and fair trade relations.

“We did talk about issues of oversupply that could arise in the future in industries that China is investing in very heavily. And I do consider that a risk,” she told reporters.

US Treasury Secretary Janet Yellen meets Chinese Vice-Premier He Lifeng in San Francisco on Friday. Photo: Bloomberg

Yellen also said that some Chinese investment and financial resources in industries such as green energy could lead to overcapacity.

On Monday, The Wall Street Journal reported that “a green-energy spending spree” in China, to fuel the country’s renewable energy development, was leading to an oversupply of solar components such as polysilicon, whose price on the international market has already fallen by more than 50 per cent since the beginning of the year.

The report noted that China invested around US$80 billion in clean energy production in 2022 and that the abundance of available financing ended up attracting players without expertise in the field, such as a toy manufacturer, a pharmaceutical company and a dairy farmer.

The high volume of Chinese capital available to those looking to enter the sector not only points to the potential risk of a bubble about to burst but is also raising concerns among competitors in Europe, another major market for green technologies.

Apec’s economic growth to lag behind rest of the world in coming years: report

Yellen also said Asia-Pacific Economic Cooperation members discussed the slowdown in the Chinese economy and the global impacts of these trends.

According to her, the figures observed by experts in recent months present “a downside or risk to the economic outlook that could affect many Apec economies that have deep trade relations” with Beijing, albeit less so the United States.

The Treasury secretary emphasised the importance of “responsibly managing the US-China economic relationship” as a central focus of her agenda during the San Francisco summit.

She expressed her intention to foster shared goals with allies and partners in the Asia-Pacific region and beyond, while also seeking a robust and stable economic relationship with Beijing.

“Going forward, we hope to build on the foundation we’ve laid to further deepen communication, stabilise the relationship, and make progress on key policy issues,” Yellen said.

“There is hard work ahead of us, but I believe our engagements here have moved us along the right path.”