Nothing off the table in US response to China overcapacity, Yellen says

5:12 pm Thursday, April 25th, 2024

By Alessandra Galloni and David Lawder

WASHINGTON (Reuters) -The Biden administration is not taking any options off the table to respond to China’s excess industrial capacity, which is a top concern for the U.S. and its allies, U.S. Treasury Secretary Janet Yellen told Reuters on Thursday.

China exporting its way to full employment is not acceptable to the rest of the world, Yellen said in a Reuters Next interview in Washington.

Yellen said that during her trip to China earlier this month, she was “successful” in raising U.S. concerns with Chinese officials about Beijing flooding global markets with electric vehicles (EVs), solar panels and other clean energy goods, threatening U.S. jobs. She added that Chinese officials acknowledge a problem with industrial overcapacity, but they needs to address it.

She said the issue, which threatens producers of similar goods in the U.S., Europe, Japan and emerging markets such as India and Mexico, was again “discussed intensively” with Chinese officials in Washington on the sidelines of the International Monetary Fund and World Bank spring meetings last week.

Yellen added that the problem will not be resolved “in a day or a week.”

“So it’s important that China recognize the concern and begin to act to address it,” Yellen said. “But we don’t want our industry wiped out in the meantime, so I wouldn’t want to take anything off the table.”

The Biden administration is completing a review of the “Section 301” unfair trade tariffs on Chinese imports imposed by former President Donald Trump in 2018, which U.S. officials have said could lead to higher tariffs on some products. President Joe Biden last week called for the review to triple the Section 301 duties on Chinese steel to 25%.

U.S. Trade Representative Katherine Tai also told U.S. senators that the U.S. needed to take “early action, decisive action” to protect the fledgling American EV sector from Chinese imports. U.S. tariffs on Chinese vehicle imports are now about 27.5%, and few Chinese EVs are sold in the U.S. at the moment.

“We have no problem with China producing and selling globally and exporting, but the United States and Europe and other countries also want to have some involvement in the ability to produce clean energy products that are going to be of great importance,” Yellen said.

(Reporting by Alessandra Galloni; Writing by David Lawder and Dan Burns; Editing by Andrea Ricci and Paul Simao)