US Treasury Secretary Janet Yellen said she told her Chinese counterpart that Beijing’s heavy financial support for certain industries could pose a threat to other nations, as trade tensions simmer between the world’s largest economies.
Speaking at a press conference in San Francisco on Monday following a day of meetings between finance ministers from across the Pacific Rim, Yellen said she discussed “issues of oversupply” with her Chinese counterpart Vice Premier He Lifeng.
“We did talk about issues of oversupply that have arisen and could arise in the future in industries that China is investing in very heavily,” Yellen said. “I do consider that a risk” and I think the Chinese understand our concerns that some of this investment could result in overcapacity, she said.
Yellen added that she discussed China’s growth slowdown with the APEC ministers, who agreed that it presented a “downside risk to the economic outlook” particularly for APEC nations with strong trade ties to Beijing.
China and the US are committed to creating a “level playing field” for companies and workers in their nations, according to statements the two sides released after their meeting at the start of the conference.
Finance chiefs held discussions in California ahead of a gathering of leaders from their nations later this week. The APEC summit will also provide an opportunity for a much-anticipated meeting of US President Joe Biden and Chinese President Xi Jinping.
Yellen, who hosted her counterparts in the California city, said the finance ministers’ meeting allowed the group “to cement progress on key priorities: from monitoring macroeconomic and financial developments in the region and globally, to advancing our approaches to regulation of digital assets, sustainable finance, and inclusive growth-oriented policies.”
Chinese overcapacity in some sectors has been an issue for years, with the European Union, Japan, the US and other nations working together in various formats to try to reduce this in sectors such as steel. The EU recently opened an investigation into Chinese subsidies for electric vehicles after Chinese exports jumped.
--With assistance from Laura Curtis.
