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I’m optimistic about the progress we’ve made in spurring growth. But the Biden Administration also recognizes that these investments are new. It will take effort, ingenuity, and time for them to reach their full potential. We’re also keeping our eye on pressures abroad that pose risks not only to America but also to the global economy. President Biden is committed to doing what we can to protect our industries from unfair competition.
In particular, I am concerned about global spillovers from the excess capacity that we are seeing in China. In the past, in industries like steel and aluminum, Chinese government support led to substantial overinvestment and excess capacity that Chinese firms looked to export abroad at depressed prices. This maintained production and employment in China but forced industry in the rest of the world to contract. Now, we see excess capacity building in “new” industries like solar, EVs, and lithium-ion batteries.
China’s overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world. Challenges for individual firms can lead to concentrated supply chains, negatively impacting global economic resilience. These are concerns that I increasingly hear from government counterparts in industrialized countries and emerging markets, as well as from the business community globally.
It is important to the President and me that American firms and workers can compete on a level playing field. We have raised overcapacity in previous discussions with China and I plan to make it a key issue in discussions during my next trip there. I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy, as China itself acknowledged in its National People’s Congress this month. And I will press my Chinese counterparts to take necessary steps to address this issue.
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Source: U.S. Treasury Department
Speaker: Janet Yellen, Secretary of the Treasury
Format: Speech
China Policy Research 