On Saturday, Treasury Secretary Janet Yellen revealed that the United States will roll out two groundbreaking initiatives in collaboration with China aimed at mitigating the growing issue of overcapacity in the world’s second-largest economy.
Yellen, currently on her second visit to China as Treasury Secretary, concluded two days of extensive discussions with her Chinese counterpart, Vice Premier He Lifeng, announcing the inception of these initiatives.
Treasury Secretary Janet Yellen (Credits: BBC)
The first initiative will establish a platform for “intensive exchanges on balanced growth in the domestic and global economies,” facilitating discussions on macroeconomic imbalances and their correlation with overcapacity.
Yellen emphasized that these exchanges would advocate for a level playing field for American workers and firms. She expressed particular concern about Beijing’s overproduction in sectors like solar energy, electric vehicles, and lithium-ion batteries. The Treasury Secretary stressed the need to address these issues significantly since state subsidies and policy support exacerbate the problem.
Acknowledging the complexity of China’s challenges of overcapacity, Yellen underscored the importance of ongoing dialogues to address these issues comprehensively. The Treasury Department and China’s Ministry of Finance will spearhead the new initiative, ensuring robust collaboration and coordination.
In addition to the economic initiative, the Treasury and the People’s Bank of China will collaborate on combating illicit finance and financial crime, marking a step forward in bilateral efforts to enhance financial transparency and integrity.
Vice Premier He Lifeng (Credits: Reuters)
The talks between Yellen and He Lifeng were described as “candid, pragmatic, and constructive.” Both sides agreed to address various economic and financial issues through working groups. These discussions, aimed at fostering sustainable finance and balanced growth, reflect a shared commitment to addressing mutual concerns and promoting cooperation.
During the talks, Yellen also raised concerns about China’s ties with Russia, particularly regarding material support provided to Russia’s invasion of Ukraine. The Chinese side assured that it would not provide military support to Russia, emphasizing a desire to prevent any escalation in bilateral relations.
Looking ahead, Yellen is set to engage in further discussions with senior Chinese officials, including Premier Li Qiang and the People’s Bank of China governor Pan Gongsheng. These discussions will be crucial in charting the course for future cooperation and addressing pressing economic challenges.
As tensions persist over issues of overproduction and trade imbalances, stakeholders are closely monitoring developments with hopes that constructive dialogue will pave the way for meaningful solutions to complex economic problems.
