Finance & Economics

Janet Yellen Says About Impact of China’s Industry Ramp-Up on World Economy

US Treasury Secretary Janet Yellen intends to put pressure on the Chinese authorities during her upcoming visit to this country since Beijing’s ramp-up of industrial capacity is a factor distorting the global economic system.

Janet Yellen Says About Impact of China's Industry Ramp-Up on World Economy

Excerpts from Janet Yellen’s speech, which she will set this week in Georgia, contain allegations that China’s excess manufacturing capacity is having an impact on global prices. In this case, it means an impact in the form of distortion. Janet Yellen also believes that the problem of excess production capacity in China is a negative factor in terms of the generated consequences for the global manufacturing system. Separately, the US Treasury Secretary draws attention to the fact that the mentioned state of affairs causes damage to companies and workers around the world in general and in the United States in particular.

Janet Yellen notes that during previous meetings of US officials with representatives of the Chinese leadership, the issue of excess production capacity was discussed. She intends to make the mentioned issue the main one in her future conversations with politics from the Asian country. This plan also applies to the US Treasury Secretary’s planned trip to China shortly.

Janet Yellen will visit Norcross, Georgia, where a solar cell manufacturing plant is reopening. This factory was closed in 2017. The reason for the shutdown of the plant seven years ago was the cheap imports that flooded the United States market.

It is worth noting that China is currently the leader of the global solar energy industry. This position of the Asian country in the mentioned sphere of activity is largely the result of Beijing’s efforts for many years to back homegrown companies of the relevant profile.

Janet Yellen is convinced that the legacy of China’s industrial policy model has led to significant overinvestment in sectors such as steel and aluminum production. These efforts have led to an increase in manufacturing in the Asian country and improved employment indicators. At the same time, Beijing’s industrial concept, according to Janet Yellen, has forced production to shrink in other countries.

The US Treasury Secretary says that there is currently a trend in China to increase manufacturing capacity. This situation is fixed in areas such as electric vehicles, lithium-ion batteries, and solar energy.

Janet Yellen plans to make her second trip to China shortly since Beijing and Washington re-engaged high-level diplomatic relations.

The Head of the People’s Republic of China, Xi Jinping, and his lieutenants are currently giving priority attention to the manufacturing sector. The authorities of the Asian country are faced with a significant factor in slowing economic growth in the form of a deep and protracted crisis in the real estate area. Within the framework of the current industrial policy concept, electric vehicles, batteries, and renewable energy sources are priorities for Beijing. China is also showing increased interest in the production of semiconductors using advanced technologies.

Beijing’s actions in the context of implementing industrial policy have become a kind of challenge for officials in the United States. The European Union is also forced to react to what China is doing. In March, the EU imposed additional tariffs on electric vehicles imported from the Asian country. Moreover, European authorities have said that Beijing is providing illegal financial support to the sphere manufacturing cars of the mentioned category.

During her visit to Georgia, Janet Yellen will talk about the policy of the administration of the President of the United States Joe Biden to build up a homegrown renewable energy industry.

As we have reported earlier, Experts Say About Significant Economic Potential of China’s Tech Sector.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.