Yellen’s in China to deliver a message: Stop making so much stuff!
Yellen’s in China to deliver a message: Stop making so much stuff!
Treasury Secretary Janet Yellen is in China for a five-day trip. Her last visit — less than a year ago — was part of an effort by the Joe Biden administration to reopen lines of communication between the two superpowers on issues affecting the global economy. But this trip has a different set of goals, and different stakes.
The U.S. is entering these discussions with a strengthening economy. But on the other side of the Pacific, said Roselyn Hsueh, co-director of the political economy program at Temple University, “the Chinese government is more concerned about the Chinese economy. And in many ways, Janet Yellen actually has more leverage.”
Leverage to pressure the Chinese to rein in their manufacturing sector, says Logan Wright, director of China markets research at the Rhodium Group.
The U.S. is arguing that China is producing way more stuff than the Chinese people and global markets need at the moment.
“With subsidies in emerging industries, like electric vehicles, for example, solar panels, other green technologies, there’s concern that the weakness in the Chinese domestic economy is going to result in the export of a lot of that excess capacity abroad,” said Wright.
So while Yellen is in China, said Josh Lipsky at the Atlantic Council, “she’s delivering a clear message that there is growing concern not just in the U.S., but around the world. She’s brought in the Europeans and the Japanese on this.”
If this “overcapacity” isn’t addressed, said Zongyuan Zoe Liu, a fellow at the Council on Foreign Relations, “that would mean domestic manufacturing would be less competitive [than] the Chinese imported goods. And that may even imply additional job loss, and it would also mean factory closure.”
Just at the moment when the Biden administration is trying to shore up American manufacturing.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
