U.S. Treasury Secretary Janet Yellen said Monday Washington will not seek to decouple from China and that her latest visit to the Asian country has put bilateral economic ties on "a stronger footing" while urging Beijing to address its overcapacity in some industries.
In a Beijing press conference on her six-day China visit through Tuesday, the first since July last year, Yellen said the world's two largest economies are "deeply integrated," and a wholesale separation would be "disastrous for both of our economies."
"Even as we take actions to diversify our supply chains, we seek to preserve the broader trade and investment relationship that can benefit American workers and firms. China is a key market for American products and services," she said.
Yellen, who agreed with Chinese Vice Premier He Lifeng in Guangzhou, southern China, to launch talks on achieving "balanced growth" in their domestic and global economies, said she is particularly worried about the negative effects of China's weak household consumption and business overinvestment.
Noting that China has increased government support for "new" industries such as electric vehicles, lithium-ion batteries and solar panels, Yellen said, "When the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question."
She said the problem affects not only the United States but also its allies, including European countries and Japan, as well as emerging markets, such as Mexico and India.
The treasury secretary said she believes that appropriately addressing the issue of macroeconomic imbalances will not only be good for the United States and other countries but also for China's long-term productivity and growth.
She emphasized U.S. concerns about overcapacity are "not animated by anti-China sentiment" but are "driven by a desire to prevent global economic dislocation and move toward a healthy economic relationship with China."
The new talks on balanced growth will "provide a dedicated structure for us to raise our concerns" about China's imbalances and overcapacity "in a detailed and targeted manner," she added.
In response to U.S. concerns expressed by Yellen during her visit, Chinese Commerce Minister Wang Wentao insisted Sunday in Paris the accusations of "overcapacity" by the United States and Europe are "groundless," according to the Commerce Ministry.
He told a meeting with Chinese automobile industry representatives in Europe that Chinese EV manufacturers' rapid development is "a result of constant technological innovations, well-established supply chain system and full market competition, not subsidies."
The minister maintained China's EV industry has made an important contribution to global efforts to address climate change. At the meeting, participants discussed their response to anti-subsidy investigations launched by the European Union last year into EV imports from China, the ministry said.
On other issues, Yellen warned Chinese firms and banks against providing support to Russia's defense industrial base and helping it to wage war against Ukraine, saying at the press conference they may face U.S. sanctions.
The treasury chief also said the two countries will continue discussions on respective trade curbs to safeguard national security. U.S. actions are implemented "through transparent rules and regulations" and Washington would welcome transparency from Beijing regarding its national security actions, she added.
The United States has kept its controls on China-bound exports of semiconductors and other high-tech items in place, while China has been restricting exports of some materials necessary for manufacturing chips.
During her trip, Yellen also held talks with Chinese Premier Li Qiang, Finance Minister Lan Foan and People's Bank of China Governor Pan Gongsheng.
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