US, China to Launch Exchanges on Balanced Growth, Money Laundering, Yellen Says

REUTERS/Tingshu Wang
U.S. Treasury Secretary Janet Yellen meets China’s Vice Premier He Lifeng at the Guangdong Zhudao Guest House, in Guangzhou, Guangdong province, China, April 6, 2024.

GUANGZHOU, China (Reuters) – U.S. Treasury Secretary Janet Yellen said on Saturday that she and Chinese Vice Premier He Lifeng agreed to launch exchanges on balanced growth in domestic and global economies, an effort she said partly aimed at addressing U.S. concerns about China’s excess manufacturing capacity.

After two days of economic talks in China’s southern export hub of Guangzhou, Yellen said she and He also agreed to start a forum to cooperate on anti-money laundering efforts in their respective financial systems.

The exchanges “will facilitate a discussion around macroeconomic imbalances, including their connection to overcapacity, and I intend to use the opportunity to advocate for a level playing field for American workers and firms,” Yellen said in a statement released at the conclusion of the talks.

She characterized the discussions as productive and frank. Coming into her four-day visit to China, her top priority was to try to persuade Chinese officials to rein in excess production capacity for electric vehicles, solar panels and other clean energy technology that are threatening competing firms in the U.S. and other countries.

Chinese state media pushed back on her excess capacity arguments, calling them a “pretext” for protectionist U.S. policies.

Such comments seek to undermine China’s domestic growth and international cooperation, and Washington should focus on fostering innovation and competitiveness within its own borders instead of resorting to “fear-mongering,” state news agency Xinhua said in an editorial late on Friday.

Yellen, He Lifeng and their teams held over four and a half hours worth of meetings on Saturday on a range of economic topics, with U.S. concerns about China’s growing exports of electric vehicles, solar panels and other goods the biggest priority for the Treasury chief.

Yellen is expected to speak with reporters later on Saturday.

Yellen told U.S. businesspeople in China’s southern export hub of Guangzhou on Friday that concerns are growing over the global economic fallout from China’s excess manufacturing capacity, making the issue the focus of her four days of meetings with Chinese officials.

Citing China’s overproduction of electric vehicles, solar panels, semiconductors and other goods that are flooding into global markets in the face of a demand slump in China’s domestic market, Yellen said this was not healthy for China and was hurting producers in other countries.

“Talking up ‘Chinese overcapacity’ in the clean energy sector also smacks of creating a pretext for rolling out more protectionist policies to shield U.S. companies,” Xinhua said.

“After all, it is now known by the world that Washington will not hesitate to show its protectionist teeth under the guise of national security in areas where its supremacy is challenged.”

Yellen met with Vice Premier He Lifeng and Guangdong Province Governor Wang Weizhong in Guangzhou after arriving in China late on Thursday.

She is to travel later on Saturday to Beijing, where she will meet officials including Premier Li Qiang, Finance Minister Lan Foan and People’s Bank of China Governor Pan Gongsheng through Monday, according to a Treasury press advisory.