Chinese Vice Finance Minister Liao Min (second right) and US Ambassador to China Nicholas Burns (right) greet US Treasury Secretary Janet Yellen (right) upon her arrival in Guangzhou on April 4, 2024.
Pedro Pardo | AFP | Getty Images
“It remains important” to “communicate closely on issues of concern such as excess capacity and economic measures related to national security. This is what the world and our citizens expect of us,” Yellen said in prepared remarks for her meeting with Deputy Premier He Lifeng. Friday. He is also Director of the Office of the Central Committee for Financial and Economic Affairs.
“A sound economic relationship must provide equal opportunities for companies and workers in both countries,” she said, adding that the two countries need to cooperate on climate change and the debt crisis in emerging markets.
Yellen and Hei Feng are expected to hold several discussions through Saturday morning. When she travels to Beijing, Yellen is scheduled to meet with Premier Li Qiang, Finance Minister Lan Fuan, and Beijing Mayor Yin Yong.
Before meeting with He, Yellen met with Wang Weizhong, governor of Guangdong Province, of which Guangzhou is the capital.
“Throughout my meetings with my counterparts, I will emphasize that a sound economic relationship can bring significant benefits to our economies,” Yellen said in prepared remarks for her meeting with Wang.
“I also emphasized that building a healthy economic relationship requires a level playing field for American workers and businesses, as well as open and direct communication on areas where we disagree,” Yellen said. “This includes the issue of China’s excess industrial capacity, which the United States and other countries are concerned could cause global spillover effects.”
On Friday, Yellen also met with representatives of American, European and Japanese companies.
“Overcapacity is not a new problem, but it has intensified, and we are seeing emerging risks in new sectors,” Yellen said in prepared remarks during an event held by the American Chamber of Commerce in China in Guangzhou.
“Excess capacity also poses challenges to Chinese companies and industries and could affect productivity and growth in China,” she said. “I believe that addressing excess capacity – and generally looking at market-based reforms – is in China’s interest.”
Analysts at a US-based consulting firm The Rhodium Group said in a report In late March, the Chinese government's support for industrialization in recent years has led to a buildup of production capacity exceeding domestic demand.
“Many Chinese companies still use overseas markets to compensate for lower prices, margins or even losses in the Chinese market,” the report said.
The Rhodium Group noted that Beijing expressed its awareness and called for more guidance in investment to prevent excess capacity. “However, the solutions adopted are likely to focus on eliminating obsolete capabilities and allowing uncompetitive firms to close while continuing to support capacity expansion, innovation and exports at other firms,” the report said.
Guangdong is one of the largest contributors to China's economic growth and home to the city of Shenzhen, a major hub for technology companies and startups. Guangdong is the number one province in China in terms of export value, according to Wind Information.
“In recent decades, [Guangzhou] “She has been at the forefront of market-oriented reforms that have advanced China’s economic development and opening-up,” Yellen said in prepared remarks for her meeting with Wang.
“I know that this city retains enormous importance today, including being a major center for technology and manufacturing,” she added.
China is the second largest economy in the world after the United States. Growth in the Asian country has slowed following a crackdown on property developers' heavy reliance on debt for growth and alleged monopolistic practices by internet platform companies. Uncertainty over Beijing's policies to boost consumption and overall growth has weighed on corporate and investor sentiment.
Written by Nicholas R. “China will likely continue to contribute about a third of global economic growth as its economic footprint increases, especially in Asia,” Lardy, a senior fellow at the Peterson Institute for International Economics, told Foreign Affairs on Tuesday.
“If American policymakers do not appreciate this, they are likely to overestimate their ability to sustain deepening economic and security ties with Asian partners,” he wrote.
Yellen's trip to China comes as the two governments try to increase communication in a relationship that has become increasingly tense.
US President Joe Biden and Chinese President Xi Jinping spoke by phone this week for the first time since their in-person meeting in California in November.
Wang Shuwen, vice minister of commerce and head of international trade negotiations, visited the United States from Tuesday to Friday to attend the first vice-minister-level meeting of the bilateral trade working group, according to a ministry statement.
Plans to hold regular meetings of these working groups were announced after Yellen and US Commerce Secretary Gina Raimondo visited China last year.
US Secretary of State Anthony Blinken is expected to make another visit this year, after making a long-awaited visit to China in June 2023.
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