US Treasury Secretary Janet Yellen told Chinese Premier Li Qiang on Sunday that the ability to have difficult conversations had put the two economic superpowers on “more stable footing” over the past year.
As they began their meeting in Beijing, Li responded that the two countries must respect each other and should be partners, not adversaries, adding that “constructive progress” had been made during Yellen's trip.
Yellen said Washington and Beijing had a “duty” to responsibly manage the complex relationship, as she pleaded with Chinese leaders to rein in China's excess industrial capacity.
“Although we still have much to do, I believe that over the past year we have put our bilateral relations on a more stable footing,” Yellen said. “This doesn't mean ignoring our differences or avoiding difficult conversations. It means understanding that we can only progress if we communicate directly and openly with each other.”
Yellen has made the threat of excess production of electric vehicles (EVs), solar panels and other clean energy products in China to producers in the United States and other countries a focal point of his second visit to China in nine months.
She visited Beijing in July 2023 to try to normalize bilateral economic relations after a period of heightened tensions caused by differences over issues ranging from Taiwan to the origins of COVID-19 and trade disputes.
In another sign of stabilizing relations, U.S. President Joe Biden and Chinese President Xi Jinping sought to manage tensions over the South China Sea during a nearly two-hour telephone conversation on Tuesday, their first direct talks since a summit in November.
U.S. and Chinese military officials met with their Chinese counterparts last week for a series of rare meetings in Hawaii focused on operational security and professionalism.
Balanced growth
In Guangzhou, the southern export hub, on Saturday, Yellen and her top economic counterpart, Vice Premier He Lifeng, agreed to launch a dialogue focused on “balanced growth.” Yellen said she intended to use the forum to advocate for a level playing field with China to protect American workers and businesses.
“As the world's two largest economies, we have a duty to our own countries and to the world to responsibly manage our complex relationships and to cooperate and demonstrate leadership to address pressing global challenges,” Yellen said to Li.
The Economist Intelligence Unit predicts that battery manufacturing capacity in China will outstrip demand by a factor of four by 2027, as the electric vehicle industry continues to grow.
Beijing's support for battery-powered vehicles has helped local champions like BYD and Geely capture share of the world's largest auto market and make China the world's largest auto exporter.
But rapid growth also means China has created excess production capacity that could be between 5 million and 10 million electric vehicles per year, according to consultancy Automobility.
Yet far from curbing investment in manufacturing, China has doubled down on Xi's new mantra of unleashing “new productive forces”, investing in cutting-edge technologies including electric vehicles, commercial spaceflight and life sciences, in which many American companies hold advantages.
Throughout her visit, Chinese state media countered Yellen's message about excess capacity.
The official Xinhua news agency said Saturday that talk of “Chinese overcapacity” in the clean energy sector created a pretext for protectionist policies aimed at shielding U.S. companies.
Suppressing China's electric vehicle-related industries will not help the United States develop its own, Xinhua said, expressing hope that more progress could be made during Yellen's visit to remove barriers hindering mutual cooperation. beneficial.
