Yellen called on the G7 and other countries to erect a "wall of opposition" to China-led industrial policy

Observer.com

2024-05-24 08:39Posted on the official account of Shanghai Observer.com

On May 23, local time, U.S. Treasury Secretary Janet Yellen claimed at a press conference before attending the G7 finance ministers and central bank governors meeting that she hopes "market-oriented countries" will erect a "wall of opposition" against China's dominated industrial policy, which is a key issue she wants to promote at the meeting this week.

Yellen claimed that many industrially advanced "democracies" outside the G7, including Mexico, India, and South Africa, are concerned about China's "overinvestment" in electric vehicles, solar products, semiconductors, steel, and other strategic industries. If China does not change its policies, including from increasing production to stimulating domestic demand, market-driven economies will face a flood of cheap exports from China, which will threaten the viability of their manufacturers.

She asserted that she was not asking countries to follow the example of the United States in imposing tariffs or to closely coordinate their trade policy responses. "But we need to stand together and send a unified message to China. In this way, they will understand that it is not just one country that feels this way, and that the strategy they are pursuing faces a 'wall of opposition'. ”

On May 23, local time, in Stresa, Italy, before the G7 Finance Ministers and Central Bank Governors meeting, U.S. Treasury Secretary Janet Yellen held a press conference in Stresa. The picture is from The Paper

Yellen revealed that the G7 countries will discuss their responses and concerns to China. In addition to this, she said that she is seeking a "consensus" between finance ministers and central bank governors of G7 countries on a plan to get early access to some $300 billion in assets frozen by Russia, which could provide significant financial support to Ukraine after 2025.

Reuters pointed out that these two issues are expected to dominate the G7 finance ministers and central bank governors meeting held in the northern Italian town of Stresa on May 24-25 local time.

According to the report, before Yellen called on the G7 to "unite" on the China issue, on May 22, local time, the Office of the United States Trade Representative announced that according to the instructions of the President of the United States, the office decided after research and judgment: to maintain the "Section 301" tariffs imposed on China during the Trump administration, and at the same time significantly increase tariffs on China's "target strategic products". Among them, the new import tariff rules for electric vehicles and their batteries, semiconductors, steel and aluminum products and a series of products came into effect on August 1 this year.

According to the Financial Times, Yellen visited Frankfurt, Germany on May 21 local time, once again hyped up the topic of so-called China's "overcapacity", claiming that the United States and Western allies must deal with China's growing manufacturing strength "in a united way", otherwise their own industries will be in danger.

On May 22, local time, before the G7 finance ministers and central bank governors meeting, French Economy and Finance Minister Bruno Le Maire also played the so-called word game of China's "overcapacity theory", claiming that the G7 and Europe need to unite to deal with the "flooding of Europe" of Chinese imports, including electric vehicles and electric car batteries. He also vowed to call for a "rebalancing" of trade relations with China at the upcoming G7 finance ministers' meeting in Italy.

French Minister of Economy and Finance Le Maire Data map from Visual China

Reuters noted that France and Germany, both G7 members of the European Union, are increasingly divergent in their stance on China, reporting that "Berlin is anxious to avoid damaging trade relations with China, a major export market."

On May 22, local time, New York Times columnist David Wallace-Wells published a commentary article entitled "The United States Loses to China in the Green Tech Race", in which the author mentioned that if you play a word association game about "electric vehicles", Americans used to mention "Tesla", but now they will say "China".

From this point of view, the article points out that at a time when China is making an amazing breakthrough in the development of electric vehicles, the United States is building a tariff wall and an industrial moat, which was unimaginable in the past.

Can the United States defeat China in a "trade war" over climate and clean technology? The article does not specify the answer, but it does give the answer, from citing China's global leadership in green technology to refuting the US tariff policy and the "overcapacity theory", the author Wallace Wells clearly disagrees with the Biden administration's approach and is worried that the US will further lag behind China.

The Associated Press and Reuters previously analyzed that Biden's adoption of the same tax hike on China as his predecessor Trump before the election clearly violated the long-standing free trade consensus in the United States, and wanted to tell voters that "they all take a tough stance on China." However, at a time when tensions are rising in the world's two largest economies, these measures could provoke a backlash from China, triggering a broader trade conflict.

"The U.S. hype of 'overcapacity' in China's new energy industry is completely contrary to objective facts and economic laws, and is essentially protectionism." Chinese Foreign Ministry spokesman Wang Wenbin asked rhetorically on May 22: "According to the logic of the US side, what commodities are exported too much, what is 'overcapacity', then the US exports a large number of soybeans, airplanes, and natural gas every year, isn't it also overcapacity?" Shouldn't the G7 finance ministers' meeting focus first on these overcapacity problems in the United States? ”

Wang Wenbin pointed out that in the name of "overcapacity", the US is trying to coerce G7 members to impose restrictions on China's new energy products, but in fact it wants to form a "protectionist alliance", which runs counter to the trend of the times of openness and win-win results, and will not only harm the welfare of consumers in relevant countries, but also cause interference and damage to the global green transition.

Wang Wenbin said that China is willing to deepen cooperation with other countries in the new energy production and supply chain to promote technological innovation and industrial development. It is hoped that all countries will adhere to openness and cooperation, reject protectionism, strive for win-win results, and avoid "losing more".

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