Janet Yellen says US won't allow Chinese overcapacity to destroy new industries

The US Treasury Secretary Janet Yellen on Monday warned Beijing that Washington will not allow China's green imports to harm new industries.

“We’ve seen this story before,” Ms Yellen said during a press conference, referring to the millions of US jobs lost when cheap Chinese steel – backed by Beijing – flooded the global market.

“I’ve made clear that President Biden and I will not accept that reality again.”

Ms Yellen was wrapping up a four-day trip to Beijing to continue high-level talks between the two economic superpowers and to press her Chinese counterparts on excessive overcapacity of new industries.

Washington has warned that Chinese overcapacity in the “new three” economy – electric vehicles, lithium-ion batteries and solar – will distort global prices.

“China is now simply too large for the rest of the world to absorb this enormous capacity,” Ms Yellen said.

“And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”

Ms Yellen said her worries are shared by Europe, Mexico, Japan and emerging markets.

Following a meeting with the Chinese Vice Premier He Lifeng on Saturday, Ms Yellen said the two countries had agreed to hold exchanges that would enable discussions around macroeconomic imbalances and how they could lead to overcapacity.

“Importantly, we have and will continue to emphasise that our concern about overcapacity is not animated by anti-China sentiment or a desire to decouple,” she said.

US concerned about China supporting Russian military procurement

Ms Yellen said she also told Beijing officials that President Joe Biden's administration is concerned about the role Chinese firms are playing in supporting Russia's military procurement and warned them to take action against those companies.

“President Biden and I are determined to do all that we can to stem the flow of material that is supporting Russia’s defence industrial base and helping it to wage war against Ukraine,” Ms Yellen said.

She also said companies found to be supporting Russia militarily “will face significant consequences”.

In a separate interview with CNBC, Ms Yellen said China can have a relationship with Russia, but that it must not support its military.

Ms Yellen's comments came as the Russian Foreign Minister Sergey Lavrov visited China to hold discussions with his Chinese counterpart. Those discussions were expected to focus on Ukraine and the Asia Pacific, Russia's foreign ministry said.

China's foreign ministry spokesman said Beijing has never sought to benefit from the war in Ukraine.