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Yellen won't rule out more protections for US clean energy sector amid Chinese excess capacity

Published 04/03/2024, 05:15 PM
Updated 04/03/2024, 05:20 PM
© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen testifies before a Senate Finance Committee hearing on the 2025 budget on Capitol Hill in Washington, U.S., March 21, 2024. REUTERS/Elizabeth Frantz/File Photo

By David Lawder

ANCHORAGE, Alaska (Reuters) - U.S. Treasury Secretary Janet Yellen on Wednesday would not rule out additional steps to protect American clean energy industries from China's excess investment and production capacity, but declined to say whether she would raise the possibility of new tariffs in talks with Chinese officials.

During a fuel stop in Alaska on her second trip to China for economic talks, Yellen told reporters the Biden administration was serious about nurturing U.S. supply chains for electric vehicles, EV batteries, solar panels and other key products.

"We're providing tax subsidies to some of these sectors, and I wouldn't want to rule out other possible ways in which we would protect them," she said, when asked whether she would raise a threat of new trade barriers in talks with her Chinese counterparts, without specifying whether those steps included tariffs.

"But I think it's not just the United States, but quite a few countries, including Mexico, Europe and Japan, that are feeling massive pressure from massive investment in these industries in China," Yellen added.

The Treasury secretary intends to raise U.S. concerns about China's large and growing excess manufacturing capacity, particularly in new energy goods, during her nearly weeklong trip to China's southern factory and export hub, Guangzhou, and the capital, Beijing.

"We are trying to nurture an industry in solar cells, electric batteries and electric vehicles. And these are actually all areas where massive investment in China is creating overcapacities," Yellen said.

She will meet with her main counterpart, Vice Premier He Lifeng, Guangdong Province Governor Wang Weizhong and executives of U.S. companies in China, the Treasury Department said.

She will hear firsthand about business climate challenges that are prompting U.S. companies to limit their investment in China.

The trip is Yellen's second in-person visit to China as Treasury secretary. She visited Beijing in July 2023 to re-establish economic ties after years of frosty relations - fueled in part by U.S. tariffs on Chinese goods imposed by then-President Donald Trump and maintained by President Joe Biden, along with increasing national security curbs on American exports of semiconductors and other high-technology goods to China.

Her trip comes a day after Biden and Chinese President Xi Jinping held their first direct talks since November, in which Taiwan tensions and U.S. national security technology curbs on China took center stage.

Yellen last met with Vice Premier He in November, ahead of the Asia-Pacific Economic Cooperation Summit in San Francisco, where Biden also met with Xi.

© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen testifies before a Senate Finance Committee hearing on the 2025 budget on Capitol Hill in Washington, U.S., March 21, 2024. REUTERS/Elizabeth Frantz/File Photo

Her outreach has led to a series of meetings between U.S. Treasury officials and counterparts in China's finance ministry and central bank, exchanging views on a range of economic topics, including difficulties in China's property sector. But because the discussions are not set up as negotiations, they have not led to policy shifts.

The European Union is investigating whether China's EV industry is benefiting from unfair subsidies, which could lead to tariffs to protect European carmakers. The U.S. Commerce Department has opened a probe into whether Chinese vehicles pose national security threats due to the data they transmit, and U.S. lawmakers have urged Biden to hike tariffs on Chinese EVs.

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