US Treasury Secretary Janet Yellen has warned of the threat posed by China's overcapacity to the global economy.
"Direct and indirect government support is currently leading to production capacity that significantly exceeds China’s domestic demand, as well as what the global market can bear," the 77-year-old told representatives of the US Chamber of Commerce in Guangzhou, southern China, on Friday.
"I understand these policies may be driven by domestic development objectives. But overcapacity can lead to large volumes of exports at depressed prices."
China is flooding the global market with products such as solar panels and batteries. This is causing concerns in the West where companies are unable to compete with cheap products from the Far East.
"We’ve seen [China] pursue unfair economic practices, including imposing barriers to access for foreign firms and taking coercive actions against American companies. I strongly believe that this doesn’t only hurt these American firms: ending these unfair practices would benefit China by improving the business climate here," she added.
Yellen is in China until next Tuesday for talks with senior government officials. She heads to Beijing on Saturday and was at pains to point out that the US still wanted to work with China economically.
"President [Joe] Biden and I firmly reject the idea that the United States should decouple from China. A full economic separation is neither practical nor desirable, as both the US and China have affirmed in public statements following our high-level bilateral meetings," she said.
