Yellen Pledges to Advocate for Addressing Cheap Green Energy Exports During Her Upcoming Visit to China
Treasury Secretary Janet Yellen has announced her commitment to addressing China’s manufacturing overcapacity for green energy products during her next trip to the country. Yellen expressed concern over the global spillovers caused by China’s excess capacity, stating that it distorts global prices and production patterns, ultimately hurting American firms, workers, and those around the world.
China has a history of government support leading to overinvestment and excess capacity in industries like steel and aluminum. This has resulted in Chinese firms exporting products abroad at depressed prices, maintaining production and employment in China while forcing the rest of the world’s industry to contract. Yellen warns that a similar situation is now occurring in new industries like solar, electric vehicles (EVs), and lithium-ion batteries.
Data from the International Energy Agency reveals that China accounted for a significant percentage of global solar panel production in 2021 but demanded only a fraction of its manufacturing output. Additionally, China has become the world’s largest auto exporter, surpassing Japan in 2023. Chinese electric carmaker BYD outsold Tesla in the final quarter of last year, and China dominates around 75% of global lithium-ion battery production.
The Biden administration has raised concerns over China’s overcapacity in previous bilateral talks, and Yellen intends to make it a key issue during her upcoming visit. The American Chamber of Commerce in China’s annual business climate report highlights government financial assistance as one of the top concerns regarding unfair treatment of U.S. firms in China and Hong Kong.
The Alliance for American Manufacturing (AAM), a U.S. manufacturing advocacy group, supports Yellen’s efforts to address China’s overcapacity. AAM President Scott Paul emphasizes that China has already decimated numerous industries in America over the past two decades. He calls on the Biden administration and Congress to proactively employ existing trade tools and develop new ones to prevent further job losses.
The AAM recently published a report warning that China poses an existential threat to the American auto industry if Chinese companies use Mexico as a backdoor to sell vehicles in the United States. By manufacturing in Mexico, Chinese automakers can take advantage of more favorable tariffs under the United States-Mexico-Canada Agreement.
Sens. Jon Ossoff and Raphael Warnock have also voiced concerns over China’s impact on the solar industry. In a letter to President Biden, they urged him to eliminate the tariff exemption for bifacial solar modules, as imports of these modules doubled between 2020 and 2022. The senators stress the importance of supporting the growing U.S. solar manufacturing industry to ensure energy security and independence from China.
In a separate letter, Ossoff, Warnock, Sen. Sherrod Brown, and Sen. Marco Rubio asked President Biden to increase tariffs on Chinese solar imports, noting that China’s aggressive subsidies for its own solar manufacturing industry pose a global threat. By 2026, China is projected to have enough capacity to meet global demand for the next decade, posing a significant challenge to the U.S. solar industry and American energy security.
Yellen’s upcoming visit to China presents an opportunity to address these concerns directly. With China’s dominance in green energy production and its impact on global markets, it is crucial for the United States to advocate for fair trade practices and protect its industries from the distortions caused by China’s manufacturing overcapacity.
