During her visit to China, United States Treasury Secretary Janet Yellen emphasized the importance of market-based reforms in helping the country sustain its growth. She highlighted that China’s excessive industrial capacity, supported by government subsidies, is creating production levels that exceed both domestic demand and global markets. Yellen warned that this could lead to trade tensions with other countries and hinder sustainable growth.
Yellen’s discussions with Chinese Vice Premier He Lifeng focused on the negative impacts of China’s excess factory capacity and growing exports on the global economy. Despite setting an ambitious growth target of 5 percent for 2024, the International Monetary Fund predicts a lower growth rate. Yellen highlighted the need for market-based reforms and reducing industrial overcapacity in key sectors such as electric vehicles and solar energy to address emerging risks and support sustainable growth.
Yellen acknowledged the success of China’s past market-based reforms in lifting millions of people out of poverty and suggested that reviving these reforms could bring further benefits. She also expressed concerns raised by American and international companies about unfair treatment compared to local competitors in China. By addressing overcapacity and implementing market-based reforms, Yellen believes that China can support its economic growth and improve its business climate for both domestic and international companies.
