Yellen opens China meeting with concerns about overcapacity and encourages market-oriented reforms | Wilnesh News

BEIJING — U.S. Treasury Secretary Janet Yellen kicked off her first full day of formal meetings in China to discuss overcapacity and encourage market-oriented reforms.

Yellen arrived in the southern Chinese city of Guangzhou late Thursday. Expected to go to Beijing on Saturday, where she will stay until Tuesday. This is her second visit to China as Finance Minister.

Yellen met with Wang Weizhong, the governor of Guangdong Province, of which Guangzhou is the capital, ahead of a meeting with Vice Prime Minister Ho Lifeng on Friday.

“In my engagements with my peers, I will emphasize the tremendous benefits that a healthy economic relationship can bring to our two economies,” Yellen said in a speech prepared for her meeting with Wang.

“I also emphasized that building a healthy economic relationship requires a level playing field for American workers and businesses and open and direct communication in areas where we disagree,” Yellen said. “This includes China’s industrial overcapacity issue , the United States and other countries are concerned that this issue may cause global spillover effects.”

Analyst at American Consulting Company Rongding Group stated in the report In late March, it emerged that the Chinese government’s support for manufacturing in recent years had led to increases in production capacity exceeding domestic demand.

“Many Chinese companies are still using overseas markets to compensate for lower prices, profits and even losses in the Chinese market,” the report said.

Rhodium Group pointed out that Beijing has expressed its understanding and called for strengthening investment guidance to prevent overcapacity. “However, the solutions adopted are likely to focus on phasing out outdated production capacity, allowing the most competitive firms to close while continuing to support capacity expansion, innovation and exports by others,” the report states.

Guangdong province is one of the largest contributors to China’s economic growth and is home to Shenzhen, a major center for technology companies and start-ups. According to Wind information statistics, Guangdong Province is currently the province with the highest export volume in China.

“(Guangzhou) has been at the forefront of market-oriented reforms in recent decades, driving China’s economic development and opening up,” Yellen said in a speech prepared for the meeting with Wang Yi.

“I know the city still has huge importance today, including as a key center for technology and manufacturing,” she said.

China is the world’s second largest economy after the United States. The Asian country’s economic growth has slowed after a crackdown on property developers’ reliance on debt to grow and alleged monopolistic practices by online platform companies. Uncertainty over Beijing’s policies to boost consumption and overall growth weighed on business and investor sentiment.

Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics, wrote in Foreign Affairs magazine on Tuesday: “China is likely to continue to contribute about a third of world economic growth while expanding its economic footprint, especially in Asia.”

“If U.S. policymakers underestimate this, they may overestimate their ability to sustain deepening economic and security ties with their Asian partners,” he wrote.

US President Biden and Chinese President Xi Jinping The two sides spoke by phone this week for the first time since a face-to-face meeting in California last November.