U.S. Treasury Secretary Janet Yellen said on Wednesday she intends to warn China about the negative effects of Beijing’s subsidies for its clean energy industries, including solar panels and electric vehicles (EVs), during a visit to the country.
“I intend to talk to the Chinese when I visit about overcapacity in some of these industries, and make sure that they understand the undesirable impact that this is having - flooding the market with cheap goods - on the United States but also in many of our closest allies,” Yellen told MSNBC in a live interview.
I am a bit amused. In the 1990’s we lauded US corporations for building China factories to bring cheap goods into the USA at the cost of devastating blue collar workers within the USA.
And doesn’t the cheap access of green products drive the reduction of global warming.
Yellen made the comments after visiting Georgia to see a newly reopened solar cell manufacturing plant, which closed shop in 2017 because of stiff competition from factories in China. The factory has, however, re-opened thanks to generous solar and clean energy tax credits in the 2022 Inflation Reduction Act.
Oh I got it now US subsidies good; China subsidies bad.
Will the US economic war against China prove to be detrimental to the fight to slow global warming?
But perhaps this is just some political campaign hooey rather than a serious economic meeting with China. I post you decide.
Is it that Chinese companies are so aggressive, or that other companies are fat and lazy, and expect everything to go their way, without working to be competitive?
Remember the words of Bernie Appel, when asked about RS’s prices being 40% higher than the competition’s “we do people a favor when we sell them our stuff”.
Produce better products? Support new industries? Tariff foreign products to compensate for ignoring environmental compliance, living standards, slave labor, and so on?
Lots of possible approaches, but we’d have to convince the brainwashed that the market occasionally needs help because it’s not always perfect, and sometimes even that help isn’t enough.
After forty years of brainwashing, the Proles are convinced the markets are perfect when USian “JCs” get a lot richer, in a hurry. Failure of the “JCs” to get a lot richer, fast, is a market failure that requires government intervention to restore the parabolic upward curve of “JC” wealth, because the Proles are under the mistaken impression they will benefit from “JC” wealth accumulation.
There is no doubt that China dominates certain industries. Solar panels, probably wind turbines, rare earths, lithium, batteries and soon EVs.
They do this by strategic planning. Spotting industry growth areas and then subsidizing them to get them going. And low cost labor is their major advantage.
As low cost producers they can undercut the price of any competitor. And our guys with a focus on short term profits usually drop out promptly. Leaving China to dominate the market.
Economists tell us China hopes to stimulate their slowing economy by increasing manufacturing capacity and dumping product on world markets.
Yellen spent her time screeching at China about it’s overproduction of goods.
The seeds of the China problem started in USA promotion of globalization which began in 1996 NAFTA accords and spread to JCs off shoring factories to China. Those China factories cut into US manufacturing/ industrial base. Decimating our blue collar work force & their children. But we had foreign wars that could use those children so they could obtain monies for expensive higher education. And there was a cost of increased world pollution as initially China factories were coal powered though that has been dropping as Chinese nuclear power plants begin operating.
And prior to that globalization development our government began the push to bring China into the WTO hoping China would become more like us (particularly more “democratic”) by virtue of trading with us. LOL We drank our own Kool-aid.
The Clinton presidency from 1992 started with an executive order (128590) that linked renewal of China’s MFN status with seven human rights conditions, including “preservation of Tibetan indigenous religion and culture” and “access to prisons for international human rights organisations”—Clinton reversed this position a year later.
Thar’s gold in them thar hills of China!
We tolerated the lack of transparity and intellectual theft for access to cheap goods.
China spent billions to innovate and stream line its industrial base creating a capacity to over produce driving product pricing down in many sectors.
For example solar panel are so cheap that the Dutch & German are using them as garden fencing. OK those are not the optimal way to obtain solar power but they are serving a dual purpose of fencing & providing some solar power to fighting global warming. A win-win methinks.
China will turn a deaf ear to Yellen as it did with US previous complaints of lack of transparity and intellectual theft.
But China’a over production will end due to its demographic issues and rising labor cost plus the implosion of its real estate market. I think it is likely China is using its over production capacity to of set/delay its real estate problem.
I say take advantage of Chinese cheap well-made EVs to drive down world pollution.
The US problem with China is of our own making. Apparently there ain’t much strategic thinking by the “best and Brightest” in the shining city on the hill. Perhaps too much time spent counting the filthy lucre flowing into the city from corporate special interests.
iirc, Milton Friedman was preaching offshoring. Something along the lines of “if those people subsidize their industry, and make goods cheaply, it is to our advantage to buy from them.”
Bribing the Chinese and Russians to join the modern world with mutual benefits all around made sense, but was overly optimistic without laying out a sequence of baby steps… Unfortunately, but not surprisingly, Gorby and Deng were replaced by gangster sociologies.
That is the main reason I want us to immediately support Ukraine full force to underline that the alternative to our earlier kind offer is utter failure of the society and, uhm, vanishment of the gangster rulers. We need to end the legitimacy of unprovoked, economically idiotic, morally evil, wars of aggrandizement of violation of core principles of international law.
Check on how Harvard helped the creation of Russian Oligarchs while at the same time enriched themselves and posing as teachers of the free market system to Russia.
After Mao and the fall of the Soviet Union (economic system), China decided to encourage entrepreneurs and private investment. It made a very big change in the Chinese economy. I wonder if “globalization” caused this difference or did they happen in the same time frame.
Or maybe the Chinese remembered what Lenin said, heard what Friedman was preaching, and decided they could take the western economies for a buggy ride, and the west would like it.
According to a luminary on line, the source of the Lenin rope selling quote:
“They [the capitalists] will furnish credits which will serve us for the support of the Communist Party in their countries and, by supplying us materials and technical equipment which we lack, will restore our military industry necessary for our future attacks against our suppliers. To put it in other words, they will work on the preparation of their own suicide.”