BEIJING, April 7 (Reuters) - U.S. Treasury Secretary
Janet Yellen told Chinese Premier Li Qiang on Sunday that the
ability to have difficult conversations has put the two economic
superpowers on "a more stable footing" over the past year.
As they began a meeting in Beijing, Li responded that the
two countries needed to respect each other and should be
partners, not adversaries, adding that "constructive progress"
had been made during Yellen's trip.
Yellen said Washington and Beijing had a "duty" to
responsibly manage the complex relationship, as she brought her
case for reining in China's excess factory capacity to the
Chinese leadership.
"While we have more to do, I believe that, over the past
year, we have put our bilateral relationship on more stable
footing," Yellen said. "This has not meant ignoring our
differences or avoiding tough conversations. It has meant
understanding that we can only make progress if we directly and
openly communicate with one another."
Yellen "raised issues of concern, including industrial
overcapacity in China and the impact that could have on American
workers and firms," according to a U.S. Treasury readout.
Yellen has made the threat of China's excess production of
electric vehicles (EVs), solar panels and other clean energy
products to producers in the U.S. and other countries a focus of
her second visit to China in nine months.
She visited Beijing in July 2023 to try to normalise
bilateral economic relations after a period of heightened
tension caused by differences over issues ranging from Taiwan to
COVID-19's origins and trade disputes.
In a further sign of the ties stabilising, U.S. President
Joe Biden and Chinese President Xi Jinping sought to manage
tensions over the South China Sea in a nearly two-hour call on
Tuesday, their first direct talks since a summit in November.
U.S. and Chinese military officials met their Chinese
counterparts last week for a series of rare meetings in Hawaii
focused on operational safely and professionalism.
Following her meeting with Li, Yellen met with Beijing mayor
Yin Yong and attended an event with students and professors at
the elite Peking University.
BALANCED GROWTH
On Saturday in the southern export hub of Guangzhou, Yellen
and her main economic counterpart, Vice Premier He Lifeng,
agreed to launch a dialogue focused on "balanced growth". Yellen
said she intends to use the forum to advocate for a level
playing field with China to protect U.S. workers and businesses.
"As the world's two largest economies, we have a duty to our
own countries and to the world to responsibly manage our complex
relationship and to cooperate and show leadership on addressing
pressing global challenges," Yellen told Li.
The Economist Intelligence Unit forecasts China's battery
manufacturing capacity will outpace demand by a factor of four
by 2027, as its EV industry continues to grow.
Beijing's support for battery-powered rides has helped
homegrown champions such as BYD and Geely
grab share in the world's biggest car market, and turn China
into the world's largest auto exporter.
But rapid growth has also meant China has created excess
manufacturing capacity that could be between 5 and 10 million
EVs per year, according to consultancy Automobility.
Still, far from curbing investment in manufacturing, China
has doubled down on Xi's new mantra of unleashing "new
productive forces" by investing in cutting-edge technology
including EVs, commercial spaceflight and life sciences - areas
where many U.S. firms hold advantages.
Throughout her visit, Chinese state media have pushed back
against Yellen's message on excess capacity.
State news agency Xinhua on Sunday quoted Premier Li saying
the U.S. should "refrain from turning economic and trade issues
into political or security issues" and view the issue of
production capacity from a "market-oriented and global
perspective".
The development of China's clean energy sector, where
overcapacity concerns are felt most acutely, will support the
global energy transition, Xinhua quoted Li as saying.