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US Treasury Secretary Janet Yellen in China

US Tells China Not To Flood Its Auto Market

US Treasury Secretary Janet Yellen was on a 4-day trip to China’s southern city of Guangzhou and capital Beijing.

In the recent trip of US Treasury Secretary Janet Yellen to China, the US was concerned about China about to flood the market. China, as we all know, is the manufacturing capital of the world. Its over-production capabilities have resulted in flooding the international markets. Fearing the dominance of EVs, the US is staying vigilant to not let Chinese carmakers into its territory.

The EV war between America’s Tesla and China’s BYD has been going on for quite some time now. In the last quarter of last year, BYD overtook Tesla for the highest EV sales worldwide between the September to December period. That was the first time Tesla lost its top spot. However, in Q1 of 2024, Tesla regained the pole position. Still, the concerns regarding Chinese EVs flooding international markets, including the USA, at cost-effective prices are a threat to many countries.

US Treasury Secretary Janet Yellen in China
US Treasury Secretary Janet Yellen in China

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US Tells China Not To Flood Its Auto Market

Yellen mentioned that the massive Chinese government support more than a decade ago had led to below-cost steel flooding the global market, which “decimated industries across the world and in the United States”. She told a news conference at the US ambassador’s residence that, “I’ve made clear that President Biden and I will not accept that reality again.”

She held the meeting with her Chinese counterparts Vice Premier He Lifeng and Premier Li Qian for a total of 11 hours. Yellen said she was especially worried about China’s weak household consumption and business overinvestment, “imbalances” she said were “aggravated by large-scale government support in specific industrial sectors.”

Needless to say, the Chinese officials countered this allegation. China’s Commerce Minister Wang Wentao called the fears of overcapacity “groundless”. Premier Li told Yellen earlier that Washington should view the matter of production capacity “objectively” and from a “market-oriented” perspective. Beijing had expressed its “serious concerns” to Yellen about the US sanctions, tariffs and restrictions. The two countries have also agreed to open channels for further talks on excess capacity.

Tesla Giga Factory in Shanghai, China
Tesla Giga Factory in Shanghai, China

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Learn Electric Cars Says

This is a geopolitical situation where the overproduced and underpriced Chinese EVs and other products are threatening to take over various international markets. We have seen how Chinese electric cars are slowly expanding their global footprint. Moreover, they are offering great products with the latest technology, cheaper batteries, and exhilarating performance at incredibly attractive prices. That has been China’s approach since the inception of its globalization.

The USA’s concerns are understandable since there would be too much dependency on one country. That has, unfortunately, been the case for the longest time. For instance, the EV battery raw materials and manufacturing largely take place in China. This is similar to the world’s most semiconductor chips being produced in Taiwan. During lockdown, the entire world reeled under the effect of this. Hence, too much dependence on one country for anything is not ideal in today’s world.

Every major country is, therefore, focusing on local manufacturing. Utilizing its own resources, technology and labour is the best way to approach the future to become self-reliable. But then again, we live in a world of global connectivity, both physically and digitally. Hence, isolating a single nation won’t be easy. In any case, let us keep an eye out for further developments in this case.

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