Yellen says China's rapid buildout of its green energy industry 'distorts global prices'

Treasury Secretary Janet Yellen testifies during a Senate Finance hearing to examine President Joe Biden's proposed budget request for fiscal year 2025 on Capitol Hill Thursday, March 21, 2024, in Washington. (AP Photo/Mariam Zuhaib)

WASHINGTON (AP) — Treasury Secretary Janet Yellen called out China's ramped-up production in solar energy, electric vehicles and lithium-ion batteries, calling it unfair competition that “distorts global prices" and “hurts American firms and workers, as well as firms and workers around the world.”

Yellen, who is planning her second trip to China as Treasury secretary, said Wednesday in Georgia that she will convey her belief to her Chinese counterparts that Beijing's increased production of green energy also poses risks "to productivity and growth in the Chinese economy."

"I will press my Chinese counterparts to take necessary steps to address this issue.”

China is the dominant player in batteries for electric vehicles and has a rapidly expanding auto industry that could challenge the world’s established carmakers as it goes global. The International Energy Agency, a Paris-based intergovernmental group, notes that in 2023 China accounted for around 60% of global electric car sales.

Yellen delivered remarks Wednesday afternoon at Suniva — a solar cell manufacturing facility in Norcross, Georgia. The plant closed in 2017 in large part due to cheap imports flooding the market, according to Treasury. It is reopening, in part, because of incentives provided by the Democrats' Inflation Reduction Act, which provides tax incentives for green energy manufacturing.

The firm's history is something of a warning on the impact of oversaturation of markets by Chinese products — and a marker of the state of U.S.-China economic relations, which are strained due to investment prohibitions, espionage concerns and other issues.

China on Tuesday filed a World Trade Organization complaint against the U.S. over what it says are discriminatory requirements for electric vehicle subsidies. The Chinese Commerce Ministry didn’t say what prompted the move.

U.S. Trade Representative Katherine Tai said in response to the complaint that the U.S. subsidies are a “contribution to a clean energy future” while China “continues to use unfair, non-market policies and practices to undermine fair competition.”

The European Union, also concerned about the potential threat to its auto industry, launched its own investigation into Chinese subsidies for electric vehicles last year.

“In the past, in industries like steel and aluminum, Chinese government support led to substantial overinvestment and excess capacity that Chinese firms looked to export abroad at depressed prices,” Yellen said. “This maintained production and employment in China but forced industry in the rest of the world to contract.”

“These are concerns that I increasingly hear from government counterparts in industrialized countries and emerging markets, as well as from the business community globally,” she said.

The tone of Yellen's speech stands in contrast to Chinese leader Xi Jinping, who met with American business leaders in Beijing Wednesday and called for closer trade ties with the U.S. amid a steady improvement in relations that had sunk to the lowest level in years.

Xi emphasized Wednesday the mutually beneficial economic ties between the world’s two largest economies, despite heavy U.S. tariffs on Chinese imports and Washington’s accusations of undue Communist Party influence, unfair trade barriers and theft of intellectual property.