USA Asks China to Cut Production and Exports

US Treasury Secretary Janet Yellen, during a speech at the US Chamber of Commerce in China, openly stated for the first time that the USA fears and absolutely wants to avoid a new “invasion” of “made in China” products. Yellen said China is “too large an economy to try to achieve export-led growth” and would instead benefit from a reduction in industrial overcapacity that “puts pressure on other economies.”

The EU has previously said that a new wave of Chinese exports would bankrupt many hundreds, if not thousands, of European companies, causing a spike in unemployment. Among the countries most at risk is Germany, which has privileged trade relations with China.

Yellen said she understands that the Chinese government’s support for manufacturing is closely tied to domestic development goals. However, the US Treasury Secretary explained, this “currently results in production capacity well exceeding China’s domestic demand, as well as the global market’s tolerance threshold.” From a US perspective, the risks associated with industrial overcapacity are amplified in “emerging” sectors, such as electric vehicles, lithium batteries, and photovoltaic panels. “Addressing overcapacity and, more generally, considering market reforms is in China’s interest,” Yellen emphasized.

In recent weeks, several countries, including the USA and Australia, have announced billions of dollars of investment in manufacturing components for renewable energy production. The interests of US manufacturers to cope with China’s dominance have led Washington to abandon its differences with Russia to obtain supplies of critical goods, including rare earth elements and other strategic products.

While the White House prefers to “behave with restraint” and not advertise its growing business with the Kremlin, Russian sources said that in February 2024, the United States resumed imports of indium from Russia, a versatile and precious metal that finds numerous applications in sectors ranging from electronics to solar panels. Overall, Russian exports to the United States rose to $287.9 million in February, up from $244 million in the previous month. Russian exports are currently dominated by chemical fertilizers: in February, the USA imported $158.5 million worth of nitrogen and potash fertilizers, while last year US imports of Russian chemical fertilizers totaled $1.4 billion. “This flow has never been interrupted or reduced,” said a source in the Russian Ministry of Agriculture. US imports of Russian uranium remain a separate chapter, reaching $1.2 billion in 2023, which is +43% over 2022 and the highest since 2010.