Yellen warns China's industry ramp-up is distorting world economy

US TREASURY Secretary Janet Yellen said she plans to press China in an upcoming visit to the country on a ramp-up in its industrial capacity that’s distorting the global economy.

“China’s overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world,” Yellen said in excerpts of remarks she’s set to deliver on Wednesday (Mar 27) on a visit to Georgia. “We have raised overcapacity in previous discussions with China and I plan to make it a key issue in discussions during my next trip there.”

Yellen is visiting Norcross, Georgia, to showcase the reopening of a US solar-cell manufacturing facility that shut in 2017 under the pressure of “cheap imports flooding the market.” China today dominates the global solar energy industry after years of policy support for its domestic companies.

China’s industrial-policy legacy “led to substantial overinvestment” in products including steel and aluminum, which aided that country’s production and employment “but forced industry in the rest of the world to contract,” Yellen said.

“Now, we see excess capacity building in ‘new’ industries like solar, EVs, and lithium-ion batteries,” Yellen said in the excerpts released by the Treasury.

The US Treasury chief is expected to head to China for a second trip since Washington and Beijing re-engaged in high-level diplomacy. BLOOMBERG