Trade warriors’ real fears about Beijing’s industrial overcapacity

US TREASURY Secretary Janet Yellen was frank about the purpose of her four-day visit to China last week: to persuade Beijing to stop investment in more factories for making electric vehicles (EVs), solar panels and other clean energy goods.

She claimed that China’s production capacity threatened competing firms in the US. Beijing rebuffed her, saying it would be better all round if America fostered innovation and competition within its own borders, rather than worry so much about Chinese investment in its own economy. So far, so predictable.

Western alarm at Beijing’s intention to build up its technology industries has been rising for a while now. Late last year, European Commission chief Ursula von der Leyen cited Chinese overcapacity as the primary reason for ordering an anti-subsidy investigation into EV subsidies.