US-China economic flashpoints in Yellen's China trip

Since U.S. Treasury Secretary Janet Yellen visited Beijing last year, the world's two biggest economies have resumed regular talks and averted major escalations in tensions.

But the countries still trade barbs on economic issues as they battle for superiority in advanced technologies and work to secure critical supply chains.

As Yellen arrives in China on Thursday, what issues does she face?

 Industrial overcapacity 

Washington is wary that cheap Chinese exports could flood global markets, citing green energy sectors like solar and electric vehicles.

The United States is working to build its own supply chains in these areas.

Chinese banks have facilitated major new borrowing for the country's manufacturing sectors, extending it nearly $700 billion in new loans in the third quarter of 2023, from the prior year, said the Atlantic Council. It added this was often at below-market interest rates.

With new factories making products from EVs to batteries, there are fears Beijing could lean on the global market to absorb production that domestic demand cannot absorb.

"That's going to have an impact not only on advanced countries like the United States and (in) Europe, but also on many developing countries," said Asia Society Policy Institute vice president Wendy Cutler.

China has acknowledged risks from overcapacity but it is unclear if Beijing will take concrete steps to address this.

"Beijing and Washington are unlikely to see eye-to-eye on the issues of overcapacity," added Yun Sun, senior fellow at the Stimson Center.

China will see the focus on overcapacity in clean energy as a new U.S. strategy to choke Chinese exports, she added.

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