Yellen warns China industrial subsidies pose risk to world economy

U.S. Treasury Chief Janet Yellen called on Friday for a "level playing field" between American and Chinese companies, telling officials during a visit to southern China that Beijing's industrial subsidies threatened that balance.

Yellen arrived in the city of Guangzhou on Thursday for four days of talks with Chinese officials on what is her second visit to the world's number two economy in less than a year.

Meeting Friday morning with the governor of Guangdong — a vast province emblematic of the reforms and development that drove China's breakneck growth — she said the U.S. was committed to a "healthy economic relationship".

But, she stressed, that required "a level playing field for American workers and firms", as well as "open and direct communication on areas where we disagree".

"This includes the issue of China's industrial overcapacity, which the United States and other countries are concerned can cause global spillovers," she said.

Yellen has warned that China's huge subsidies for technology like green energy, EVs and batteries risk creating an excess of goods that then flood global markets — undercutting American and other countries' firms.

Beijing has dismissed those concerns, last month condemning an EU probe into its subsidies for EVs as "protectionism" and part of a Western effort to politicise international trade.

Washington's worries about a flood of exports come as U.S. President Joe Biden pushes to boost domestic manufacturing in clean energy — with policymakers warning that China's excess capacity could harm the growth of those industries.

The Biden administration is very sensitive to the U.S. auto industry's concerns about China and EVs, especially in an election year, said Paul Triolo,...