By David Lawder
FRANKFURT (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday that the U.S. and Europe need to respond to China’s industrial policies in a “strategic and united way” to keep manufacturers viable on both sides of the Atlantic.
In remarks on the importance of the U.S.-European alliance in Frankfurt, Yellen said China’s excess industrial capacity threatened both American and European firms as well as the industrial development of emerging market countries.
“China’s industrial policy may seem remote as we sit here in this room, but if we do not respond strategically and in a united way, the viability of businesses in both our countries and around the world could be at risk,” she said.
Last week, the Biden administration announced steep new tariffs on Chinese electric vehicles (EVs), solar products, semiconductors, battery parts, steel and other strategic industries.
Yellen had warned Chinese officials on a trip to Guangzhou and Beijing in April that the U.S. would not accept their excess production of these goods that would flood global markets with cheap exports.
In remarks later at the TechQuartier technology and finance incubator in Frankfurt, Yellen said Chinese production in these sectors significantly exceeds global demand, threatening the development of clean energy industries around the world. The Biden administration is taking action to protect U.S. workers and firms from being undercut by “unfair Chinese economic competition.”
She added that Chinese industrial capacity will be a focus of the Group of Seven finance meetings later this week in Stresa, Italy.
“We want to see healthy green technology sectors, from innovative start-ups to green manufacturing factories, in the United States, Europe, and around the world, not just in China,” Yellen said.
FROZEN RUSSIAN ASSETS
Yellen, who received an honorary degree from the Frankfurt School of Finance and Management, said the European Union and other countries were taking similar actions to use their own authorities to investigate potential trade remedies for Chinese EVs and other products.
Yellen also called for Europe and the U.S. to stand together against Russian aggression and Iranian “support for terrorism,” including agreeing on a way to unlock the value of some $300 billion worth of frozen Russian sovereign assets to aid Ukraine.
“That’s why I believe it’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen said. “This will be a key topic of conversation during G7 meetings this week.”
Yellen also is pushing for the G7 finance leaders to agree at their meetings this week on a plan to use the income stream from the frozen Russian sovereign assets to back a larger loan to Ukraine.
(Reporting by David Lawder; editing by Mark Heinrich, Alex Richardson and Paul Simao)
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