Chinese companies will face “significant consequences” if they help Russia in its aggression against Ukraine, launched in February 2022 and not yet condemned by Beijing. US Treasury Secretary Janet Yellen conveyed the warning from President Joe Biden's administration to Chinese Vice Prime Minister He Lifeng during the two-day discussion held in Guangzhou, then getting the green light for the start of “intense exchanges for balanced economic growth », in the face of US and global fears about the Dragon's hyper-subsidized production overcapacity.
“Secretary Yellen emphasized that companies, including those from the People's Republic, must not provide material support for Russia's war on Ukraine, including support for Russia's defense industrial base, otherwise there will be significant consequences,” the Department reported of the Treasury at the end of the talks, when rumors about the possibility of Chinese rescue are multiplying, including the latest one about satellite intelligence. As for trade, however, “they will facilitate discussion on macro imbalances, including their connection to excess productive capacity, and intend to use the opportunity to support a level playing field for American workers and businesses”, clarified the former president of the Fed.
The parties also agreed to start a dialogue on combating money laundering, according to the US readout. Yellen, who moved to Beijing in the evening for the final appointments of her five-day visit that include meeting with Premier Li Qiang, noted that exchanging views on balanced growth would create the framework for listening to each other's assessments.
«I think they realize how worried we are about the implications of their industrial strategy, about the possibility of flooding our markets with exports that make competition difficult – observed Yellen -. It's an issue that won't be resolved in an afternoon or in a month, but I think they felt that this is an important issue for us.” Overcapacity has been a problem for China in the past, but the phenomenon has taken the form of emerging risks in sectors such as electric vehicles, batteries and solar energy products amid the energy transition, undermining workers and competing companies in the US, Mexico , India, EU and Japan.
China's state news agency Xinhua reported that the two sides agreed to discuss a series of issues including the balanced growth of the United States, China and the global economy, as well as financial stability, sustainable finance and cooperation in fighting to money laundering. And he added that China responded comprehensively on the issue of production capacity, but did not provide details.
Beijing then expressed serious concern about the American trade and economic measures that limit China's “right to development”, as President Xi Jinping defined it in the phone call a few days ago with Biden, between sanctions and restrictions on the export of technology, chip in the lead.However, the real risk, without corrections from the Chinese side, is that a new global trade battle will be unleashed with tariffs and protectionist barriers.