China’s Overcapacity Poses Risks to World Economy Says Janet Yellen

China’s Overcapacity Poses Risks to World Economy –Janet Yellen, the U.S. Treasury Secretary, expressed growing concerns about the global economic impact of China's excess manufacturing capacity during her visit to China.

Yellen highlighted the potential consequences of overcapacity, such as increased exports at lower prices, which could harm American and global businesses, including those in India and Mexico.

China’s Overcapacity Poses Risks to World Economy Says Janet Yellen

"Overcapacity can lead to large volumes of exports at depressed prices, overcapacity would undercut American businesses, as well as those globally, including those from India and Mexico. And it can lead to over concentration of supply chains, posing a risk to global economic resilience," Janet Yellen, the U.S. Treasury Secretary

She warned that overcapacity could also lead to supply chain concentration, posing a risk to global economic resilience.

Yellen mentioned that the European Union had initiated an investigation into subsidies for Chinese electric vehicle exports, reflecting concerns about overcapacity threatening various industries.

She emphasized that while overcapacity is not a new issue, it has intensified, particularly in sectors where government support has led to excessive production beyond domestic and global demand.

Yellen criticized China's government for unfair treatment of foreign companies, including barriers to access and coercive actions against American firms.

According to a recent survey by the U.S. Chamber of Commerce, one-third of American firms in China reported experiencing unfair treatment compared to local competitors.

Yellen urged China to return to pro-market policies, expressing concerns about the impacts of its departure from such approaches on the U.S. and global economy.

Source : US Treasury Secretary Janet Yellen Speaks to American Business Community in Guangzhou, China

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