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China’s Troubles Won’t Deter US Economy, Says Treasury’s Adeyemo, Stresses Excess Capacity Concerns

China's Troubles Won't Deter US Economy, Says Treasurer
China's Troubles Won't Deter US Economy, Says Treasurer

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China’s Troubles Won’t Deter US Economy, Says Treasurer

On February 23, U.S. Deputy Treasury Secretary Wally Adeyemo expressed concerns about China’s excess manufacturing capacity impacting the global economy, despite the belief that China’s current economic challenges are unlikely to slow U.S. growth immediately.

Speaking at a Council on Foreign Relations event in New York, Adeyemo emphasized that while he is not worried about China’s economic headwinds significantly affecting the U.S. in the short term, he is fundamentally concerned about the potential spillover of China’s excess manufacturing capacity onto the global stage. He highlighted China’s heavily subsidized manufacturing capacity in industries like electric vehicles (EVs), solar panels, steel, and aluminum, producing more goods than China can consume.

Adeyemo noted that addressing this issue is crucial, as overcapacity from China is likely to impact the global economy. He cited U.S. tariffs and tax credits for EVs and their batteries as measures that will help ensure fair competition and keep Chinese EVs from flooding the U.S. market.

The U.S. Treasury Secretary, Janet Yellen, is expected to discuss these concerns about Chinese excess capacity with counterparts at the upcoming Group of 20 finance ministers meeting in Sao Paulo, Brazil. Adeyemo emphasized the importance of fair competition, stating that China needs to compete on a level playing field not only with the United States but also with countries worldwide.

Addressing another topic, Adeyemo downplayed the potential damage to the U.S. dollar’s status as the world’s reserve currency due to the imposition of sanctions. He stressed the importance of multilateral and targeted sanctions for maximum effectiveness. Adeyemo’s perspective is that the strength of the U.S. economy, rather than the use of sanctions, will be the determining factor for the dollar’s role in the global economy.


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