As Yellen heads to Beijing, China worries that the U.S. is planning more tariffs on green tech

As U.S. Treasury Secretary Janet Yellen appeals to Chinese leaders to change their domestic manufacturing policies on the second day of an official visit, state media are receiving her message with skepticism, and anxiety about more U.S. tariffs on green energy products.

Yellen, who started her five-day visit in one of China’s major industrial and export hubs, has focused thus far on what the U.S. considers to be unfair Chinese trade practices in talks with senior Chinese officials.

The official Xinhua News Agency wrote Friday night that while Yellen’s trip is “a good sign” that the world’s two largest economies are maintaining communication, “talking up ‘Chinese overcapacity’ in the clean energy sector also smacks of creating a pretext for rolling out more protectionist policies to shield U.S. companies.”

Chinese government subsidies and other policy support have encouraged solar panel and EV makers in China to invest in factories, building far more production capacity than the domestic market can absorb.

The massive scale of production has driven down costs and ignited price wars for green technologies, a boon for consumers and efforts to reduce global dependence on fossil fuels. But Western governments fear that that capacity will flood their markets with low-priced exports, threatening American and European jobs.

In extended meetings with Vice Premier He Lifeng on Friday and Saturday, Yellen reiterated that the U.S. seeks “a healthy economic relationship with China that benefits both sides.” She said if China alters its policies to encourage domestic household consumption instead of subsidizing green energy, that “would be something that’s in China’s interest and it would be something that’s good for the global economy,” she said at a meeting with the American Chamber of Commerce in China on Friday.

China US Yellen

Yellen told reporters during an Alaska refueling stop en route to China that the U.S. “won’t rule out” tariffs to respond to China’s heavily subsidized manufacturing of green energy products.

The Xinhua commentary was skeptical of U.S. intentions: “it is now known by the world that Washington will not hesitate to show its protectionist teeth under the guise of national security in areas where its supremacy is challenged.”

The U.S. has made efforts through legislation and executive orders to wean itself off certain Chinese technologies in order to build out its domestic manufacturing capabilities. Many members of the White House and Congress view the actions as important to maintaining national security.

The $280 billion CHIPS and Science Act passed in 2022 to boost the semiconductor industry and scientific research in a bid to create more high-tech jobs in the United States and help it better compete with China. Additionally, last August, U.S. President Joe Biden signed an executive order to block and regulate high-tech U.S.-based investments going toward China.

Yellen moves onto Beijing on Saturday afternoon for more meetings over the weekend with senior officials, economists and the nation’s central bank governor.

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Associated Press Greater China Correspondent Ken Moritsugu in Beijing contributed to this report.

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