Flood of China tech products worries Yellen

US Treasury Secretary Janet Yellen arrived in Guangzhou yesterday with a tough message to Chinese officials - you're producing too much of everything, especially clean energy goods, and the world can't absorb it.

China is unleashing a flood of electric vehicles, batteries, solar panels, semiconductors and other manufactured goods onto global markets, the result of years of massive government subsidies and weak demand at home. Global prices for many goods are tanking, pressuring producers in other countries.

"We see a growing threat of money-losing firms that are going to have to sell off their production somewhere," a senior US Treasury official said.

In a series of meetings with top Chinese economic officials from today through Monday, Yellen will seek to convey her view that the excess production is unhealthy for China and that there is a growing drumbeat of concern about it in the US, Europe, Japan, Mexico and other major economies.

The official added Yellen would explain that "if there are trade actions around the world, it's not an anti-China thing, it's a response to their policies."

But Beijing appears to instead be doubling down on investing in more manufacturing capacity in favored high-technology sectors.

En route to Guangzhou, Yellen declined to say whether she would raise the threat of new tariffs in her meetings in Guangzhou and Beijing with Chinese Vice Premier He Lifeng and Guangdong Province Governor Wang Weizhong, who has also presided over hundreds of billions of dollars worth of recent new projects.

But she said the Biden administration was determined to develop American supply chains in EVs, solar power and other clean energy goods with investment tax credits and would not "rule out other possible ways in which we would protect them."