US to vent overcapacity complaints in Beijing talks

After railing at Beijing for a decade about Chinese dominance in the solar panel sector, Washington now is complaining that China heavily subsidized its electric-vehicle (EV) and semiconductor makers to boost global market shares – in the process creating overcapacity that also helped knock prices below competitors’ costs.

At the beginning of this year, the US Commerce Department’s Bureau of Industry and Security (BIS) launched a new survey to identify how US firms are sourcing current-generation and legacy chips (28 nanometers or above).

On January 30, US Commerce Secretary Gina Raimondo warned that Chinese EVs can pose a national security threat to the US as they can collect huge amounts of personal information. It’s the first time that Washington raised the matter to national security level.

And, now, senior economic officials from the United States and China reportedly are scheduled to meet face-to-face in Beijing this week to discuss those and other bilateral trade issues.

A five-person delegation from the US Treasury, led by Undersecretary for International Affairs Jay Shambaugh, will have “frank conversations” with Chinese counterparts around issues including China’s industrial overcapacity, which the Americans fear could flood international markets with cheap products, the reports said.

US officials will use the chance to express concerns about China’s use of non-market economic practices such as government subsidies, an unnamed Treasury official told CNN and the New York Times.

Overcapacity

Some commentators said western countries are worried that they will have to pay the price one day for their over-reliance on cheap Chinese goods, just as Europe struggled to stop using Russian gas when the Ukraine war broke