Updated February 24th, 2024 at 13:17 IST

China's capacity concerns, dollar stable: US Treasury Official

Addressing the issue of overcapacity, Adeyemo stressed the importance of maintaining a level playing field for global competition.

Reported by: Business Desk
Flag of China | Image:Pixabay
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China capacity concerns: During a Council on Foreign Relations event in New York, US Deputy Treasury Secretary Wally Adeyemo addressed concerns regarding China's surplus manufacturing capacity and its potential impact on the global economy. 

Despite acknowledging China's current economic challenges, Adeyemo expressed confidence that they are unlikely to impede US economic growth in the near future.

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Adeyemo highlighted his fundamental concern about the overflow of excess capacity from China into the global economy, particularly in sectors such as electric vehicles and solar panels. 

He said that China's heavily subsidised manufacturing sectors, similar to steel and aluminium industries, are producing more goods than can be consumed domestically.

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Addressing the issue of overcapacity, Adeyemo stressed the importance of maintaining a level playing field for global competition.

 He noted that US tariffs and tax credits for electric vehicles and their batteries are intended to prevent Chinese EVs from saturating the US market, thereby allowing American firms to compete fairly.

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In discussions with Chinese counterparts, Adeyemo stressed the need for China to compete on equal terms with countries worldwide, not just the United States. 

He indicated that Treasury Secretary Janet Yellen is expected to raise concerns about Chinese excess capacity during the upcoming Group of 20 finance ministers meeting in Sao Paulo, Brazil.

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Regarding the potential impact of US sanctions on the dollar's status as the world's reserve currency, Adeyemo remained optimistic. He underscored the importance of multilateral and targeted sanctions to maximise their effectiveness while downplaying concerns about damage to the dollar's dominance.

Adeyemo credited Biden administration policies, including investments in infrastructure, semiconductors, and clean energy technologies, for enhancing the attractiveness of the United States as an investment destination. 

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He expressed confidence that as long as these policies continue, the US financial system and the dollar will remain dominant globally.

In conclusion, Adeyemo reassured stakeholders that despite challenges posed by China's excess capacity and geopolitical tensions, the United States remains steadfast in maintaining stability and dominance in the global economy.

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(With Reuters Inputs)

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Published February 24th, 2024 at 13:17 IST