US, Europe must unite to respond China's industrial policy: Treasury chief Yellen

ISTANBUL

US Treasury Secretary Janet Yellen said Tuesday her country and Europe must unite to respond China's industrial policy.

"The US and Europe both recognize that China’s tremendous rise—from representing 3 percent of the global economy to 20 percent—means that it will help shape the global economy," Yellen said at the Frankfurt School of Finance and Management in Germany.

"We have also engaged directly with China on areas where the US and Europe, along with many others, are concerned by China’s actions, from its pursuit of economic coercion to macroeconomic imbalances that are leading to industrial overcapacity," she added.

Yellen said the US' critical mineral supply chains are currently overconcentrated in China, so the US has deepened economic ties with other partners and allies to build resilient supply chains that advance its energy and economic security.

"We have also engaged directly with China on areas where the US and Europe, along with many others, are concerned by China’s actions, from its pursuit of economic coercion to macroeconomic imbalances that are leading to industrial overcapacity," she said.

"China’s industrial policy may seem remote as we sit here in this room, but if we do not respond strategically and in a united way, the viability of businesses in both our countries and around the world could be at risk," Yellen added.

She said China's industrial overcapacity not only poses a threat to companies in the US and Europe, but it could also prevent countries around the world, including emerging markets, from building the industries that could power their growth.

Yellen's comments came a week after President Joe Biden administration increased tariffs on $18 billion worth of imports from China, which include measures on steel, aluminum, semiconductors, solar cells electric vehicles and batteries.

The US last Thursday also banned 26 Chinese textile firms due to forced labor concerns regarding Uyghurs, while 21 of those firms source or sell cotton from Xinjiang Uyghur Autonomous Region, according to the Department of Homeland Security.