Treasury Secretary Janet Yellen asserted she would push Beijing’s senior leadership to address China’s overcapacity during her trip to the nation in April.
Speaking on Wednesday from solar manufacturer Suniva’s soon-to-reopen plant in Norcross, Ga., Treasury Secretary Janet Yellen promised to push China’s senior leadership to address their nation’s green energy product overcapacity, which threatens to unravel the U.S. solar industry’s resurgence. The Secretary travels to China for a second time during her term next month.
“We have raised overcapacity in previous discussions with China and I plan to make it a key issue in discussions during my next trip there,” Yellen said on Wednesday. “I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy, as China itself acknowledged in its National People’s Congress this month. And I will press my Chinese counterparts to take necessary steps to address this issue.”
Much stands at risk if the Biden administration fails to curtail harm from Chinese overcapacity, especially in the U.S. solar industry. American solar factories saw decades of decline and closings before the Inflation Reduction Act sponsored a renaissance. Indeed, 20% of solar manufacturing jobs in the United States were lost between 2016 and 2020, according to Yellen.
During a barrage of Chinese solar panel dumping in the 2010s, America’s solar panel manufacturing industry collapsed, leading to the shuttering of Suniva’s Norcross factory in 2017. That same year, Suniva fought back and filed a successful trade case that led to tariffs on solar cells and modules. Those tariffs, coupled with funding in the Inflation Reduction Act, have cleared the way for the solar company to restart its factory this spring.
IRA tax credits have radically reinvigorated this valuable sector, and companies have announced more than $76 billion in clean energy manufacturing investments since President Biden took office, according to the White House. But a wave of cheap solar imports threatens to derail that progress.
A recent BloombergNEF report found that the U.S. imported a record high of solar panels between January and November 2023, with the bulk coming from Southeast Asia. Troublingly, China uses this region to ship its solar panels to the United States with the aim of evading U.S. tariffs, the Commerce Department found. However, Biden imposed a moratorium on additional solar panel tariffs that prevents Commerce from addressing this circumvention until this summer.
As BloombergNEF Senior Analyst Pol Lezacano said in the Financial Times:
“The IRA subsidies are hugely lucrative, but they’re still not enough to compete against cheap imports,” Lezcano said, adding that a “new protectionist measure” would be necessary to make American manufacturing competitive.
That Yellen, who has advocated for greater cooperation with China in the past, condemns Beijing’s market distortion could signal growing consensus in the White House that greater trade enforcement need to be put in place.
“As we look ahead, American companies will be able to continue to take advantage of President Biden’s economic agenda to invest and help build our new economic future. Success is not preordained. American companies will have to put in hard work and innovate, and we’ll have to navigate challenges to come. We’ll need to work to ensure there’s a level playing field on which companies around the world can compete,” Yellen said.