US Treasury team heads to China to talk subsidies, economic policies

WASHINGTON — The Biden administration has sent five senior US Treasury officials to Beijing this week for economic talks that will include China’s “non-market” policies that are adding excess industrial capacity, a Treasury official said on Monday.

The delegation, led by Treasury Undersecretary for International Affairs Jay Shambaugh, planned to hold frank conversations on Monday and Tuesday as part of the US-China Economic Working Group about Beijing subsidies that the US says encourage overproduction of goods, potentially flooding global markets.

Affected industries include electric vehicles, a sector whose development in the United States the Biden administration is trying to boost with its own tax subsidies.

The group will discuss the US and Chinese economic outlooks, investment screening regimes for national security in both countries, and opportunities to cooperate on climate change and debt relief to poor countries, the Treasury official said.

The emphasis on China’s industrial subsidies comes as the Biden administration is continuing a review of US tariffs imposed on hundreds of billions of dollars worth of Chinese imports by former President Donald Trump.

US Treasury Secretary Janet Yellen and other senior administration officials have called for the punitive duties of up to 25% to be shifted to a more strategic focus.

Mr. Trump, the expected Republican presidential nominee, has signaled he would double down on stronger tariffs if elected, calling for China’s most-favored nation trading status to be revoked, a move that would effectively raise nearly all tariffs on Chinese goods. President Biden is expected to take a tough but more nuanced approach to China.

The meeting is the third since Secretary Yellen and her Chinese counterpart, Vice Premier He Lifeng, launched the group in September alongside the parallel Financial Working Group.

That group met in Beijing in late January, with Treasury officials receiving assurances that Chinese banks were “doing well” despite China’s real estate and financial market turmoil, according to Ms. Yellen.

The meetings are the first for the economic group in Beijing. The group last met in San Francisco ahead of November’s Asia Pacific Economic Cooperation Summit after an initial virtual meeting. — Reuters