US criticizes China for flooding the world with cheap goods

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Jakarta –

United States Treasury Department officials threaten to take firm action against China. The reason is, the ‘Bamboo Curtain Country’ is considered to have flooded the world with low-priced goods. The US considers this cannot be allowed.

“The whole world will respond to this, and they won’t do it in a new anti-China way, they will respond to China’s policies,” said Deputy Minister of International Affairs, Jay Shambaugh, quoted by the Financial Times, Wednesday (21/2/2024).

China is said to be carrying out dumping to support its industrial sector which is experiencing stagnation. The January purchasing managers’ index (PMI) released by China’s statistics bureau showed an increase in production. However, demand in the manufacturing sector remains muted. Only a number of large companies perform well from month to month.

China is known to provide large subsidies to the industrial sector compared to various other countries. According to a report released by the Center for Strategic and International Studies, China is estimated to provide subsidies of US$ 248 billion or Rp. 3,882 trillion (exchange rate Rp. 15,665) in 2019. Twice as much as the US.

A number of officials in the US are reportedly concerned about China’s dominance in the electric vehicle and solar panel sectors. This is because China controls more than 80% of the world’s solar panel production capacity and accounts for more than 60% of global electric vehicle sales in 2022.

China’s competitive advantage is considered to threaten the survival of these industries in the US. In fact, the Inflation Reduction Act signed by President Joe Biden in 2022 makes the US spend more than US$ 70 billion or IDR 1,095 trillion on the electric vehicle supply chain, and more than US$ 10 billion or IDR 156 trillion to encourage solar panel production.

As a result, in January 2024, Jay Shambaugh is said to have led a delegation of five senior US Treasury Department officials to China to discuss various issues. These include the potential for cooperation such as climate change, as well as Chinese subsidies which according to the US will increase excess production which has the potential to make selling products at lower prices (predatory dumping) a tempting strategy.

“We are concerned that China’s industrial support policies and macro policies that focus more on supply rather than thinking about where demand will come from are both leading to a situation where excess capacity in China will impact world markets,” Shambaugh said.

The US is not the only party concerned about this. Last fall, the European Union announced it was launching an anti-subsidy investigation into soaring imports of Chinese electric vehicles in Europe. EU Commission President Ursula von der Leyen said prices of these vehicles were “kept low” due to “large state subsidies” from China.

However, when asked about the EU investigation at a press conference on Tuesday (20/2), Chinese Foreign Ministry spokesman Mao Ning denied this. He said the rapid development in China’s automotive industry has resulted in cost-effective and high-quality products for the world.

“Every one in three cars exported from China is an electric car, which makes a significant contribution to the world’s environmentally friendly and low-carbon transition,” he concluded.

(the the)