President Biden warns that a new wave of cheap Chinese products poses a threat to American factories. There is no sign of this in official trade data, which shows that China's steel imports are down sharply from last year and that the gap between what the United States sells to China and what it buys is at a post-September low. pandemic.
But the president's aides are looking beyond those numbers and focusing on what they call troubling signals coming from China and Europe. That includes data showing China's growing desire to churn out big-ticket goods like cars and heavy metals at a pace that far outpaces domestic consumer demand.
China's generous subsidies, including loans from state banks, have helped prop up companies that might otherwise have folded in a struggling national economy. The result is, in many cases, a significant cost advantage for Chinese manufactured goods such as steel and electric cars.
The U.S. solar industry is already struggling to compete with Chinese exports. In Europe the problem is much broader. Chinese exports are spreading across the continent, to the chagrin of political leaders and business executives. They could soon pose a threat to some of the American companies that Biden has sought to support with federal grants and tax incentives, many of which come from his 2022 climate bill, US officials warn.
Seeking to avoid a similar fate, Biden has promised new measures to protect American steel mills, automakers and other businesses from what he calls “trade shenanigans” by Beijing.
European officials are struggling to counter the surge in imports, an issue they focused on this week as Chinese President Xi Jinping visited the continent for the first time in five years. In a meeting with Xi and French President Emmanuel Macron on Monday, Ursula von der Leyen, president of the European Commission, urged Xi to tackle the wave of subsidized exports flowing from her nation's factories to Western countries.
The frustration expressed by European officials mirrors fears that Biden and his aides have conveyed to Beijing: that it is deliberately using state support to gobble up market share in key sectors and drive foreign competitors out of business, as has happened in previous decades.
“These subsidized products – like electric vehicles or, for example, steel – are flooding the European market,” von der Leyen said. “The world cannot absorb China's production surplus.”
Europe has begun imposing tariffs on electric cars from China due to what local officials say is evidence of illegal state subsidies.
The United States has extensive experience with low-cost Chinese products overwhelming its markets, including a wave of solar panels that undermined the Obama administration's efforts to cultivate a domestic solar industry. This time, low-cost solar panels are once again flowing into the United States, forcing some manufacturers to delay planned investments in America.
Other goods, such as electric vehicles, have arrived more slowly, partly due to tariffs and other barriers put in place by the U.S. government.
However, Biden administration officials are closely watching Chinese production and price data and are moving to block or slow subsidized imports, particularly in sectors that are central to the president's industrial plans, such as high-energy energy technology. low carbon emissions.
Officials have complained about what they call Chinese overcapacity in public and in recent trips to Beijing by Treasury Secretary Janet L. Yellen and Secretary of State Antony J. Blinken.
Biden has proposed higher tariffs on Chinese steel and aluminum and launched investigations into Chinese automotive technologies. His administration is reviewing a wave of tariffs on Chinese goods imposed by President Donald J. Trump. We are also considering increasing some of them for strategically important sectors.
“Because Chinese steel companies produce far more steel than China needs, they end up dumping excess steel into global markets at unfairly low prices,” Biden told steel workers in Pittsburgh last month. “And prices are unfairly low because Chinese steel companies don't have to worry about making profits because the Chinese government is subsidizing them so heavily. I'm not competing. They're cheating.”
Chinese officials deny such accusations. The administration's claims “are not a market-driven conclusion, but a narrative crafted to manipulate perception and politicize trade,” Lin Jian, a Foreign Ministry spokeswoman, told reporters last week.
“The real purpose is to curb China's high-quality development and deprive China of its legitimate right to development,” he said. “There is not 'Chinese overcapacity,' but US overcapacity, caused by anxiety resulting from lack of trust and slander against China.”
Biden officials said in interviews that China's subsidized exports were starting to hurt U.S. manufacturers, including putting some foreign suppliers of components for American-made products out of business. Ms. Yellen said in a speech last month that she had warned local officials during a trip to China about the “negative fallout that overcapacity can create for the global economy.”
Some current and former Biden administration officials say it will take a global effort to defeat China's export strategy. This includes better cooperation between the United States, Europe and other wealthy allies, which is expected to be high on the agenda of Group of 7 leaders when they meet in Italy next month.
That effort should also include developing nations like Brazil and India, which have begun to push back against Beijing's trade practices, said Brian Deese, former director of Biden's National Economic Council and architect of the president's green industrial strategy.
“What we should do is build a broad international coalition to impose harmonized tariffs on Chinese industries where there is excess capacity,” Deese said.
Such an effort, he said, could prove crucial to protecting U.S. companies' investments in areas such as the next generation of advanced automotive batteries and energy storage, giving them room to breathe instead of stifling artificially low-cost competition.
“I don't think it's a foregone conclusion that even as China grows, China dominates that market,” Deese said.