New Delhi

US Treasury Secretary Janet Yellen is on a high-stakes, four-day dialogue with Chinese officials, to address the implications of China's surplus manufacturing capacity and the growing hurdles faced by American companies in the Chinese market.

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According to Reuters, Yellen's discussions with Guangdong Province Governor Wang Weizhong and Vice Premier He Lifeng indicate a continuation of the US-China economic dialogue.

However, the tone of these talks is anticipated to be more confrontational than previous engagements.

The Biden administration has been alarmed by China's overproduction in sectors such as electric vehicles (EVs), solar panels, and semiconductors.

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These excess products are overwhelming global markets, aggravating a domestic demand slump in China and causing distress to manufacturers in other countries.

Yellen says that this overproduction is unfavourable both to China's economy and to producers worldwide.

Although she has refrained from explicitly threatening new trade barriers, Yellen conveyed during her Guangzhou trip that she is open to implementing further measures to safeguard the growing American supply chain for EVs, batteries, solar power, and other commodities from competitively priced Chinese imports.

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While the US Treasury does not expect a major policy shift from China following these meetings, it considers it crucial to clarify the adverse effects of overinvestment in these sectors on the global economy.

In contrast, Chinese state media dismisses US apprehensions about manufacturing capacity as "China-bashing," pointing out the West's historical practices of surplus products seeking markets abroad once domestic demand is fulfilled.

Parallelly, the US Commerce Department and Chinese Commerce Ministry officials assembled in Washington to deliberate on commercial and investment issues.

Commerce Undersecretary Marisa Lago voiced "strong concerns regarding growing overcapacity in a range of Chinese industrial sectors".

Conversely, China's Vice Minister of Commerce, Wang Shouwen, highlighted several concerns, including US tariffs on Chinese imports, sanctions, and perceived unfair treatment of Chinese companies.

Wang advocated for economic and trade relations between China and the United States to act as a stabilising force.

Yellen's itinerary also includes meetings with international business leaders in Guangzhou and participation in an event hosted by the American Chamber of Commerce.

(With inputs from Reuters)