Yellen Plans To Confront China For ‘Unfair’ Clean Energy Subsidies

Yves here. Treasury Secretary Janet Yellen is going to China next month and plans to press China on its green energy industrial policy. There is an interesting question as to where to draw the line between subsidies that are anti-competitive versus ones considered to be kosher.

The US has a lot to answer for here, in terms of how badly we have neglected our industrial base and allowed financiers to engage in short-termism that has vitiated R&D programs intended to give a leg up. I have referred from time to time to a case study in Marianna Mazzucato’s The Entrepreneurial State, in which the Federal government sponsored LED flat panel research, with the intent of giving a head start to US manufacturing. Venture capitalists refused to back any LED companies, pooh-poohing the potential returns.

The flip side is expert like Michael Pettis have pointed out the simply massive proportion of GDP that China had been devoting to real estate development. Now that prices are seriously in reverse, to the point of being deflationary, China turned to promoting investment in green energy. This has purportedly occurred on such a scale as to blunt the impact of the housing bubble unwind. As Dima of Military Summary would say, “That’s a lot!”

I am frustrated at the lack of much in the way of data (to its credit, the post below does provide some). The loan increase below does not prove the scope of government support. Nevertheless, such a big rise does not look entirely organic:

Of course, there is also a philosophical issue. Many experts concede that getting enough consumer uptake of green energy sources and products will in fact require a lot of government support, and that includes potentially hefty subsidies. So if the US and EU are not willing to provide enough backing to get these products used on a widespread basis, should we be kvetching that China is filling the gap? This is yet another case where some movement in the direction of trying to save the planet gets tangled up in commercial interests and the desire to preserve employment.

Hopefully we will soon see some informed commentary as to whether Yellen’s charges are in line with WTO rules, or are mainly politically-driven noise-making.

By Alex Kimani, a veteran finance writer, investor, engineer and researcher for Originally published at OilPrice

  • Yellen: I intend to warn Beijing that its national underwriting for energy and other companies is creating oversupply and distorting global markets.
  • Yellen made the comments after visiting Georgia to see a newly reopened solar cell manufacturing plant.
  • A couple of days ago, China filed a complaint against the U.S. at the World Trade Organization, for electric vehicle subsidies arguing the requirements are discriminatory.

U.S. Treasury Secretary Janet Yellen has revealed that she intends to warn Beijing that its national underwriting for energy and other companies is creating oversupply and distorting global markets when she pays the country an official visit.

I intend to talk to the Chinese when I visit about overcapacity in some of these industries, and make sure that they understand the undesirable impact that this is having–flooding the market with cheap goods- -on the United States, but also in many of our closest allies, Yellen said in a speech in Norcross, Georgia.

“I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also productivity and growth in the Chinese economy, as China itself acknowledged in its National People’s Congress this month,” she added. 

Yellen made the comments after visiting Georgia to see a newly reopened solar cell manufacturing plant, which closed shop in 2017 because of stiff competition from factories in China. The factory has, however, re-opened thanks to generous solar and clean energy tax credits in the 2022 Inflation Reduction Act.

A couple of days ago, China filed a complaint against the U.S. at the World Trade Organization, for electric vehicle subsidies arguing the requirements are discriminatory.

China has pumped in more than $50 billion in wafer-to-solar panel production lines, 10x more than Europe, and also controls a staggering ~95% of the world’s polysilicon and wafer supply. Last year, the International Energy Agency warned of the dangers of the world relying so heavily on China’s solar anc clean energy sector.

The world will almost completely rely on China for the supply of key building blocks for solar panel production through 2025. This level of concentration in any global supply chain would represent a considerable vulnerability,” the agency wrote in a special report.

China is so dominant that it’s now, single-handedly, changing global solar standards: Last year, a Chinese IT columnist declared that large silicons sized between 182mm and 210mm would become the world’s standard thanks to their market share growing from 4.5% in 2020 to 45% in 2021, adding that they would probably increase to 90% in the near future.

Other than heavy investments and subsidies, Beijing has started taking extra measures in order to maintain its leading status and global market share in renewable energy manufacturing. Last year, in a mirror image of what the U.S.  has been doing with its semiconductor lithography technology, China amended its rules to ban the export of several core solar panel technologies. Following the ban,  Chinese solar manufacturers are forbidden from using their large silicon, black silicon and cast-mono silicon technologies overseas, according to guidelines published by the Ministry of Commerce and the Ministry of Science and Technology.

China’s export restraints are Exhibit A on the need to rapidly scale American solar manufacturing,” Abigail Ross Hopper, president and CEO of the U.S. business lobby Solar Energy Industries Association, told WSJ after the Biden administration launched the IRA, which has been hailed as a game-changer for the solar sector.

Although China produces more than 80% of the world’s solar panels and modules, solar exports have faced heavy tariffs imposed by the U.S. over the past decade. This has forced some Chinese manufacturers to move their facilities to countries like Malaysia and Thailand in a bid to avoid the tariffs. However, Beijing does not approve this trend because it does not want them to take their core technologies abroad. Technology experts have pointed out that China wants to prevent India from becoming a  major competitor and one of the world’s leading solar panel suppliers.

Back in 2011, the U.S. Commerce Department ruled that China was dumping solar panels in the U.S. market and imposed duties on Chinese solar panels a year later. In June 2022, the Biden administration said it would waive tariffs on solar panels imported to the U.S. from Cambodia, Malaysia, Thailand and Vietnam for 24 months after Chinese solar firms moved their operations there. Previously, the U.S. placed tariffs on solar products from these countries and even on Taiwan, a close ally, after it deemed that Chinese manufacturers had moved their operations offshore to evade U.S. tariffs.

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  1. eg

    Maybe I misunderstand something about the programs, but isn’t this “IRA good, Chinese national underwriting bad” flagrantly hypocritical?

    1. Michaelmas

      eg: but isn’t this “IRA good, Chinese national underwriting bad” flagrantly hypocritical?

      Sure. The rule-based order — we (the US) make the rules, you take the orders.

      Except this approach has increasingly become so flagrant as to be self-defeating. Yves writes, forex: “Hopefully we will soon see some informed commentary as to whether Yellen’s charges are in line with WTO rules.” Yet to what extent are WTO rules relevant any more, when the US itself systematically disregards the WTO — the US’s own tool and creation — when it doesn’t suit the US’s purposes?

      From 2019: –

      US shuts down WTO appeals court: the World Trade Organization is facing a major crisis as its appellate body loses its ability to rule on new dispute cases. The US has been blocking the appointment of new judges to protest the way the WTO does business

      The US is in effect systematically cannibalizing the international system it itself created, in the arrogance and ignorance it’s particularly displayed since the Biden administration’s arrival. See also the US suborning of the SWIFT system to hijack Russian assets over Ukraine accelerating a trend to de-dollarization by the rest of the world in response.

      1. CA

        December 8, 2019

        Trump Cripples W.T.O. as Trade War Rages
        A U.S. offensive against the World Trade Organization will effectively shutter the group’s system for settling disputes, at a time it’s most needed.
        By Ana Swanson

        WASHINGTON — The United States has spent two years chipping away at the World Trade Organization, criticizing it as unfair, starving it of personnel and disregarding its authority, as President Trump seeks to upend the global trade system…

        1. The Rev Kev

          So why didn’t old Joe overturn this all in the past three years or more and strengthen the WTO by letting more judges be appointed? Unless of course crippling the WTO was a uniparty policy.

  2. lyman alpha blob

    But somehow subsidizing cheap GMO corn so it can be overproduced and forcing that down the world’s gullet like it were a foie gras goose, distorting markets to the point it causes miss migration, is AOK.

    I’m sure China will enjoy being lectured on how it’s supposed to be done.

    1. CA

      April 1, 2010

      “We Made a Devil’s Bargain”: Former President Clinton Apologizes for Trade Policies that Destroyed Haitian Rice Farming

      President Bill Clinton, now the UN Special Envoy to Haiti, publicly apologized last month for forcing Haiti to drop tariffs on imported, subsidized US rice during his time in office. The policy wiped out Haitian rice farming and seriously damaged Haiti’s ability to be self-sufficient…

      1. JonnyJames

        Hollow gestures and hypocrisy as usual. What ever happened to all that money that the Clinton/Bush Haiti relief fund? The US orchestrated coups to oust Aristide, and now the place is a failed state. Stealing money from one of the poorest countries on earth is stooping pretty low, but apparently routine. Stealing Afghanistan’s (and Libya’s) central bank reserves and imposing siege blockade on Afghanistan is another example.

      2. steppenwolf fetchit

        Clinton only pretended to apologize. His deliberate intent was to exterminate rice-farming in Haiti so as to turn Haiti into a dumping ground for rice from Arkansas.

        Just as part of Clinton’s deliberate intent with NAFTA was to exterminate corn-farming in Mexico so as to force several million Mexicans off their farms and into the maquiladoras envisioned lining the US-Mexico border from the Pacific to the Gulf of Mexico.

        1. Felix_47

          I think you mean into the US looking for and doing low wage work so employers do not have to pay for domestic workers. The price for that is borne by the government since the children are subsidized to about the level of the parents wages, per child. (In New York and California each child costs 30,000 per year in school.) Domestic workers with their endless complaints and wage demands to enable them to survive in the US without sleeping four to a
          room end up giving you enterprises like Boeing.

          1. steppenwolf fetchit

            I am purely going on memory now, but I think I remember reading somewhere that the original NAFTA plan was to destroy the rural economy throughout Mexico in order to force millions of Mexican peasant farmers off their land and into a Pacific-to-Atlantic zone of maquiladoras which would be set up to intercept them all.

            But at nearly the same time, Clinton oversaw the admission of China into the WTO and used that as an excuse to secure MFN status for China. And most of the maquiladoras got built in China instead.

            So all the Mexicans driven off their land by the NAFTA engineers , having no belt of maquiladoras to intercept them on the Mexican side of the border, kept moving into the US. That is why I have suggested from time to time that they be called Naftastinians, in that they were economic exiles social-class-cleansed off their land and driven into America.

            1. CA

              “I am purely going on memory now…”

              Forgive me, I read this accidentally, but this is entirely incorrect. Memory can play tricks. While ferocious name-calling, as below, is unfortunate.

              NAFTA negotiations were completed in August, 1992. China did not become a member of the WTO until December, 2001, and George Bush applied tariffs against Chinese imports early in 2002. Between 1992 and 2001, Mexican real exports had increased by more than 200% and the increase in Mexican exports continued from there.

              1. steppenwolf fetchit

                Thank you for correcting my memory on when China was let into WTO and then given MFN status with America.

                Now . . . if someone can tell me that I am wrong about the intention behind NAFTA and its effect on the peasant corngrowers of Mexico, I will thank them for correcting me on that as well.

  3. Michael Hudson

    The new nitwit phrase is Yellen’s “excess capacity.”
    Any country that exports is said to have excess capacity — that is, it produces enough beyond its domestic needs to export!
    Countries “weaponize” their state-sponsored “excess capacity” by making other countries “dependent. And the State Dept. says that any imports from a US opponent is “dependency,” letting the exporter “weaponize trade.”

    1. JonnyJames

      Thank you for pointing out terms and use of language. There are so many euphemisms and Orwellian language, I need to keep my NewSpeak dictionary handy at all times. (J is For Junk Economics comes in handy as well to translate terms into standard traditional English)

    2. digi_owl

      Ah yes, the same sort of excess capacity that after WW1 gave us consumerism by way of Bernays’ Freudian marketing.

      What comes around goes around, Yellen…

  4. thoughtfulperson

    We just had a 200 acre forrest fire on a Red Flag day here in central VA. We’ve got 20 years more of climate change getting worse if we immediately stop polluting with more co2 and ch4. These 200 acre fires of 2024 will be nothing compared to what’s coming.

    What should be happening is all these wealthy western governments upset about Chinese investment in green tech should cut their bloated “defense” budgets and invest as much as China is themselves, or more! They should be welcoming any investments and allow consumers to buy the most affordable green products- subsidize the locally made items if needed don’t make green tech more costly!

    1. ISL

      I was going to say the same. If there is to be any hope in meeting climate change goals all nations need to do what China is doing. Instead the hypocrisy is one feature that will kill off civilized humanity. I do wonder if Yellen (or the lot) can see the hypocrisy flowing out of her (their) speaking orifice(s)

    2. steppenwolf fetchit

      The other approach would be to re-protectionize America as it effectively was during the New Deal era and criminalize (years of hard prison time) the underpricing of anything ( such as solar panels) made in America at below a legally set and enforced minimum price. And prevent the import of anything into America that would be sold at below that legally set and enforced minimum price.
      People who pretend they believe in a living wage would have to pretend to believe in a living wage price for thingmakers in America. People who don’t want to pay a living wage price for things don’t deserve to have things at all.

      Would China respond to that by expropriating every American investment in China? Good! Every American who invested in China was/is an economic treasonist who deserves to be punished for his/her investment treason against America. They deserve to lose everything they have and to spend the rest of their lives sleeping in soggy boxes under leaky bridges.

      We need National Greenism in One Country.

  5. voislav

    Supreme irony for me is that China is doing something essential to its national security, reducing its dependence on imported fossil fuels, most of which are shipped by sea lanes vulnerable to interference from US and its allies. A good strategic move on their part.

    1. CA

      “Supreme irony for me is that China is doing something essential to its national security…”

      From April 2011 and the Wolf Amendment, the US has had a formal policy of containing China. This has meant containing China from space, from the Global Positioning System, to the very waters about China which are patrolled by US ships of war.

    2. digi_owl

      China was supposed to be USA’s offshored factory, not a independent player on the world stage. This the same way IMF has made the global south the money crop farm of the north Atlantic nations. No need for overt colonialism when they discipline themselves for basic food imports.

  6. Louis Fyne

    The US green-industrial policy is totally backwards. The US shouldn’t be wagging fingers when our house is in disorder.

    as another example, IMO, the money spent on the $7,500 EV credit would have greater positive impact on the environment and EV uptake if that money was directed for public transit buses, last-mile delivery trucks, work vehicles, etc—-not for a $70,000 Tesla that gets used for only 9,000 miles per year.

    then look at the debacle surrounding the USPS’s efforts to procure a new EV delivery fleet.

    But hey, virtual signaling is de facto western policy for many issues (see also Ukraine or the Mideast)

    1. NotTimothyGeithner

      The end of subsidies is going to wreck domestic solar production. As dumb as this trip seems, it’s basically a plea that Harris will be better than Trump.

    2. Glen

      Agree with all!

      That’s what I’ve been thinking too. Much easier for get EV technology in use in fleets. Much easier to get solar in new construction.

      And it should be possible to both protect national efforts and allow Americans access to China solar technology too.

      But thinking you’re going to “catch up”? That was possible twenty years ago, I’m not sure what it would take today.

  7. The Rev Kev

    Don’t have much respect for Janet Yellen because of the unworkable schemes that she comes up with like the ill-fated oil price cap on Russian oil and the spectacularly stupid idea of just taking Russian assets and sending them to the Ukraine. Nice way to gut the economy with blowback that. But maybe she should be more honest with the Chinese and give them additional demands. Such as cutting way back on research & development as they spend far more on this that the US does. And cutting back on the number of STEM graduates as having so many qualified people gives China an unfair advantage. And is all that modern infrastructure really necessary? The pity is that China could sell cheap EV cars which would make it far more affordable for people on limited means in the US which would increase demand for more cars and charging stations but the US will never allow that.

  8. john r fiore

    Hey Janet I want to buy a BYD seagull for $9200.00…not an overhyped, crap Tesla for $55,000.00…let those cars in…

    1. Paris

      I was going to make this point: in the end, the helmet-haired woman is only interested in the gains of her friends, screw the populace. The American consumer can always be fleeced.

      1. LawnDart

        Need fleece to be fleeced: they’ve taken to scalping us, butchering our carcasses, and rendering the bones.

  9. TomDority

    Well, in America, we can take a company that produces a profitable per unit product while paying good wages and then, with the advanced financial engineering we have developed: cut wages and benefits, lay off people and manage to bankrupt the company. Of course the same advanced financial engineering has raised the cost of living and doing business beyond the ability to compete on global markets in a fair way.
    Thus we resort to cheating on a global market through enforced debt peonage and continuing disruptions of the piece. Sort of like a mean drunk on steroids.

    1. Felix_47

      I would add that American legal and medical engineering is the equal of American financial engineering.

  10. CA

    March 28, 2024

    Bidenomics Is Making China Angry. That’s OK.
    By Paul Krugman

    [ Repeatedly, continually, attacking a thoroughly benign 5,000 year old civilization of 1.4 billion is definitely not OK, but entirely wrong. Krugman and economic buddies have been attacking and ridiculing China and those who would defend Chinese policy for years, so this prejudiced writing was expected. ]

    1. JonnyJames

      Ol’ Kruggie is so predictable he’s boring. He’s good for a sarcastic laugh and easy to ridicule.

  11. LawnDart

    “Now, we see excess capacity building in ‘new’ industries like solar, EVs, and lithium-ion batteries,” Yellen added.

    What is “excess capacity” when we are decades away from simply meeting demand? Does “oversupply” mean that our shoddy, poorly-designed and overpriced one-offs have trouble finding buyers, customers, in the global economy?

    New industries would also include AI, hydrogen fuel cells, and UAVs. This link is dense with details, types of subsidies and amounts of awards, of the Chinese governmental framework intended to foster development of NEVs in the emerging “low altitude economy,” monies directed at R&D, private investment, construction, production, operations, and much, much more– billions of dollars, trillions of yuan, directly injected into the economy, spread widely:

    As one aspect of the Chinese economy, these are actual plans that are being implemented today by China’s government(s), and not “gee-whiz!” dreamy or fuzzy-minded Power-Point presentations of pet-projects. They are doing this now, and we are not even at the starting-line– hell, we don’t even seem aware there’s a race going on here.

    China is setting the standards, in China, to meet Chinese needs. These are standards that don’t exist elsewhere, because this industry/new economy does not exist elsewhere: China is the first-mover, and for all of the energies and efforts this requires, it all but guarantees market dominance for the foreseeable future.

    1. digi_owl

      Excess supply is when it negatively affect Wall Street quarterlies by undercutting price projections. What we are looking at is Innovators Dilemma on a global scale. Why they are doing something tangible about it, while “we” only come up with carbon credits and other derivative schemes.

  12. David in Friday Harbor

    A few years back I attended a reception for Janet Yellen at an event that included both her informal and formal remarks. I found her to be a cloistered font of conventional wisdom and U.S. jingoism.

    An industrial policy that subsidizes actual production and consumer access to EV’s, batteries, and solar is what the world needs to stave-off the ongoing climate catastrophe. STFU Janet!

  13. Altandmain

    The motivation behind this is very simple – the US desperately wants to keep its hegemony. What Yellen wants is for China to remain poor and for the US to remain on top. She sees kicking China’s green energy transition as a threat to US hegemony and wants China to self-sabotage.

    I’ve linked this article from John Ross before, but it is so important:

    America’s culture of greed played a major role in the rapid development of China. Always focused on short term profit, including labor arbitrage. They used Chinese labor as a weapon to destroy the New Deal and the American middle class that relied heavily on manufacturing.

    What the US ruling elite didn’t understand was that not all ruling elites are as shortsighted as they are. The Chinese elite built up their nation using the transferred industrial base. It’s all backfired and China has rapidly risen to the point where it has already surpassed the US.

    There’s this myth that China is only about cheap labor or weak environment regulations. That isn’t true. If it were, we’d see jobs leaving China as their wages have gone up. Instead it’s due to investments and a serious industrial policy. Economies of scale and a long-term orientation also play a major role.

    Ultimately, Yellen’s trip will be a failure. She will be seen by the Chinese as an arrogant imperialist, trying to inflict another Century of Humiliation on China. Furthermore, who is she to lecture China? She has not demonstrated competence – her comments on inflation being temporary did not age well (and not to mention the Biden administration will do nothing about greedflation because the donors are paying Biden not to).

    So it boils down to the following:

    1. She is trying to get China to self-sabotage and trying to get the US to remain on top.

    2. She has not demonstrated competence at managing her own nation as head of the Federal Reserve and now the Treasury (and she claims a global overcapacity that China is to blame – who is to say she is any good at forecasting demand for solar panels, batteries, EVs, etc?).

    3. The US itself has ignored rule of law when the WTO rules against the US, something that has been known in China. ( That’s a big double standard for the US, a nation that endlessly lectures other nation about rule of law.

    The US spent decades promoting the “superiority” of the free market and now they are throwing a tantrum because the US is unable to compete with the Chinese on price. That’s resulted in the loss of industry for the US. That will have other consequences, such as not having a manufacturing base in the event of a war (ex: note the inability of the US to scale up artillery shells for Ukraine).

    It’s also been suggested that she may be in China to beg the Chinese to buy US Treasuries. Apparently, there are fewer foreign buyers interested in buying and China has been gradually reducing its US Treasury holdings.

    Well, all I will say is that the US freezing Russia’s foreign asset reserves have really hurt the US in the long run. Another example of a shortsighted decision. The claim that property rights were sacrosanct in a capitalist economy is untrue. The world knows that the US will freeze and perhaps outright steal your financial securities if you do not bow to American imperialist geopolitical demands.

    China doesn’t exist to serve the beck and call of the US ruling elite, to add another zero to their net worth after looting the US and the rest of the world. The Chinese government exists for the benefit of China, unlike the US government that exists for the benefit of the plutocracy at the expense of the American people.

    The self-inflicted nature of all of these problems seems to escape the American ruling class, which is too craven, greedy, and short-sighted to understand the long-term consequences of their actions.

    1. CA

      Excellent comment and excellent further analysis:

      April 4, 2023

      The U.S. is trying to persuade China to commit suicide
      By John Ross

      China has not only set a goal of short-term economic acceleration in 2023 compared to the pandemic period but also a clear strategic economic target for 2035. At the 20th Party Congress the latter was stated as reaching the level of a “medium-developed country by 2035”. Slightly earlier, in 2020’s discussion around the 14th Five Year plan, it was concluded that by 2035 for China: “It is entirely possible to double the total or per capita income”. These two goals are essentially the same. This target requires an average annual growth of GDP of at least 4.6% a year by 2035…

      1. Mikel

        Rather than actually try to create an economy that works for more people, they figure if every other country is somehow worse then this sh– looks better.

    2. JonnyJames

      Good points. I would add, the US routinely ignores the law and makes a mockery of the notion of rule of law daily. Imposing unilateral siege warfare on Venezuela, Cuba, Iran, Syria etc. Allowing and enabling financial crime, ignoring antitrust laws, flagrant war crimes, violations of the AECA etc. exporting weapons to Israel, Ukraine etc. The Persecution of Julian Assange is another glaring example. The Bush Jr. regime was never investigated (Obama made sure of that). Who’s going to enforce the law if the institutions of power are rotten to the core? The “Supreme Court” itself makes a mockery of the law in cases like Citizens United where unlimited political bribery is formalized.

      The US is not capable of an agreement. International cooperation is based on a minimum of mutual trust, yet that trust has been destroyed. No rational actor would trust the US to adhere to laws, it’s the unilaterally dictated “rules based order” (Do what we say, or we kill you)

      The rank hypocrisy, hubris and arrogance of the declining Empire is sickening. The Chinese are traditionally very diplomatic, but my response to Yellen would be, in Carlinesque fashion: “F off, you….fill in the blank”.

      1. digi_owl

        Basically gunboat diplomacy has lost its bite, and thus USA is like the gorilla after the chest pounding didn’t scare away the competition.

        With China getting access to the trans-Siberian railway (demonstrated by being able to send a train from Beijing to Moscow ahead of a state visit by Xi), and Russia having resources to sell to Chinese factories, increasingly the US control of the seas (basically transferred from UK after the wars) gets neutered.

    3. JohnH

      I’m enjoying the blatant hypocrisy of “free” trade fundamentalists like Krugman, people who used to demonize anyone who could be labeled as protectionist for merely intimating that there might be some problem or other with corporate-friendly, managed trade.

      Now the political winds have shifted. The foreign policy blob has given up the illusion that “free” trade and access to American markets could bring China under US suzerainty, as had happened with Japan. (It only took these geniuses a few decades to figure this out!)

      And lo and behold! Krugman and other free trade fundamentalist have magically become economic nationalists!!! Tariffs and sanctions suddenly make great economic sense. Long hyped consumer benefits of comparative advantage and low priced imports be damned!

      The sad part is that few in the mainstream media are about to call the erstwhile free trade fundamentalists on their blatant hypocrisy. After all, if they did that, they might undermine the credibility and sway of expert opinion.

      1. CA

        ‘I’m enjoying the blatant hypocrisy of “free” trade fundamentalists like Krugman, people who used to demonize anyone who could be labeled as protectionist for merely intimating that there might be some problem or other with corporate-friendly, managed trade…’

        An important comment.

        The point of such trade advocates was always to gain a capitalist control of China. That was why China was declared capitalist, all the while China was decidedly, avowedly socialist. After all, a 5,000 year old civilisation should know what it is and should be respected in describing itself. The Western intellectual disdain for the Chinese is shockingly broad-spread, by students of capitalism and socialism as well.

      2. steppenwolf fetchit

        The reason the pro Forcey-FreeTrade MSM will not call out the erstwhile “free trade fundamentalists” on their blatant hypocrisy is because they are afraid that might lead their readers to think about a rejection of Forcey-FreeTrade ideology itself and Forcey-FreeTrade policy itself.

        Because there are two ways to solve the “blatant hypocrisy problem” here. We can either
        drop the blatant hypocrisy by re-embracing Forcey-FreeTrade and letting our Trading Enemies mercantalize America all the way down to a Haitian poverty level. Or we can drop the blatant hypocrisy by dropping Forcey-FreeTrade itself, re-embracing protectionism, and re-instituting a policy of National Economic Survival in One Country.

        We might end up as a middle income middle power by re-embracing Protectionist National Survivalism. But we will end up as one big Haiti by the continued practice of Forcey-FreeTrade and submission to economic stripmining by the better mercantilisists of the world.

    4. MFB

      With appropriate respect, China is not poor, and the US is not on top of anything except the enfeebled NATO alliance. Apart from these preliminary assumptions your observations are largely correct in my judgement.

  14. Bill R

    Thinking about all the trillions the USA gives to various industries and the way the military have used force to ensure Europe no longer have the energy to run its own industry.

  15. ISL

    Since China has not listened to anything else the US said (before the SMO), even as cloistered a apparatchik as Yellen (funny how the US is paralleling the Soviet empire) knows she will only be blowing hot air.

    It’s virtue signaling to “convince on-the-fence Trump voters” to vote for Bidenomics.

    What a plan!

  16. matt

    the united states complaining about chinese industrial dominance greatly distresses me, because the usa insists on dragging countries down instead of improving our own industrial capacity. american factories are significantly less efficient than chinese ones due to so many *solvable* factors, such as our lacking transportation systems, private equity, lack of industrial machinery, and honestly just general lack of skilled laborers.
    biden keeps investing in industries without solving the problems crippling industry in the first place. transportation costs do not need to be this high. allowing private companies to dominate rips away any chance for an economy of scale. the chinese government is run by engineers who understand these things, and it shows.
    boeing is also a good example of cost cutting and focus on profits over quality. allowing businessmen to profitmax instead of making good products. the usa needs to remake our system of value in that, profits utterly detached from any physical quantity are allowed to be the goal of industries. wish i had an incredibly clear legal policy outlined to stop that, alas, i do not. and those who should be formulating that (yellen) are just saying things instead of doing things.

  17. ChrisRUEcon

    Wot a family-blog joke …

    Not sure if this X/Twitter thread was posted here since Kelton made it, but it’s amazing in the revelation from Chinese officials that MMT is explicitly embraced by China.


    “China urgently needs to ‘liberate’ itself from traditional ideas that fiscal and monetary policy must be kept separate and that government deficits are bad, according to Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, a think tank under the Ministry of Finance.” 3/

    “Modern monetary theory at least sheds a ray of light for us to solve real conundrums and discuss what’s considered taboo in the past,” Liu said during a webinar last week. 4/

    “MMT is an important point of reference for China in strengthening the linkage between fiscal and monetary policy,” Guan Tao, a former official at the State Administration of Foreign Exchange, said at the same webinar last week. 5/

    China is going to use every fiscal advantage it has to help its industries thrive locally and globally, while the dunces here are still mired in fallacious economic theory. Someone should send Yellen a link to the “Capitalism Didn’t Make The iPhone, You Imbecile” video (via YouTube).

    1. CA

      April 21, 2022

      China’s Economists Are Getting Into Modern Monetary Theory

      MMT in focus as fiscal stimulus to become mainstay this year
      China can consider U.S.-style QE, former PBOC adviser says

      By Bloomberg

      Modern Monetary Theory can inspire China to make sure central bank easing supports government spending, several prominent economists said, as Beijing turns to fiscal policy to boost economic growth…

    2. CA

      Ratios of Debt to GDP for the 10 largest economies:,924,132,134,534,536,158,922,112,111,&s=GGXWDG_NGDP,&sy=2007&ey=2023&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1

      October 15, 2023

      General government gross debt as a percent of Gross Domestic Product for Brazil, China, France, Germany, India, Indonesia, Japan, Russia, United Kingdom and United States, 2007-2023


      Brazil ( 88)
      China ( 83)
      France ( 110)
      Germany ( 66)
      India ( 82)

      Indonesia ( 39)
      Japan ( 255)
      Russia ( 21)
      United Kingdom ( 104)
      United States ( 123)

  18. Piotr Berman

    “China has pumped in more than $50 billion in wafer-to-solar panel production lines,”

    Similar amount was pumped into Ukraine in attempt to make it “competitive” against Russia. In the meantime, one of the principal ports lacked proper protections of the bridge that can neatly close the port if collapsed (nay, it could never happen, huge ships doing weird things can happen only in Suez Canal or fyords of Alaska). USA does not lack money, but brains directed how to spend it.

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