© Reuters. U.S. Deputy Treasury Secretary Wally Adeyemo speaks at the Royal United Services Institute in London, Britain, October 27, 2023. REUTERS/Hannah McKay/File Photo
By Sarah Harper
U.S. Deputy Treasury Secretary Wally Adeyemo expressed worries about the potential consequences of China’s surplus manufacturing capacity on the worldwide economy. Despite China’s ongoing economic challenges, Adeyemo remains optimistic that these difficulties are unlikely to have a significant impact on U.S. economic growth in the short term.
During a Council on Foreign Relations event in New York, Adeyemo stated, “I am not alarmed by China’s issues posing substantial obstacles for the U.S. economy.” He highlighted concerns related to China’s real estate sector problems, an aging population, and a deteriorating environment for private enterprises. Instead, he emphasized the overarching issue of excess manufacturing capacity from China affecting global markets.
Adeyemo pointed out that China’s heavily subsidized production capacity in various sectors, such as electric vehicles and solar panels, has led to an overflow of goods beyond its domestic demand. This surplus is bound to impact international markets. To mitigate this scenario, he mentioned the implementation of U.S. tariffs and incentives for electric vehicles and related components, aiming to safeguard American businesses and foster fair competition.
Discussing the challenges posed by Chinese overcapacity, Adeyemo stressed the importance of addressing this issue directly with Chinese authorities. He underlined the necessity for fair competition not only with the United States but also with nations globally.
Treasury Secretary Janet Yellen is set to raise concerns regarding Chinese excess capacity during discussions on the sidelines of a Group of 20 finance ministers meeting in Sao Paulo, Brazil, in the coming week.
Implications for the Dollar
In light of recent developments, including the imposition of new sanctions on over 500 Russian-linked entities, Adeyemo downplayed concerns about potential repercussions on the dollar’s status as the world’s reserve currency. He emphasized the need for sanctions to be carefully targeted and coordinated among multiple parties to maximize effectiveness.
Adeyemo opined that the resilience of the U.S. economy would play a pivotal role in safeguarding the dollar’s prominence globally. He cited the Biden administration’s strategic initiatives focused on enhancing infrastructure, semiconductor manufacturing, and sustainable energy technologies, which have enhanced the appeal of the U.S. as an investment destination.
Highlighting the significance of these policies, Adeyemo asserted, “As long as we continue on this trajectory, I am confident that the dollar and America’s financial system will maintain their dominant position worldwide.”
[Read More](https://www.investing.com/news/forex-news/chinas-woes-wont-slow-us-economy-but-excess-capacity-a-concerntreasurys-adeyemo-3313589)