US Treasury Secretary Janet Yellen on Wednesday said that China's overcapacity in green industries such as electric vehicles and lithium-ion batteries is distorting the world's economy.
During her remarks in the US state of Georgia, Ms Yellen also said Beijing's industry damaged “American firms and workers, as well as firms and workers around the world”.
Ms Yellen said previous Beijing's support in industries such as steel and aluminium resulted in “overinvestment and excess capacity” to maintain employment and production in China.
China has recently turned to what is called a “new three” economy, with exports in which Beijing has invested.
"Now, we see excess capacity building in 'new' industries like solar, EVs and lithium-ion batteries,” Ms Yellen said.
She is preparing for a second trip to China since becoming Treasury Secretary.
“I will convey my belief that excess capacity poses risks not only to American workers and firms and to the global economy, but also to productivity and growth in the Chinese economy,” Ms Yellen said.
“And I will press my Chinese counterparts to take necessary steps to address this issue.”
Her remarks stand in contrast to those of Chinese President Xi Jinping, who on Wednesday expressed a more optimistic tone about US-China trade relations.
During a meeting with business leaders in Beijing, Mr Xi called for closer trade ties between China and the US.
In a statement after the meeting, the US-China Business Council said it “encouraged the government to further address long-standing concerns with cross-border data flows, government procurement, better protection of intellectual property rights, and improved regulatory transparency and predictability”.
The EU this month also made efforts to impose tariffs on Chinese electric vehicles, saying Beijing has been illegally subsidising the industry.
