April 12, 2024 (EIRNS)Treasury Secretary Janet Yellen, former Federal Reserve chair, both during and since her April 3-9 visit to China, has repeatedly made the public demand that China stop “dumping subsidized products” on other nations’ markets and on Chinese consumer markets, because it supposedly maintains manufacturing overcapacity in the Chinese economy. The United States Yellen represents not only massively subsidizes U.S. productive capacity and products, but also forces them on other nations by war and sanctions.
The biggest target for Yellen appeared to be China’s smartphone company, Xiaomi, and other makers of electric vehicles, which have won the world’s top share of EV sales, challenged only by Elon Musk’s Teslas (of which a large share are produced in China). The United States, under the Inflation Reduction Act, provides a subsidy averaging $7,000 on the sale of each EV made in the United States, and has specifically kept out EVs manufactured in Europe by this subsidy program. Yellen was loudly protesting that China provides its own subsidies to EVs destined for sale in Europe and the United States. She combined worry and insult into a single expression: “When the global market is flooded with cheap Chinese goods, the viability of American firms is put into question.”
U.S. subsidies go far beyond the motor vehicle sector, to include solar power installations and wind turbines, among other “green” products; and they include truly vast hundreds of billions available for subsidies of manufacturing facilities. The most recent high-profile example is the $6.6 billion in direct subsidies and loans under the U.S. “CHIPS and Science Act,” given to an Arizona subsidiary of TSMC of Taiwan, to build a delayed semiconductor “fab” in Arizona. The “CHIPS Act” has a potential of hundreds of billions of dollars in such subsidies; matched by the $200 billion in subsidies authorized under the Inflation Reduction Act for manufacturing of “green” products.
