Yellen to Warn China Against Flood of Cheap Green Energy Exports

The Biden administration is growing increasingly concerned that a glut of heavily subsidized green technology exports from China is distorting global markets and plans to confront Chinese officials about the problem during an upcoming round of economic talks in Beijing.

The tension over industrial policy is flaring as the United States invests heavily in production of solar technology and electric vehicle batteries with funding from the Inflation Reduction Act of 2022, while China pumps money into its factory sector to help stimulate its sluggish economy. President Biden and Xi Jinping, China’s leader, have sought to stabilize the relationship between the world’s two largest economies, but differences over trade policy, investment restrictions and cyberespionage continue to strain ties.

In a speech on Wednesday afternoon, Treasury Secretary Janet L. Yellen will lay out her plans to raise the issue of overcapacity with her Chinese counterparts. At the Suniva solar cell factory in Norcross, Ga., she will warn that China’s export strategy threatens to destabilize global supply chains that are developing around industries such as solar, electric vehicles and lithium-ion batteries, according to a copy of her prepared remarks reviewed by The New York Times.

“China’s overcapacity distorts global prices and production patterns and hurts American firms and workers, as well as firms and workers around the world,” Ms. Yellen will say. “Challenges for individual firms can lead to concentrated supply chains, negatively impacting global economic resilience.”

The Treasury secretary is expected to make her second trip to China in the coming weeks. The South China Morning Post reported that she will visit Guangzhou and Beijing in early April. The Treasury Department declined to comment on her travel plans.

In her speech in Georgia, Ms. Yellen will compare China’s investments in green energy technology production to what she described as its previous overinvestment in steel and aluminum, saying it created “global spillovers.”

“It is important to the president and me that American firms and workers can compete on a level playing field,” Ms. Yellen will say. “We have raised overcapacity in previous discussions with China, and I plan to make it a key issue in discussions during my next trip there.”

She will add: “I will press my Chinese counterparts to take necessary steps to address this issue.”

Ms. Yellen is visiting Suniva because it is a prime example of how the Biden administration’s industrial investments are reviving struggling companies. The solar panel company closed its Norcross plant in 2017 in part because cheap imports were flooding the U.S. market; it plans to reopen the factory this spring thanks to the Biden administration’s green energy investments.

The Treasury Department estimates that the private sector has announced more than $200 billion of clean power investments since the Inflation Reduction Act, which included nearly $400 billion in tax credits and subsidies for low-emission forms of energy production, was passed.

China, which invested more than $130 billion in its solar sector last year, has voiced its own frustration about America’s manufacturing investments. Buyers of electric vehicles that contain components made in China, Russia, North Korea or Iran are not eligible for generous U.S. tax credits.

China filed a complaint Tuesday with the World Trade Organization arguing that the Biden administration’s electric vehicle subsidy policies are discriminatory.