Economist Stephen Roach speaks to CGTN Europe about Janet Yellen's China visit
Renouned economist and a Senior Fellow at Paul Tsai China Center at Yale Law School Stephen Roach shares his views on the complexities of the US-China trade relations.
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00:00 Earlier I spoke to Stephen Roach, a CEDAW fellow at the Paul Tsai China Center from
00:04 Yale Law School.
00:05 He told me what Yellen might achieve on this trip.
00:09 Well I think this trip is part of the ongoing diplomatic dialogue between the US and China
00:19 that Yellen herself started a little less than a year ago with her mission to Beijing.
00:27 You know there's discussion that she's going to raise concerns about China's excess production,
00:35 overcapacity in a world that has a hard time absorbing that.
00:40 But I think there's very little in the way of expectations that that will achieve much
00:49 progress.
00:50 I would prefer that she phrase this in a more constructive tone as opposed to a threatening
00:56 tone.
00:57 The flip side of excess capacity is that China has weak domestic demand, especially internal
01:05 private consumption.
01:06 And I would hope that the US Treasury Secretary would use the occasion to stress the long-standing,
01:14 rebalancing imperatives of the Chinese economy that many, including myself, have been stressing
01:21 for over 15 years.
01:23 Yellen hinted that the surge in China's exports of electric cars and solar panels and batteries
01:29 was creating a problem at a time when the US has invested heavily in reviving its own
01:34 manufacturing sector.
01:36 Do you think it's because she is trying to... her statement is in favor of the US only?
01:44 Well look, she is a leading, if not the leading, spokesman for the official view of the US
01:54 economy.
01:55 And manufacturing-led growth is a major emphasis of the Biden administration.
02:04 And any bumps in the road on the path to manufacturing-led revival will be countered by political statements
02:13 like this.
02:14 You know, China's efforts at electric vehicles, solar and batteries certainly fit the script
02:25 of dealing with climate change that the US and other developed countries are very much
02:32 in favor of.
02:33 So there's a little bit of hypocrisy here in that point of view.
02:37 Yellen also said she wouldn't rule out the possibility of trade barriers.
02:41 So do you think that China and the US can afford to have an escalated trade war, which
02:46 started in 2018?
02:49 Well, the tariffs of the Trump administration have surprisingly remained intact during the
02:56 Biden administration.
02:57 I think that's too bad.
03:00 The tariffs, I think, do damage to both nations.
03:04 And I don't think they can be justified on economic terms.
03:09 They draw their support from political positions of the Trump administration that have been
03:18 embraced by the Biden administration.
03:21 And personally, I think the sooner they are reduced, the better.
03:25 But we do not seem to be going in that direction.