Yellen Faces Diplomatic Test in Urging China to Curb Green Energy Exports

After three hours of meetings on Friday, Treasury Secretary Janet L. Yellen and Vice Premier He Lifeng of China sat down for a working dinner at the White Swan Hotel in Guangzhou, China. They planned to follow that with a scenic boat cruise along the city’s Pearl River.

The evening activity was intended to give the pair, the top economic officials from the United States and China, an opportunity to go beyond talking points and build trust.

But the first of four days of discussions about their economies was about more than pleasantries. Following months of work to reopen communication with China, Ms. Yellen lodged a direct complaint: Cheap Chinese exports of green energy technology are threatening the electric vehicle and solar sectors that the United States has been trying to develop, and the Biden administration is prepared to protect them.

The message represented a challenging test of economic diplomacy for Ms. Yellen. She wants China to dial back its industrial policy just as the United States is ramping up its own with trillions of dollars of subsidies for domestic clean energy industries. The new push against China’s exports threatens to inflame trade tensions between the world’s largest economies just as they have been working to stabilize relations.

Ahead of her meeting with Mr. He, Ms. Yellen previewed her arguments before a group of American business executives operating in China, explaining her view that China cannot jump-start its growth with an export boom and advising that it should focus on supporting greater consumption within its own borders. She also warned that a surge of Chinese green technology products being sold below the cost of production will warp global supply chains by depressing prices and forcing firms worldwide to shutter.

“Overcapacity isn’t a new problem, but it has intensified, and we’re seeing emerging risks in new sectors,” Ms. Yellen said on Friday.