"China's Manufacturing Capacity Helps Curb Global Inflation"…Rebuttal to Overproduction Criticism

Liao Min, Vice Minister of Finance of China, Bloomberg Interview

"For decades, China has suppressed global inflation by supplying cost-effective manufactured goods."

Liao Min, Vice Minister of Finance of China, directly rebutted criticisms from some Western quarters regarding overproduction. The core of his rebuttal was that his country's manufacturing capabilities have contributed to the world's response to climate change and the suppression of inflation.

[Image source=Reuters Yonhap News]

Vice Minister Liao attended the G20 Finance Ministers meeting held in Rio de Janeiro, Brazil, on the 25th-26th, and said this in an interview with Bloomberg News. He stated, "We are supplying eco-friendly products to countries worldwide aiming to achieve carbon reduction targets by 2030," citing estimates from the International Energy Agency that global demand for new energy vehicles will increase from the current 45 million units to 75 million units.

Bloomberg News reported that Vice Minister Liao was one of the key members at the trade negotiation table with U.S. officials during former President Donald Trump's administration. At that time, he visited the U.S. as part of Vice Premier Liu He’s staff and even met then-President Trump in the Oval Office.

Vice Minister Liao also explained, "We need to communicate sincerely about market economy rules and will continue to discuss these issues through working group meetings with the U.S."

This statement came just one day after U.S. Treasury Secretary Janet Yellen criticized China for investing excessive liquidity and subsidies into manufacturing, contributing to overcapacity. Secretary Yellen also evaluated the economic policies announced by China at the 20th Central Committee of the Chinese Communist Party’s 3rd Plenary Session (3rd Plenum) held from the 15th to 18th, stating that "there was no visible effort to resolve structural imbalances or to expand consumer spending."

He further rebutted that government subsidies were not the main reason China secured competitive advantages in certain sectors. He emphasized, "A more important factor is years of corporate research and development investment, entrepreneurship, and technological innovation," adding, "If China had relied solely on government support during its more than 40 years of reform and opening-up experience, there would be no globally competitive sectors."

Moreover, he argued, "Some countries enjoyed advantages in the existing automobile sector and neglected electric vehicle development and emerging industries," while "China, being at a disadvantage in the traditional automobile market, sought growth in new fields such as electric vehicles."

In particular, he elaborated, "Imbalances between supply and demand are natural phenomena in all market economies. In the short term, companies make their own investment decisions, and in the long term, it means they expect higher demand," adding, "Their decisions will be proven right or wrong according to market forces." He also added, "Large capital flows into new industries have periodically occurred in the past in fields such as information technology (IT), shale gas, and bio-pharmaceuticals."

This content was produced with the assistance of AI translation services.