President Biden is warning that a new surge of cheap Chinese products poses a threat to American factories. There is little sign of one in official trade data, which show that Chinese steel imports are down sharply from last year and that the gap between what the United States sells to China and what it buys is at a post-pandemic low.
But the president’s aides are looking past those numbers and fixating on what they call troubling signs from China and Europe. That includes data showing China’s growing appetite to churn out big-ticket goods like cars and heavy metals at a rate that far exceeds the demand of domestic consumers.
China’s lavish subsidies, including loans from state-run banks, have helped sustain companies that might otherwise have folded in a struggling domestic economy. The result is, in many cases, a significant cost advantage for Chinese manufactured goods like steel and electric cars.
The U.S. solar industry is already struggling to compete with those Chinese exports. In Europe, the problem is much broader. Chinese exports are washing over the continent, to the chagrin of political leaders and business executives. They could soon pose a threat to some of the American companies that Mr. Biden has tried to bolster with federal grants and tax incentives, much of which comes from his 2022 climate law, U.S. officials warn.
In an effort to avoid a similar fate, Mr. Biden has promised new measures to shield steel mills, automakers and other American companies against what he calls trade “cheating” by Beijing.
European officials are struggling to counter the import surge, an issue they focused on this week when President Xi Jinping of China visited the continent for the first time in five years. In a meeting on Monday with Mr. Xi and President Emmanuel Macron of France, Ursula von der Leyen, the European Commission president, urged Mr. Xi to address the wave of subsidized exports flowing from his nation’s factories into Western countries.
The frustration European officials expressed mirrors the fears Mr. Biden and his aides have conveyed to Beijing: that it is deliberately using state support to gobble up market share in key industries and drive foreign competitors out of business, as it did in previous decades.
“These subsidized products — such as the electric vehicles or, for example, steel — are flooding the European market,” Ms. von der Leyen said. “The world cannot absorb China’s surplus production.”
Europe has begun imposing tariffs on electric cars from China over what officials there call evidence of illegal state subsidies.
The United States has ample experience with cheap Chinese products overwhelming its markets, including a wave of solar panels that undercut the Obama administration’s efforts to nurture a domestic solar industry. This time, cheap solar panels are again flowing into the United States, causing some manufacturers to delay planned investments in America.
Other goods, like electric vehicles, have been slower to arrive, in part because of tariffs and other barriers the U.S. government has in place.
Still, Biden administration officials are watching Chinese production and price data closely and moving to block or slow subsidized imports — particularly in industries that are central to the president’s industrial plans, like low-carbon energy technology.
Officials have complained about what they call Chinese overcapacity in public and in recent trips to Beijing by Treasury Secretary Janet L. Yellen and Secretary of State Antony J. Blinken.
Mr. Biden has proposed higher tariffs on Chinese steel and aluminum and started investigations of Chinese automotive technologies. His administration is reviewing a wave of tariffs on Chinese goods that President Donald J. Trump imposed. It is also considering increasing some of them for strategically important industries.
“Because Chinese steel companies produce a lot more steel than China needs, it ends up dumping the extra steel into the global markets at unfairly low prices,” Mr. Biden told steelworkers in Pittsburgh last month. “And the prices are unfairly low because Chinese steel companies don’t need to worry about making a profit, because the Chinese government is subsidizing them so heavily. They’re not competing. They’re cheating.”
Chinese officials reject those charges. The administration’s claims are “not a market-driven conclusion but a crafted narrative to manipulate perception and politicize trade,” Lin Jian, a spokesman for the Foreign Ministry, told reporters last week.
“The real purpose is to hold back China’s high-quality development and deprive China of its legitimate right to development,” he said. “There isn’t a ‘China overcapacity,’ but a U.S. overcapacity of anxiety stemming from lack of confidence and smears against China.”
Biden officials said in interviews that China’s subsidized exports were starting to hurt U.S. manufacturers, including by driving some foreign suppliers of components for American-made products out of business. Ms. Yellen said in a speech last month that during a trip to China, she had warned officials there of “the negative spillovers that overcapacity can create for the global economy.”
Some current and former Biden administration officials say it will take a global effort to defeat China’s export strategy. That includes better cooperation between the United States, Europe and other wealthy allies, which is expected to be high on the agenda for Group of 7 leaders when they meet in Italy next month.
That effort should also include developing nations like Brazil and India, which have begun to push back at Beijing’s trade practices, said Brian Deese, a former director of Mr. Biden’s National Economic Council and an architect of the president’s green industrial strategy.
“What we should do is build a broad international coalition to impose harmonized tariffs on Chinese industries where there is overcapacity,” Mr. Deese said.
Such an effort, he said, could prove crucial to protecting U.S. companies’ investments in areas like the next generation of advanced batteries for automobiles and energy storage, by giving them room to breathe instead of the suffocation of artificially cheap competition.
“I don’t think it’s a foregone conclusion that even as China ramps up, China dominates that market,” Mr. Deese said.
