U.S. Treasury Secretary Janet Yellen said on June 13 that China has “overconcentrated supply chains” that threaten U.S. jobs and investment in green energy. This follows her comments while in China that underscored “the global economic consequences of China’s industrial overcapacity.”

The Chinese regime’s aggressive trade policies, including subsidies and dumping of products below the cost of production, “may interfere significantly with our efforts to build a healthy economic relationship,” Yellen said.

Is the claim of Chinese “overcapacity” in green investment, including electric vehicles (EVs), a form of trade war propaganda, real, or a bit of both? Could singling out China in this way be a result of Beijing’s aggression across not only economic but also military and diplomatic matters? Is it a cudgel used against China’s own trade barriers?

Strategic dumping destroys international competition with artificially low prices, so later prices can be pumped up to monopolistic levels. Overcapacity is a factory utilization rate of below 80 percent that leads to greater production, even at below production cost. It is typically caused by government subsidies and creates more industrial output than is justified by market conditions—something one would expect Democrats to welcome in the case of green tech. However, overcapacity typically lowers prices for exports with the effect of closing foreign factories, including in the United States.

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