US Democrats urge Trump to sign trade deal that limits Chinese production

U.S. Democrats have asked the Trump administration to press China to curb “structural overproduction”, essentially overhauling Beijing’s economic model, as Treasury Secretary Scott Bessent holds talks with Chinese officials in Spain, Reuters writes.

Democratic members of a House of Representatives committee on China said any bilateral trade deal should include “binding requirements” on Beijing to reduce industrial overcapacity.

China produces far more manufactured goods than can be consumed domestically, fuelling huge shipments abroad and price wars at home. While Chinese officials have repeatedly rejected U.S. assertions about overcapacity, Beijing has launched a campaign against deflation and price wars in some sectors.

Bessent and Trade Representative Jamieson Greer, addressed in the letter along with Commerce Secretary Howard Lutnick, began talks in Madrid on Sunday with a Chinese team led by Vice Premier He Lifeng.

The world’s two largest economies have struggled to turn a truce on triple-digit tariffs, extended for 90 days last month, into a lasting trade deal to address complaints ranging from fentanyl and the U.S. trade deficit to TikTok’s ownership.

Overcapacity should be addressed in the talks, the letter says, citing China’s steel and solar panel industries as examples where a massive expansion of supply was followed by waves of exports that undercut jobs and industry in the U.S. and elsewhere.