Recent discussions have surfaced accusing the Chinese mainland of flooding the global market with an excess production capacity in new energy vehicles (NEVs). Critics argue that this so-called ‘overcapacity’ is negatively impacting world markets. But is this debate really justified?
The concept of overcapacity hinges on the balance between supply and demand. In the case of China’s NEV industry, the potential demand—especially in many developing countries—is substantial. These markets are eager for affordable and sustainable transportation options that NEVs can provide.
The perceived overcapacity isn’t due to a lack of global demand but rather to market restrictions imposed by certain regions, notably the U.S. and Europe. These restrictions prevent China’s NEV producers from meeting the existing international demand, leading to market distortions. By hindering the normal release of NEVs into global markets, these policies contribute to the illusion of overcapacity.
Essentially, the overcapacity debate masks a deeper issue of capacity competition. Instead of focusing on unfounded claims, there should be an emphasis on reducing trade barriers to allow for the natural flow of goods. This would not only benefit consumers worldwide by providing more transportation choices but also support global efforts towards sustainable development.
In conclusion, the so-called overcapacity in China’s NEV sector is less about actual excess production and more about external limitations on market access. Addressing these barriers could alleviate concerns and foster a more cooperative international economic environment.
Reference(s):
cgtn.com
