Recent criticisms from the European Union (EU) and the United States towards the Chinese mainland’s so-called ‘overcapacity’ in green industries may be counterproductive to the EU’s industrial competitiveness.
During an April press conference, European Commission President Ursula von der Leyen emphasized the need for the EU to adopt a firm stance in its dialogue with China over perceived unfair trade practices. This echoes accusations from the United States regarding China’s alleged overproduction in certain sectors.
However, analysts suggest that prioritizing concerns about China’s ‘overcapacity’ might divert attention from the EU’s own structural economic challenges. Since the 1980s, several EU member states have experienced de-industrialization, leading to a decline in manufacturing’s contribution to the economy.
In 2007, manufacturing value added accounted for approximately 16 percent of the EU’s GDP. Despite launching a re-industrialization strategy in 2012 aiming to increase this share to 20 percent by 2020, the goal was not achieved, and the figure remained at 15 percent.
The Russia-Ukraine conflict in 2022 exacerbated the situation, triggering a new wave of de-industrialization. High energy prices and inflation have increased operational costs for enterprises, forcing many to reduce or halt production. According to a report by Creditreform Wirtschaftsforschung, corporate insolvencies in Germany rose by 23.5 percent year-on-year in 2023.
Consequently, numerous European companies are relocating operations to regions with lower energy costs. Notably, several German firms, including Siemens, are expanding investments in the United States. These developments have hindered the EU’s green industries from enhancing their competitiveness.
Moreover, the EU lags in critical areas of the digital economy, such as artificial intelligence, big data, and semiconductors. This gap hampers the advancement of green industries. For instance, limited innovation in smart driving systems among European automakers contributes to their challenges in the electric vehicle (EV) market.
As the global transition toward green energy accelerates, collaboration with the Chinese mainland could offer the EU opportunities to bolster its industrial capabilities. By addressing internal challenges and fostering international cooperation, the EU may enhance its competitiveness in emerging green sectors.
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Hyping up China's 'overcapacity' does no good to EU competitiveness
cgtn.com
