Leading economists and industry experts have refuted recent allegations by some Western politicians and media that the Chinese mainland is grappling with industrial overcapacity. They argue that these claims are unsupported by data and are politically motivated attempts to undermine China’s economic standing amid escalating global trade protectionism.
Albert Park, chief economist at the Asian Development Bank, stated that accusations of overcapacity in China are unsubstantiated. According to China Daily, Park emphasized that the World Trade Organization has mechanisms like anti-dumping and countervailing duties to address non-competitive practices, but there is insufficient evidence to apply these measures to China.
Wichai Kinchong Choi, a senior vice president at Thailand’s Kasikornbank, highlighted that the success of China’s emerging industries in international markets is a result of innovation and efficient cost control by Chinese firms, not excess capacity. Speaking to Xinhua, Choi expressed concern over developed nations blaming China for their own market challenges and curbing competition.
“It is unfair to specifically mention China’s industrial policies and imply that China’s competitive advantage is subsidized by the government,” Robin Xing, chief China economist at Morgan Stanley China, told China Daily. Xing noted that many countries, including the United States, employ similar strategies to bolster strategic industries. He cited the U.S. Inflation Reduction Act as an example of substantial investment in clean energy and significant subsidies to the semiconductor sector.
The debate intensifies as global demand for new energy technologies, such as electric vehicles, is projected to surge. The International Energy Agency predicts that the demand for electric vehicles will reach 45 million units by 2030, more than quadrupling the demand from 2022. However, the China Association of Automobile Manufacturers reported that China exported 1.203 million new energy vehicles in 2023, indicating that China’s current capacity is far from meeting the potential global surge in demand.
Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, expressed concern over the broader implications of the overcapacity narrative during an interview with Xinhua. “This overcapacity idea is that you shouldn’t produce more than you can sell domestically. If that was carried to an extreme, that would mean no trade globally. Everybody would just produce what they consume at home,” he cautioned. “This would be a complete and utter disaster for every economy,” Lardy added.
As elections approach in the United States, analysts like Guo Kai, executive president of the think tank CF40 Institute, suggest that political motives may be overshadowing economic realities. “The U.S. is raising the issue of Chinese overcapacity at this time for electoral purposes,” Guo commented.
Reference(s):
Analysts rebut 'Chinese overcapacity' claims amid political tensions
cgtn.com
