China has refuted recent claims by U.S. Treasury Secretary Janet Yellen alleging that China’s new energy industry suffers from overcapacity, which she asserts distorts global prices and production patterns, harming American firms and workers.
An official from China’s National Development and Reform Commission stated that these accusations are unobjective and inaccurate. From a market perspective, capacity levels are determined by supply and demand dynamics. Fluctuations and imbalances are normal in any market economy, and current indicators show that China’s new energy industries are operating within standard capacity utilization rates.
Industries closely linked to new energy sectors, such as electrical machinery, equipment manufacturing, and automobile manufacturing, have capacity utilization rates of 77% and 75% respectively. These figures align with the 75% capacity utilization rate of China’s manufacturing industry during the same period, suggesting that overcapacity is not an issue. Additionally, data from Bloomberg indicates that leading Chinese automobile exporters maintain capacity utilization rates recognized as normal by international standards.
China’s strengths in emerging industries are the result of its own competencies and are shaped through full market competition, rather than government subsidies. While the U.S. criticizes China’s new energy sector for alleged overcapacity due to government support, it continues to introduce industrial policies to bolster its own new energy industry. For instance, the Inflation Reduction Act stipulates that only electric vehicles assembled in North America are eligible for a maximum subsidy of $7,500 through federal tax deductions, a policy that some view as discriminatory.
Analysts suggest that open dialogue and cooperation between China and the U.S. are essential for addressing global challenges such as climate change and the transition to sustainable energy. Collaborative efforts could lead to mutual benefits and a healthier global economic environment.
Reference(s):
Alleged 'overcapacity': Another example of suppression against China
cgtn.com
