Open Questions | ‘Phase 2 China shock is coming’: historian Adam Tooze on Europe, America and manufacturing
Historian says he worries about escalation in tension between the great powers ‘to the point now of genuine war scares’
I think it’s a test of bona fides: where is the argument being applied? If somebody wants to make a case that there’s an overhang of capacity in Chinese heavy industry, it wouldn’t be surprising in light of the gear shift in Chinese growth, which was so heavily based around construction and involved a lot of concrete and steel – basic infrastructure buildout.
It’s an argument that reflects the difficulty of locating the current moment in Chinese economic history properly. It’s far too superficially seen as just a cyclical downturn, or something like that. It’s actually a far more fundamental break from a truly unique urbanisation push to a new phase, and so there are going to be some adjustment difficulties. It’s clearly been a long-standing issue, and it’s trailed over the global heavy industrial system for a long time.
It is significant that [the overcapacity debate] has come up at this moment, because it provides a kind of justification for industrial policy in the West and that’s also the dimension in which it seems to me quite problematic because it concerns the leading edge [of technology].
The new element of this argument is in green tech, and it’s just very difficult to even understand what we mean by the suggestion of, say, excess capacity in [solar] photovoltaics (PV). You can see it from the point of view of Chinese manufacturers who say this themselves, because it’s really difficult to earn a buck in making PV in China. But there’s no reason the rest of the world should have any dog in that particular fight. That’s industrial firms in China competing as hard as they do and using all of the tools in the book.
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