Opinion | US concern about China’s overcapacity is a non-issue, just like in 2009
- The narrative sounds similar to that during the global financial crisis when, as a result of its massive stimulus package, China became the world’s largest exporter amid weak demand
- Instead of pointing fingers, China’s green capacity should be viewed within the broader framework of climate change cooperation
Echoing Yellen, US Secretary of State Antony Blinken also raised unfair Chinese trade practices during a subsequent meeting with local government officials in Shanghai.
Overcapacity, denoting a situation where production surpasses demand, has become a recurring theme in discussions on China’s economic landscape, resonating across various sectors and industries.
Lu Feng, emeritus professor of economics at Peking University, recently shed light on the dimensions of the current wave of overcapacity. He pointed to sectors including petrochemicals, semiconductors, autos, new energy vehicles and batteries.
For instance, Chinese exports of lithium-ion batteries surged more than 30 per cent year on year in 2023. In the same year, China also exported 1.2 million electric vehicles, 80 per cent more than a year ago.
The rapid growth of China’s EV exports, in particular, has driven discussions on Chinese overcapacity. Fuelled by geopolitically charged mistrust, these concerns have been amplified into a chorus of anxiety.
