China’s overcapacity dilemma solvable with ‘painful’ industrial revamp, scholars say

China should accept the “painful restructuring” of some industries to ease overcapacity concerns, as inaction may hamper the country’s economic recovery and motivate the US and Europe to ramp up scrutiny of those sectors, advisers to Beijing have said.

Lu Feng, a professor at the National School of Development at Peking University, admitted supply overflows exist – naming petrol cars, petrochemicals, low-end computer chips, batteries and electric vehicles (EVs) as examples – but the rearrangement of the industries involved would ultimately be beneficial.