Overcapacity narrative suppresses China’s economy

Workers install engines in new energy vehicles at the Dayun New Energy Vehicle Production Base in Yuncheng, Shanxi province, on Jan 25, 2024. [Photo/VCG]

BEIJING: China holds a significant position in the global supply chain, although that’s not due to Chinese policy, but rather the result of companies and consumers worldwide making their own decisions, experts and executives say.

After all, they added, China, as the world’s second-largest economy, has a comparative advantage in its economic model – one that makes it the go-to manufacturing hub of the world.

The so-called “China overcapacity” narrative has been employed by certain Western countries, primarily the United States, as a political tool to tarnish and suppress the Chinese economy, the observers said.

Behind the slander lies an agenda of anti-globalisation and protectionism that ultimately hinders normal global trade and undermines the common interests of nations, they said.

During US Treasury secretary Janet Yellen’s trip to China in early April, her second visit to the country in nine months, she made the comment that China is flooding global markets with cheap goods, particularly in new green industries.

The narrative has been translated into concrete actions such as probes launched by the United States and the European Union into China’s electric vehicles, based on unfounded allegations of state subsidies and aimed at choking the role of China’s green product supply.

The notion of excess capacity should not be simplified or attributed solely to one country, Premier Li Qiang said during talks with German chancellor Olaf Scholz in Beijing last week.

From a market perspective, the amount of production capacity is determined by the relationship between supply and demand, and having production moderately greater than demand is conducive to full market competition and promoting the survival of the fittest, Li said. — China Daily/ANN

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