What do you think of the so-called 'overcapacity'? This press conference has a lot of information
On the 28th, the Ministry of Commerce released the Chinese position on the issue of so-called 'overcapacity'. The relevant person in charge of the Ministry of Commerce introduced the relevant situation of this document at the press conference held by the State Council Information Office on the same day, responding to the hot concerns of the outside world.
In recent years, some economies have politicized economic and trade issues due to concerns about their own industrial competitiveness and market position, hyped up the so-called "overcapacity" problem in China, and used this as an excuse to continuously increase restrictions on China.
How to comprehensively and objectively view the issue of 'overcapacity'?
Lin Weilong, director of the Policy Research Office of the Ministry of Commerce, said that "overcapacity" is a dynamic phenomenon in the market economy, which is not only related to changes in supply and demand, but also affected by the life cycle of industries, always in a dynamic cycle of "balance imbalance rebalancing". Balance is relative, and imbalance is universal. At the same time, the capacity utilization index needs to be viewed separately based on the actual situation of different countries and industries.
From the perspective of China's development reality, the overall utilization rate of industrial capacity is within a reasonable range. By 2025, the utilization rate of industrial capacity above designated size will be 74.4%, with more full utilization in high-tech manufacturing, high-end equipment manufacturing, strategic emerging industries, and other fields. The utilization rate of production capacity in some traditional industries such as raw materials is temporarily low, mainly due to structural adjustments and adaptive adjustments brought about by green transformation, which is a normal phenomenon in the process of industrial upgrading and upgrading. Overall, the supply and demand of China's industry are basically balanced, and the operating situation is stable, "said Lin Weilong.
How to view the international discourse on "subsidies causing overcapacity"?
Han Yong, Director of the World Trade Organization Department of the Ministry of Commerce, stated that industrial subsidies themselves are not a problem, and there is no necessary connection between industrial subsidies and overcapacity.
Reasonable and compliant industrial subsidy policies can help correct market failures, promote technological innovation, protect the ecological environment, reduce poverty, and promote balanced development, without causing so-called 'overcapacity'. However, on the other hand, if protectionist measures are taken, illegal industrial policies are introduced, and competition is restricted, it will disrupt the global economic and trade order, "said Han Yong.
It is reported that the US Inflation Reduction Act plans to provide $750 billion in various subsidies from 2022 to 2031, among which electric vehicles that receive subsidies must meet local or North American production and sales conditions, excluding other countries and regions. According to incomplete statistics, the European Commission will provide over 1.44 trillion euros in various subsidies between 2021 and 2030. The EU Industrial Accelerator Act proposes to directly link local content with financial support through the requirement of "EU origin", which constitutes serious investment barriers and institutional discrimination.
Countries should focus on making the cake of global development, reasonably and compliantly formulate industrial policies, and should not use them as tools to restrict the development of other countries. China is willing to discuss relevant industrial policies with all parties under the framework of the World Trade Organization, jointly regulate relevant practices, and promote multilateral rules to keep pace with the times, "said Han Yong.
Can trade surplus be equated with overcapacity?
More exports and a large surplus do not mean overcapacity, "said He Shaojun, the head of the Foreign Trade Department of the Ministry of Commerce.
He pointed out that the surplus reflects a profound evolution of international division of labor. Looking back at the history of global economic development, manufacturing powerhouses such as the United Kingdom, the United States, Japan, and Germany have all maintained long-term trade surpluses. 80% of American chips are exported, and about two-thirds of commercial aircraft delivered by Boeing are sold to customers outside of North America. The EU's automobile, pharmaceutical, and cosmetics industries will have trade surpluses of 92.2 billion, 214.6 billion, and 11.6 billion US dollars respectively in 2025.
China's trade surplus reflects the completeness and efficiency of its industrial system, which is an objective result of changes in the global division of labor system and trade pattern. He Shaojun said that China provides more than 80% of photovoltaic modules and 70% of wind power equipment to the world, providing important support for the green transformation of trading partners. Foreign funded enterprises contribute 16% of China's trade surplus and also receive substantial investment returns from it. These are vivid depictions of 'surplus in China, interests in all parties'.
He also pointed out that from the perspective of the overall international balance of payments, although China has a large surplus in goods trade, there are deficits in service trade, capital, and financial accounts. The current account surplus accounts for about 3.7% of GDP, which is within the internationally recognized reasonable range, and there has not been a significant imbalance in international balance of payments.
What are the advantages and driving forces of China's industries?
Overall, this is the result of multiple factors such as China's solid industrial foundation, market iteration empowerment, enterprise innovation breakthroughs, and international openness and cooperation. He Shaojun said that the development of China's modern industries and the improvement of its foreign trade competitiveness rely on innovation driven and continuous deepening of reforms. Next, we will continue to promote high-quality trade development, further support related industry enterprises to deeply integrate into the global supply chain system, and inject more vitality into the global digital, intelligent, and green transformation.
Vice Minister of Commerce Yan Dong stated that China is providing more and more "market dividends," "development dividends," and "innovation dividends" to the world by leveraging its market advantages, industrial development, and technological progress. The integration and superposition of these dividends bring more development opportunities and greater development space to the world, which is the "China Opportunity 2.0" mentioned by more rational and objective voices in the international community.