China isn't at overcapacity, but simply meeting global needs

The recent buzzword in Western mainstream media to attack China with is "overcapacity." As claimed by US Secretary of the Treasury Janet Yellen, as well as numerous reports, China is "deliberately" flooding markets with renewable energy products, such as solar panels and electric cars, which are at cheaper prices than average.

This is triggering threats of protectionist measures against Chinese products in the US and allied countries. Indeed, it is true that China has become the largest exporter of renewable energy goods on the planet, but these "concerns" are in fact politically motivated on the premise of opposing China's success in renewable energy supply chains, which has long been a strategic goal of the Biden administration.

First, the narrative that China's domestic consumption is "weak" and therefore products are being "dumped" overseas is untrue. This is part of an existing push in the mainstream media that has deliberately depicted the country's economy in pessimistic terms. On a domestic level China's electric vehicle market is valued at US$319 billion, which is the largest EV market in the world. As noted by Statista, it is growing at an average of 5.69 percent per year, with annual electric vehicle sales set to reach 8.77 million per by 2028. This data immediately challenges the ungrounded narrative.

Secondly, rather than operating at so-called "overcapacity," it should be noted that China has the largest and most productive industrial supply chain in the entire world, which is capable of meeting not only the demands of its own market, but also that of the planet. China after all is the largest exporting nation on Earth and the largest trading partner of most countries.

The ability of China to supply on such a large scale with a comprehensive integrated supply chain naturally brings down production costs and the demand that it meets also guarantees lower profit margins. Therefore, the overall product is cheaper. This is simply not the case for Europe and the US where every element of production is more expensive and the overall supply is less.

Thirdly, this helps us understand China is meeting the demands of the world for electric vehicles when nobody else can. Western countries have long been very aggressive about meeting climate goals and many countries have goals to ban fossil fuel automobiles by specific dates, therefore initiating an unprecedented demand for electric vehicles. We must ask are these countries capable of producing such cars on a large scale, at affordable prices, themselves? They cannot meet their own demand; therefore, this is why imports of these products from China are surging. This is not overcapacity; this is called meeting demand. This is not China "dumping" products, this is consumers wanting to buy Chinese products because of their affordability, competitiveness and quality.

Despite this, Chinese electric cars are being subject to politically motivated attacks. Although the West claims it cares about climate change, in reality they have a political problem with China's competitiveness and seek to undermine China's dominance in the global supply chain purely out of geopolitical considerations. While they want China to "cooperate" on climate change, this clearly does not extend to providing the goods they need and are unable to supply for their own population.

The Biden administration in general has sought to try and deliberately undermine China, including opportunistically using vague allegations of forced labor to attack Chinese products such as solar panels. In addition to this, paranoia and mass hysteria may also be weaponized to accuse Chinese renewable energy products such as EVs of espionage, without any proof whatsoever.

Thus, it has become an opportunistic attack to accuse China of "dumping," making the bad faith arguments that China's economy is "struggling" so they are deliberately exporting "more products" at lower prices to undermine others.

There is no truth in this. The reality is that the Chinese electric vehicle industry is booming in its own merits, domestic demand for these products is surging, China's industrial production is more competitive, and therefore more affordable than the West's, and thus China is compensating for the global surge in demand for electric cars when the west are not able to create quality products at the same scale or affordability. This is in fact what free market dynamics look like, something the US and its allies have pushed for centuries, yet grown to resent when it doesn't produce results in their favor.

(The author, a postgraduate student of Chinese studies at Oxford University, is an English analyst on international relations. The views are his own.)