Yu Peng | Enough of the false talk of “China’s excess production capacity”

Recently, some Western politicians and media outlets have defended the argument of the so-called “excess of China’s productive capacity”. They claim that there is a problem of “excess production capacity” in Chinese clean energy products such as electric cars and solar panels. Furthermore, they also argue that this supposed problem threatens the industrial development of other countries and has a negative impact on the world economy.

This argument is full of lies and discursive traps, so that, in essence, it only serves a few countries, for their own political interests, to try to safeguard their economic hegemony. Behind his accusation of an alleged increase in “anxiety overload” of China, these countries hide anti-globalization and trade protectionism interests.

The so-called question of productive capacity is just the natural result of the international division of labor and market demand. In the context of globalization, productive capacity is determined by supply and demand. According to the Law of Supply and Demand, market equilibrium is relative, while imbalance is universal and can occur in any market economy.

Since the Industrial Revolution in the 18th century, the Western world has always led the process of industrialization and globalization. The USA, Germany and Japan were the world’s first major automobile manufacturers, leading the development of the global automobile industry.

France, Germany and Japan, in turn, have become the world leaders in the manufacture of bullet trains, being at the forefront of research and development of high-speed rail technologies. Now, if we are going to talk about “excess capacity productive”, so we have to admit that the history of the US itself is a history of excess, and therefore export, of productive capacity.

In the 1940s, the percentage of US exports in relation to total world exports reached 21.6%, a level well above China’s historical figure of 14.9%. In 2023, according to Customs’ HS6 code classification of 5,000 goods, the US share of global exports exceeded 30% in 376 categories and 10% in 1,729 categories, respectively. US chips, especially the best quality ones, are 80% destined for export. Likewise, American corn, soybeans, natural gas and other products have also conquered the world.

China’s renewable energy industry is advancing with “acceleration”, so that the growth in exports of Chinese electric vehicles, lithium batteries and photovoltaic products is a result of the international division of labor and market demand. This reflects China’s renewable energy industry, which is based on a balanced production and supply chain system, sustained technological innovation and full market competition to achieve comparative advantages.

China’s renewable energy sector has contributed to the global ecological transition. Currently, global climate change is imposing itself. The urgency to promote the ecological transition is increasing. In 2023, 510 million new kilowatts of renewable energy capacity were installed globally. China contributed more than half of this amount – it represents a huge growth in global renewable energy production.

China’s wind and photovoltaic energy products are exported to more than 200 countries and regions around the world, helping the Global South and a vast number of developing countries obtain clean and affordable energy.

In 2022, China’s renewable energy production equated to a reduction in domestic carbon dioxide emissions of about 2.26 billion tons. Wind and photovoltaic energy products exported to other countries represented, in turn, a reduction of around 573 million tons in carbon dioxide emissions. The total domestic and external reduction was more than 2.8 billion tons, equivalent to the global production of renewable energy in the period or 41% of the global emissions reduction.

Facts have proven that China’s renewable energy industry provides high-quality production capacity, which contributes to the implementation of the United Nations 2030 Agenda for Sustainable Development and the goals of the Paris Agreement on Climate Change. Thus, it is deeply aligned with the world’s urgent needs and provides important support for promoting ecological transition and green development in all countries around the world, including many developing countries.

The so-called “excess production capacity” it is a false narrative constructed by the West to discredit China.

The West has made a lot of noise about the assumption that the “excess China’s production capacity distorts global prices and production patterns.”, which is, in reality, a pretext for trade protectionism in Western countries. In the 1980s, the US used the so-called “excess production capacity” to boycott the Japanese automobile industry, and now they repeat the same trick.

In recent years, the USA and the West have spread concepts such as “de-risking” e “nearshoring”, adopting high subsidies, tax incentives, among other means, to promote the relocation of the industrial chain. The US signed the Chip and Science Act and the Inflation Reduction Act to provide hundreds of billions of dollars in subsidies, directly interfering with the allocation of market resources and becoming a truly large industrial subsidy itself.

On the other hand, the US and the West wielded the protectionist shield by establishing trade, low-carbon and compliance barriers, among many other impediments to global free trade. Recently, the Americans announced high tariffs on steel, aluminum, semiconductors, photovoltaic cells and electric vehicles produced in China.

Industry experts estimate that if US consumers are unable to purchase electric vehicles “ultra-accessible” produced by Chinese auto companies, the US will not be able to meet its carbon dioxide emissions reduction targets promised for 2030. Imposing high tariffs on photovoltaic cells will also increase costs for US automakers, so the policy of imposing tariffs of the USA will eventually turn against itself.

This year marks the 50th anniversary of the establishment of diplomatic relations between China and Brazil.

Over the past half century, China-Brazil pragmatic cooperation has been increasingly fruitful. China has been Brazil’s main trading partner for 15 consecutive years, with a trade volume much higher than that of other countries.

In recent years, Chinese automobile companies, represented by BYD and Great Wall, have actively invested in Brazil and contributed to the rapid development of the local renewable energy automobile industry.

Companies such as Three Gorges and China Guangdong Nuclear Power have invested in wind and solar energy projects in Brazil, introducing advanced Chinese technology and high-quality products to the country and thus boosting the generation of locally skilled jobs.

China is actively promoting Chinese-style modernization, accelerating the development of new productive force and actively cultivating industries of the future. Brazil is actively promoting its “reindustrialization” and its green and low-carbon transformation, so that the city of Belém, in Pará, will host the 30th Conference of the Parties to the United Nations Framework Convention on Climate Change in 2025.

Since the 2 countries have complementary economies and compatible development strategies, China is willing to cooperate with Brazil in emerging areas such as energy transition and the digital economy, as well as explore practical paths for industrial development and strive to transform the “supply chain” in a “a win-win chain”, aiming to improve the lives of both peoples.

Economic globalization has become an irreversible trend. The economies of all countries have formed a community in which we are one for all and all for one. Trade protectionism, economic coercion and intimidation are not only contrary to the general trend of economic globalization, they are also unpopular. Running over others will not make us run faster. Against the backdrop of the difficult recovery of the world economy, the energy and food security crisis, the climate crisis and several other interconnected risks, we hope that all countries will work together to face these challenges, keep an open mind, insist on free competition and create an environment for economic and commercial cooperation that is truly internationalized, based on the market and the rule of law.