The Chinese government has firmly rebutted criticisms from the United States and European countries regarding overproduction, arguing that protectionism poses a greater risk to the global economy.
On July 28, the Ministry of Commerce published a lengthy document on its website titled 'China's Position on So-Called Overproduction,' dismissing the controversy surrounding overproduction originating from China.
The ministry stated, "Some countries and economic blocs are politicizing trade and economic issues due to concerns over their own industries' competitiveness and market positions, thereby strengthening sanctions and protectionism against China."
The document emphasized that there is no international consensus on the concept of 'overproduction,' asserting that each economic sector's overproduction situation should be assessed based on its development stage and level.
It also refuted claims linking overproduction to domestic demand shortfalls, state subsidies, and trade surpluses. The document highlighted that "there is no inherent connection between industrial subsidies and overproduction," adding that "reasonable industrial subsidies can address market failures and promote technological innovation and environmental protection."
Instead, the document argued that China's production capacity offers new opportunities for the global economy. While some have labeled the recent surge in Chinese solar panels and new energy vehicles in international markets as 'China Shock 2.0,' the ministry contended it should be viewed as 'China Opportunity 2.0.'
It claimed that China's production capacity can foster global innovation cooperation and technological advancement, accelerate the world's green and low-carbon transition, and support the industrialization of developing countries.
The document also pointed out that "protectionism only disrupts the global economy and trade order, and does not contribute to the security and stability of global supply chains or the healthy and orderly development of industrial cooperation."
During a regular briefing on the same day, Yan Dong, Deputy Minister of Commerce, stated, "Some economic blocs have exaggerated China's so-called overproduction issue," adding that the document aims to correct the facts.
This statement from China comes as the U.S. and the European Union (EU) increase pressure on China over concerns about overproduction and trade imbalances.
The U.S. Trade Representative (USTR) launched an investigation in March into so-called 'structural overproduction' involving 16 economic blocs, including China. Negotiations between China and the EU to address trade imbalances are ongoing, with both sides reportedly setting October as a key deadline for solutions.
China's document appears to be a proactive response to criticisms from the U.S. and EU regarding 'China's overproduction,' particularly as regulations on competitive Chinese products like electric vehicles and solar panels are tightening in the European market.
Chui Pan, a professor at the University of International Business and Economics, told Global Times on July 28 that the timing of the document's release is intended to clarify misunderstandings, asserting that the decline in industrial competitiveness in some countries is not due to China's 'overproduction' or industrial subsidies.
However, there are concerns that the document may not sufficiently address the U.S. and EU's worries about overproduction. Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, stated in the Nihon Keizai Shimbun that while the document provides an official rebuttal and data from Beijing, the USTR is likely to treat it as a defense rather than new evidence that could change legal or political trends.
She added that while the document could serve as a reference in future negotiations between China and the EU, the EU's fundamental concerns remain, making it difficult for a single document to alter the direction of negotiations.
* This article has been translated by AI.
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