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China's new energy advantage comes from market competition, not government subsidies

CGTN

Fearful of losing hegemony in advanced technologies and global value chains, a handful of Western countries have been peddling "overcapacity" claims targeting China's booming new energy industries.

Chinese Premier Li Qiang on Tuesday refuted the claims during his meeting with German Chancellor Olaf Scholz in Beijing. He said the country's new-energy industry gained advantages through self-improvement and sufficient market competition rather than government subsidies.

The Chinese premier emphasized that the production capacity of different countries is determined by their comparative advantages and that as long as countries strengthen cooperation, they can achieve common development.

Li added that China's new energy industry's high-quality production capacity will make important contributions to global green development.

'No sign of industrial overcapacity in China'

Data analyses of China's emerging industries show no evidence of overcapacity.

The National Information Center of China recently predicted that the penetration rate of new energy vehicles in China would increase from 35.2 percent in 2023 to 60 percent by 2033.

Considering the global division of labor and international market conditions, the International Energy Agency estimates that global total electric vehicle (EV) sales will reach 45 million in 2030, 4.5 times more than those in 2022, and solar photovoltaic additions will expand almost fourfold to 820 gigawatts by 2030.

Jin Xiandong, an official of the National Development and Reform Commission, China's top economic planning agency, said during a press conference on Wednesday that a moderate surplus of production over demand is conducive to market competition and natural selection and that the phenomenon is very common worldwide.

As for attempts to link production capacity issues with international trade and to claim that a surge of exported goods indicates "overcapacity," Jin said, "The allegations are not tenable."

Workers assemble electric vehicles on a smart production line in Nanchang, east China's Jiangxi Province, April 15, 2024. /CFP
Workers assemble electric vehicles on a smart production line in Nanchang, east China's Jiangxi Province, April 15, 2024. /CFP

Workers assemble electric vehicles on a smart production line in Nanchang, east China's Jiangxi Province, April 15, 2024. /CFP

A recent Bloomberg report found that most of China's leading electric vehicle exporters boast capacity utilization rates well within internationally recognized norms.

French entrepreneur Arnaud Bertrand holds similar views. He published an article on X, analyzing China's capacity utilization rates, inventory levels and profit margins, concluding that "there is just no sign of industrial overcapacity in China."

Bertrand said "the real issue here is not one of industrial capacity but one of competitiveness. What is crystal clear is that the competitiveness of Chinese companies is overwhelming."

"It's understandable that when you see a competitor continuously gaining in strength, you grow quite anxious as to your own future and that of your people. But it needs to be framed the right way; framing it as if China was doing something malign with deliberate 'overcapacity' is just a very unfair characterization," he said.

"I'm afraid this 'overcapacity' framing is just another illustration of this poor leadership: when you prefer to blame others for your own failures rather than face reality," he concluded.

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