China's 'overcapacity' a smoke screen for U.S. selfish agendas

Editor's note: Recently, some Westerners have been making noises about China's "overcapacity," accusing the country of "flooding" the global market with cheap products and "distorting" the market rules. Is there overcapacity in China? Is the export of Chinese products an attempt to digest obsolete capacity or to revive the global economy? Will anti-China policies protect or harm Western industries? CGTN has introduced a six-part series "Debunk China's overcapacity fallacy" to analyze these matters. The second essay focuses on Washington's selfish calculations behind China's "overcapacity" allegations. Anthony Moretti, a special commentator for CGTN, is an associate professor at the Department of Communication and Organizational Leadership at Robert Morris University. The article reflects the author's opinions and not necessarily those of CGTN.

The latest attempt by the United States to undermine China's economic success story is to scream "overcapacity."

Before we discuss this flawed idea in more depth, keep in mind that earlier this year the buzzword was "decoupling." The ridiculous thought process then went like this: Unless China played by Western economic rules, the U.S. was prepared to reduce or eliminate its reliance on certain Chinese goods. Suffice to say, while that term was designed to suggest the Americans were ready, willing and able to go it alone (or only with its political allies), the reality was decoupling made as much sense as agreeing to undergo major surgery without anesthesia.

In other words, you might think you are being tough, but you are only being dangerously short-sighted.

Decoupling was never a sound strategy. In fact, it was not possible. But once it was tossed into the trash can, a new buzzword needed to be created so that the never-ending China bashing could continue.

Enter "overcapacity."

Summarized briefly, U.S. political leaders want global audiences to slam China for creating cutting-edge products at home that they also want to sell at the lowest possible price around the world. Before she traveled to China earlier this month, U.S. Treasury Secretary Janet Yellen said that China was undermining U.S. and European industries with such actions. In her words, "I understand these policies may be driven by domestic development objectives. But overcapacity can lead to large volumes of exports at depressed prices."

However, once "overcapacity" is scrutinized, uncomfortable questions for the West need to be asked.

Electric vehicles (EVs) and solar panels are two examples used when the overcapacity drum is banged. In its review of EVs, the Atlantic magazine offered this conundrum faced by the White House: "Chinese electric vehicles – cheap, stylish, and high quality – should be a godsend to the Biden administration, whose two biggest priorities are reducing carbon emissions quickly enough to avert a climate catastrophe and reducing consumer prices quickly enough to avert an electoral catastrophe. Instead, the White House is going out of its way to keep Chinese EVs out of the U.S. What gives?"

The article adds that the president – in a dogfight in this re-election year – is promoting gas-guzzling, climate-damaging and more expensive cars rather than endorsing policies critical to the administration's domestic and global agenda. Nevertheless, Americans would not rally around the president if they understood he was denying them a chance to save money and promote the environment. However, they might back him for criticizing China for "overcapacity."

Therefore, blocking Chinese-made EVs from the U.S. market while keeping tariffs in place on other Chinese-made goods remains critical to the president's hopes for four more years in the White House.

What exactly does that have to do with "overcapacity?" Nothing.

In fact, overcapacity becomes a smoke screen in this case to allow the White House to protect the perhaps out-of-date American automobile industry and to think about re-election.

The themes surrounding solar panels are the same. China is believed to be a global leader in investing in solar and in creating jobs in that sector. In 2023 alone, China added more solar panels than the U.S. did in the nation's history. According to the International Energy Agency, "China has been instrumental in bringing down costs worldwide for solar (photovoltaic technology), with multiple benefits for clean energy transitions."

That should be applauded, right? Yes, but not in the U.S. because businesses are examining their bottom line as they evaluate solar and reaching a conclusion the White House does not want. The Financial Times recently reported that U.S.-based power companies are buying Chinese-made solar panels rather than expanding domestic production. The reason? Cost.

The White House has responded to this issue by again suggesting China has an "overcapacity" of something and wants to sell it cheap. To no one's surprise, Washington is ready to add tariffs to such technologies. According to Reuters, the tariff request was made by a South Korean company that wants to increase its presence in the United States.

In other words, "overcapacity" is a smoke screen to alleviate the preferences of an international partner not located in China.

What Washington does not want to admit is that it is losing the EV and solar panel race. Beijing is far ahead because of its aforementioned commitment to looking not at short-term gains but at long-term objectives. The world will be a healthier place as more and more people buy EVs and incorporate green technologies, like solar, into their lives. But Washington will support those goals only if the U.S. is in the leading position in creating and selling them.

Selfish thinking is not a wise plan. It leads to ineffective decisions at home ("decoupling" is but one example) and makes global audiences see the inconsistency between saying one thing and doing another. The U.S. can do better. But the Biden administration is not prepared to do it. You might say the White House has an "undercapacity" of ideas.

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