CGTN infographic by Sun Yiwen.
Editor's note: Recently, the U.S. and Europe have been hyping that China has reached overcapacity in the new energy industries. In response, CGTN has employed data to refute such accusations, particularly in the electric vehicle (EV) manufacturing sector, by analyzing four key aspects: price, technological innovation, export rate and capacity utilization. This episode will focus on capacity utilization.
Overcapacity refers to a situation in which an industry or sector produces more goods or services than the market demands. It is often measured through capacity utilization, with lower utilization rate suggesting excess capacity and potential inefficiencies in the industry.
China's industrial capacity utilization rate was 75.1 percent in 2023, according to the National Bureau of Statistics, a number below the internationally recognized normal threshold of around 80 percent.
However, "that doesn't seem to be causing alarm in Beijing," Bloomberg reported, saying the figure is higher than in 2016 and has shown an uptick in recent quarters.
"Under these circumstances, it is hard to believe that China has a serious structural overcapacity," said Fan Lei, an economist at Guolian Securities, as quoted by Bloomberg.
Moreover, the relatively low overall capacity utilization rate is due to a significant disparity among various sectors.
EVs have a high utilization rate compared to China's low capacity utilization rates in low-tech sectors such as cement and glass, said the Atlantic Council, an American think tank.
"In automobiles, producers of internal combustion engine (ICE) vehicles have suffered from very low capacity utilization rates—in many cases well below 50 percent – as consumers have been shifting from ICE vehicles to EVs. By contrast, EV producers, especially large ones like BYD, SAIC and Li Auto, have high utilization rates, exceeding 80 percent," the Washington D.C.-based think tank said.
CGTN infographic by Sun Yiwen.
According to an analyst comment published last December on the British automotive industry news site, Just Auto, "Hyundai Motor's capacity utilization rate will be only 23 percent in 2023, and Kia Motors' capacity utilization rate will be just 25 percent."
In contrast, data from JSC Automotive and the 2023 annual report of China Changan Automobile Group showed that among the Chinese leading car manufacturers, BYD realized 98.2 percent in capacity utilization in 2023, Li Auto reached 118.8 percent, and Changan Auto, 87.31 percent.
China's automobile industry set a new record in 2023, seeing both production and sales exceeding 30 million units for the first time.
CGTN infographic by Sun Yiwen.
China's automotive market is far from saturated, which means it will continue to maintain a faster and stronger growth momentum compared to the European and American markets, Ferdinand Dudenhoeffer, director of the Center for Automotive Research in Bochum, said in a recent interview with Xinhua.
The expert said large-scale production has enabled battery manufacturers in China to lower production costs and enhance the cost efficiency of lithium-ion batteries, adding that "this is one of the reasons why Chinese automakers can produce low-cost electric vehicles."