CXSE - China's Overcapacity Debate And How To Avoid A Collision Course
2024-05-28 08:30:00 ET
Summary
- The overcapacity debate is not really about overcapacity in its most precise term, but rather what we call “problematic overcapacity”.
- We expect it will be difficult to avoid friction given the rise of protectionism, heightened geopolitical friction, and the sheer scale of China’s economic transition.
- The best realistic path forward may be to find areas for cooperation where possible, while protecting domestic industries where necessary.
By Lynn Song
The deba te on overcapacity is heating up
Discussions about China’s overcapacity issue have been ongoing for many years. Most recently, various industries, such as those dealing with solar panels, wind turbines, steel, and cement, have started to debate the issue.
The discourse was reignited following US Treasury Secretary Janet Yellen’s visit to China in April, where she brought up concerns about industrial overcapacity, noting that China’s economy was too large to “export its way to rapid growth,” and called for shifting away from state-driven investment and returning to market-oriented reforms....
China's Overcapacity Debate And How To Avoid A Collision Course