Wang Huiyao: US concern about China’s overcapacity is a non-issue, just like in 2009
Residential buildings with solar panels are seen from the air in Yinchuan, Ningxia, in northwestern China, on March 31. US Treasury Secretary Janet Yellen recently said China should address its overcapacity issue, particularly with regard to clean energy products. Photo: AFP
SCMP OP-Ed
■ The narrative sounds similar to that during the global financial crisis when, as a result of its massive stimulus package, China became the world’s largest exporter amid weak demand.
■ Instead of pointing fingers, China’s green capacity should be viewed within the broader framework of climate change cooperation.
By Wang Huiyao | Founder of
the Center for China and Globalization(CCG)
The issue of overcapacity in China has once again found its way into international discourse. During her recent visit to China, US Treasury Secretary Janet Yellen emphasised the concerns shared by the United States and other nations over China’s industrial overcapacity spilling into the global economy.
Echoing Yellen, US Secretary of State Antony Blinken also raised unfair Chinese trade practices during a subsequent meeting with local government officials in Shanghai.
Overcapacity, denoting a situation where production surpasses demand, has become a recurring theme in discussions on China’s economic landscape, resonating across various sectors and industries.
Lu Feng, emeritus professor of economics at Peking University, recently shed light on the dimensions of the current wave of overcapacity. He pointed to sectors including petrochemicals, semiconductors, autos, new energy vehicles and batteries.
For instance, Chinese exports of lithium-ion batteries surged more than 30 per cent year on year in 2023. In the same year, China also exported 1.2 million electric vehicles, 80 per cent more than a year ago.
The rapid growth of China’s EV exports, in particular, has driven discussions on Chinese overcapacity. Fuelled by geopolitically charged mistrust, these concerns have been amplified into a chorus of anxiety.
However, the current narrative of Chinese overcapacity sounds rather similar to that during the global financial crisis of 2008, as China’s 4 trillion yuan (US$580 billion) stimulus package led to expanded industrial input and concerns over Chinese exporting overcapacity.
China became the world’s largest exporter in 2009, triggering apprehension about an economic model more centred on acquiring market share than brand-building. Back then, the contraction of global trade exacerbated fears about overcapacity, so much so that The New York Times ran a piece fretting over China’s excess capacity.
Yet, history reveals that this state of affairs was short-lived, and that the hand-wringing about overcapacity was unnecessary. Global demand quickly recovered in 2010, as exports grew 14.5 per cent, a rebound from the 12 per cent fall in the previous year. And concerns about China’s capacity began to dissipate.
It became evident that the outcry about overcapacity was largely inspired by the global economic slowdown and diminished market demand rather than inherent flaws in China’s industrial model.
Fast-forward to 2024, and the global economic landscape is marked by geopolitical turbulence, and international trade dynamics are unfolding differently.
Despite this, international demand has shown noticeable resilience, and forecasts indicate a gradual recovery in global trade. The world electric vehicle market, in particular, is witnessing exponential growth, with sales soaring 35 per cent year on year in 2023 and projections indicating further expansion.
BYD electric vehicles are lined up ready to be loaded onto the ship BYD Explorer No 1 for export to Brazil, at the port of Lianyungang in Jiangsu province, on April 25. Photo: China Daily via Reuters
Similarly, the solar panel market presents immense growth potential, with the International Energy Agency (IEA) forecasting that global demand for new photovoltaic installations will reach 820 gigawatts, about four times that of 2022, if the goal set by the Paris Agreement is met.
The global market’s green appetite is huge and dwarfs the capacity of suppliers. To achieve the climate goals outlined in the Paris agreement, substantial investments in clean energy are imperative – according to the IEA, US$4.5 trillion would be needed per year, yet renewable energy spending in 2023 is expected to be only US$1.8 trillion.
The gap between required investment and actual expenditure underscores the need for highly cost-effective products, advanced technologies and efficient resource allocation. It is impossible for China to tackle the climate challenge alone.
Instead of addressing so-called overcapacity, we need global collaboration across industries and sectors to increase the momentum of the global sustainable economy.
As the world transitions to environmental technologies, maximising the capacity of green suppliers is critical in combating climate change. Rather than resorting to finger-pointing and protectionism, fostering cooperation among all stakeholders – manufacturers, researchers, suppliers, investors and consumers – is paramount.
China, with its diverse industrial capabilities, plays a pivotal role in the global manufacturing landscape, accounting for about one-third of the world’s manufacturing output.
Viewed within the framework of economic globalisation, China’s capacity is indispensable to meeting international demand. Moreover, an integrated global market not only requires diverse participation but also offers mutual benefits, fostering a win-win scenario for stakeholders.
In conclusion, the narrative surrounding overcapacity in China must be contextualised within the broader framework of sustainable industrial growth and global collaboration.
As the world embraces the green transition, leveraging collective capacities and resources is imperative in addressing the challenges posed by climate change. Instead of fragmentation, concerted efforts towards cooperation and innovation will pave the way for a more resilient and sustainable future for all.
From SCMP， 2024-5-2
CCG Books
● Published by Springer
● Authors: Wang Huiyao
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The book raised the question of how relations between the US and China will unfold is one of the most consequential of the 21st century. In the past decade, perhaps no thinker has had a greater influence on how this question is understood in both the US and China than eminent Harvard scholar Graham Allison, who developed the idea of the Thucydides Trap to warn of the risk of war erupting between a rising power and a ruling power in the power transition process.
This book presents a comprehensive collection of Allison’s views and writings on US-China relations from 2017 to 2022, covering a range of topics including the balance of power between the two sides, where the relationship is headed, and lessons from history on how conflict can be avoided.
● Links：
https://link.springer.com/book/10.1007/978-981-99-2236-9
● Published by Springer
● Authors: Joseph S. Nye
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This open access book consists of essays selected from Joseph S. Nye, Jr.’s last three decades of writing and illustrate a variety of perspectives on the nature of power, the role of the United States in the world and US-China relations. Through this collection, it is hoped that readers will gain a better understanding of today’s global environment and find that while great power competition may be inevitable in a world as centers of power shift, cooperating to address transnational challenges can be a positive sum game.
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● Published by Palgrave Macmillan Singapore
● Editors: Wang Huiyao, Miao Lu
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This book aims to help readers make sense of our changing world by sharing the views of global thought leaders on some of the most important issues of our time, from US-China relations and global governance to climate change and the COVID-19 pandemic.
The ten dialogues in this book were part of the “China and the World” series of online discussions hosted by the Center for China and Globalization (CCG). The series features CCG President Huiyao Wang in conversation with experts from a range of fields, from renowned scholars of international relations, economics, and history, to journalists, policymakers, and business leaders.
● Links：
https://link.springer.com/book/10.1007/978-981-19-3846-7
● Published by Springer
● Authors: Wang Huiyao
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This book focuses on globalization and China’s evolving role in the world, offering unique perspectives on a number of developments during a tumultuous period that began with Donald Trump’s election and ended with the outbreak of the Covid-19 pandemic. This period saw the global landscape reshaped by China’s continued rise, intensifying great power competition, and a public health crisis that has changed how we live.
The essays center on three interconnected themes – China’s remarkable development under its policy of Reform and Opening-up, China’s deepening integration into the global economy and rise in an increasingly multipolar world, as well as the quest to revitalize global governance and multilateralism to address the pressing global challenges of the 21st century.
● Links：
https://link.springer.com/book/10.1007/978-981-16-9253-6
● Published by Springer
● Edited by Wang Huiyao and Miao Lu
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China and the World in a Changing Context-Perspectives from Ambassadors to China is the latest volume in CCG’s “China and Globalization” series, which seeks to create a balanced global perspective by gathering the views of highly influential scholars, practitioners, and opinion leaders from around the world on issues of policy and governance.
Ambassadors are a kind of vehicle and bellwether for globalization. These diplomatic envoys serve as pivotal contact points between nations across a wide range of fields, from economics and culture, to health and the environment. The special group of ambassadors in this book – all based in Beijing – are at the forefront of what, for many countries, is one of their most important bilateral relationships and the platform for one of the most striking and consequential developments in global affairs in the 21st century: the rise of China on the world stage.
● Links：
https://link.springer.com/book/10.1007/978-981-16-8086-1
● Published by Springer
● Edited by Wang Huiyao and Miao Lu
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Released nearly two years after the outbreak of COVID-19, Transition and Opportunity brings together an array of CEOs and senior executives from leading multinationals, leaders of foreign trade associations and representatives of advocacy groups on the ground in China to share their views on the potential and risks China holds for business as the world economy recovers.
The 22 entries in this book include contributions from the heads of Beijing-based chambers of commerce representing the EU, the US, France, Switzerland and Brazil and others, CEOs and senior executives of MNCs like Airbus, Royal DSM, Michelin, LinkedIn and Herbalife as well as representatives of global consulting firms like KPMG, PwC, Accenture and Roland Berger.
Divided into three parts - ‘The Big Picture,’ ‘Analysis and Advice,’ and ‘On the Ground’ - content progresses from looking at how countries balance their own interests with China’s for that elusive ‘win-win’ formula, to the role consultancies and advisors play in helping companies succeed, then looking at the experiences of individual companies to see how they have adapted and thrived in China.
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https://link.springer.com/book/10.1007/978-981-16-8603-0
● Published by Springer
● Edited by Wang Huiyao and Alistair Michie
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This book brings together leading international scholars and policy-makers to explore the challenges and dilemmas of globalization and governance in an era increasingly defined by economic crises, widespread populism, retreating internationalism, and a looming cold war between the United States and China. It provides the diversity of views on those widely concerned topics such as global governance, climate change, global health, migration, S&T revolution, financial market, and sustainable development.
● Links：
https://link.springer.com/book/10.1007/978-981-16-5391-9
● Published by Springer
● Edited by Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China
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The internationalization of Chinese enterprises is one of the most notable aspects of economic globalization in the 21st century. Despite the 2008 financial crisis and weak global outbound investment, under the “go global“ initiative, Chinese outbound investment has gone from strength to strength, while also diversifying in terms of investment modalities, destinations, and industries. However, growing anti-globalization sentiment in some countries has also created new challenges for Chinese firms expanding internationally.
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This book provides a comprehensive overview to help readers to grasp the broad picture of the international expansion of Chinese enterprises. It has important reference value for enterprises to help devise foreign investment strategy, seize opportunities, and navigate challenges in the course of globalization.
● Links：
https://www.springer.com/cn/book/9789811546457
● Published by Edward Elgar
● Edited by Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China
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An excellent guide for understanding the trends, challenges and opportunities facing China through globalization, this Handbook answers the pertinent questions regarding the globalization process and China’s influence on the world.
With contributions from leading experts and international researchers, each chapter covers key topics regarding China’s participation in globalization, including: China’s new role in global economic governance; outward direct investment; China’s soft power and the implications for foreign relations; global migration, diaspora and talent. An enriching range of case studies and extensive empirical research are used to explore the successes and failures of globalization in China, and to discuss the dilemmas facing decision makers in today’s globalized world. A major contribution to the field, this Handbook offers valuable insights to China’s often misunderstood globalization process.
An essential reference for academics and researchers looking for a go-to empirical resource, this Handbook provides scholars of economics, politics and East Asian studies with an exemplary selection of contemporary research on China and globalization.
● Links：
https://www.e-elgar.com/shop/handbook-on-china-and-globalization
● Published by Springer
● Authors: Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China
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https://www.springer.com/gp/book/9789811362552#aboutBook
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