China Rejects "Overcapacity" Claims, Citing Globalization and Fair Competition

China has firmly rejected claims of "industrial overcapacity," a contentious issue fueling trade tensions with its global partners. The Ministry of Commerce published a document arguing that some nations "politicize" trade matters out of fear of losing competitiveness, using the overcapacity argument as a "pretext" to impose restrictive measures against Beijing.

The Chinese government contends that the global distribution of industrial capacity is a natural outcome of the international division of labor and the historical evolution of globalization. It points to past shifts in manufacturing power, from the UK and US to Europe, Japan, East Asia, and now China, as evidence of this dynamic process. Beijing views its role as the "world's factory" as a product of its integration into the global economy and its participation in international manufacturing networks.

Beijing further argues that "overcapacity" is a dynamic phenomenon inherent to market economies, lacking a universally agreed-upon definition by international bodies like the World Trade Organization. The ministry refutes the notion that industrial subsidies, trade surpluses, or market competition automatically equate to overcapacity. Instead, it accuses the United States and the European Union of employing "double standards" through their own public aid programs, local content requirements, and foreign investment restrictions.

China maintains it adheres to WTO rules, stating its subsidies are "transparent and non-discriminatory." The nation's industrial competitiveness, it asserts, is built on innovation, its vast market scale, efficient supply chains, and corporate investment. China also denies deliberately pursuing trade surpluses, highlighting its role not only as an exporter but also as a significant consumer and importer.