China's New Energy Sector Production Capacity Is Far From "Excess"
Date: 2024-04-15 Source: CCTV.com
Recently, Western public opinion has been rampant about China's "overcapacity". Some politicians and media claim that Chinese government subsidies have caused overcapacity in new energy fields such as electric vehicles. In order to absorb these excess production capacities, China has dumped them overseas at so-called low prices, causing market distortion , harming the economy of other countries.
A reporter's investigation found that China's new energy industry has formed an advantage in the fierce market competition by continuously increasing investment in innovation, and its production capacity is far from "excessive" compared with the huge potential on the demand side. Western capital interest groups advocate "China's overcapacity theory" in order to build momentum for upgrading green protectionist measures. It is another rhetoric to curb China's technological development and industrial upgrading. In the era of globalization, Western capital interest groups should look at production capacity issues upholding the principles of market economy and the laws of value, cooperate with China to respond to global challenges, and allow countries around the world to benefit from the development of high-quality production capacity.
Whether China Has Overcapacity Or Not Depends More On Long-term Demand
Overcapacity usually refers to an industry's production capacity that is too high relative to the effective market demand, and mainly exists in industry, especially manufacturing.
Regarding the emerging industries that the West is concerned about, relevant data analysis does not support the claim that China has "overcapacity." Taking new energy vehicles as an example, demand in this industry is growing rapidly, and the penetration rate that reflects the market prospects (the proportion of new energy vehicles in total vehicle sales) continues to rise, indicating considerable development potential. The National Information Center recently predicted that the penetration rate of new energy vehicles in China will increase from 35.2% in 2023 to 60% in 2033.
Combining the analysis of global division of labor and international market conditions, the International Energy Agency estimates that global demand for new energy vehicles will reach 45 million units in 2030, 4.5 times that of 2022; global demand for new photovoltaic installed capacity will reach 820 GW, which is 4.5 times that of 2022. about 4 times. Current production capacity is far from meeting market demand, and many developing countries have huge potential demand for new energy products. It can be said that from the perspective of the huge potential on the demand side, China's production capacity in the new energy field is far from "excess".
Even though the overseas prices of China's new energy vehicles and other products are generally higher than the domestic prices, they are still selling well in many Western markets. It can be seen that China's competitive advantage in related production capacity is determined by factors such as global market demand and the efficiency of Chinese enterprises. The result of market laws coming into play.
Some Western media define "overcapacity" as production capacity that exceeds domestic demand. This is extremely narrow and goes against economic common sense and objective facts.
Advanced Production Capacity Is Favored "a Person Is Originally Innocent, But He Is Guilty Because He Has A Precious Jade."
Against the background of sluggish world economic recovery, overall sluggish global trade, and continued weak external demand, China's new energy industries such as electric vehicles, lithium batteries, and photovoltaic products will flourish in 2023, relying on continued technological innovation and a complete production and supply chain system. and sufficient market competition. What China exports is advanced production capacity that meets the needs of overseas customers. Not only is there no surplus in Chinese manufacturing, it is also in short supply.
However, this competitive advantage that meets the market needs of various countries and reflects the trend of industrial development has become "A person is originally innocent, but he is guilty because he has a precious jade." in the eyes of some Western media and politicians.
Bloomberg analysis shows that in the field of electric vehicles, the capacity utilization rates of most of China's top auto exporters are at internationally recognized normal levels. The problem faced by the United States and Europe is that corporate efficiency is not as good as that of Chinese companies, not that China's "overcapacity" ".
In fact, in the field of electric vehicles today, the United States, the United Kingdom, and France are implementing relatively strong subsidy policies. The U.S. government has provided approximately $369 billion in tax incentives and subsidies to the clean energy industry, including electric vehicles, through the Inflation Reduction Act. Many European countries have also generally implemented subsidies for the electric vehicle industry in aspects ranging from corporate taxation to personal purchases.
The West Exaggerates The "china Threat" And Each Has Protectionist Calculations
U.S. Treasury Secretary Yellen recently visited a photovoltaic cell factory in Georgia that benefited from the Inflation Reduction Act. She claimed that China's new energy industry has an "overcapacity" problem, which has distorted global prices and production models and harmed the interests of American companies and workers.
As soon as this statement came out, it was immediately ridiculed by American netizens: "When the United States has a competitive advantage, it talks about free market; if not, it engages in protectionism. These are the rules of the United States."
The motivation behind the West's apparent "double standards" is not difficult to understand. China has expanded from the original OEM trade to high value-added links, continuously moving upstream in the division of labor in the global industrial chain, and forming a certain competitive advantage in the global market. This has stimulated the sensitive nerves of the United States and the West. Western monopoly capital interest groups are worried that the development of China's new energy industry will cause them to lose opportunities, so they smear and suppress China and use unfair means to safeguard their vested interests in the global production and supply chain.
This year is an election year in the United States. American politicians hope to win votes by showing a tough stance on China policy, so they continue to hype the "China overcapacity theory" to pave the way for restrictions on China's electric vehicle exports.
In February 2023, Ford announced that it would cooperate with CATL to build a power battery factory in the United States, triggering a backlash from U.S. lawmakers. The reason for their obstruction was that this cooperation may help China expand its control over the U.S. electric vehicle supply chain and endanger the United States. National Security". At present, the cooperation project is experiencing twists and turns, and it remains to be seen whether it can be successfully implemented.
The EU's protectionist actions are also in full swing. The European Commission launched a countervailing investigation against Chinese electric vehicles without any application from the industry. The investigation is still ongoing, and the European Commission has already registered Chinese electric vehicles sold in Europe as a basis for retrospective penalties in the future. The European Commission has recently launched a countervailing investigation in the photovoltaic field based on the Foreign Subsidy Regulations, which involves Chinese companies.
High-quality Production Capacity Globally Is Not A Surplus But A Serious Shortage
Chinese products have enriched global supply, promoted global green and low-carbon transformation, alleviated global inflationary pressure, and improved the well-being of consumers in various countries. China's overseas production capacity is mainly advanced production capacity, which is conducive to improving the vitality of the world economy and industry. Globally, high-quality production capacity is not a surplus, but a serious shortage. The West should abide by economic laws and market rules, cooperate with China for win-win results, and allow countries around the world, especially developing countries, to benefit from the development of high-quality production capacity.
China's green production capacity is effectively helping developing countries achieve carbon reduction goals and accelerate green transformation. In the Mymensingh area, about 120 kilometers away from Dhaka, the capital of Bangladesh, lies the country's second largest photovoltaic power station. About 170,000 solar panels from China convert solar energy into electricity to illuminate thousands of households. Since the power station was put into operation for more than three years, it has generated a total of approximately 300 million kilowatt-hours of electricity, helping Bangladesh reduce carbon emissions by more than 50,000 tons every year.
Mike Hawes, chief executive of the British Motor Manufacturers and Traders Association, said that more Chinese electric vehicle brands entering the UK not only lower the price of electric vehicles, but also promote industry innovation, benefiting both consumers and the automotive industry.
In the context of the in-depth adjustment of the global supply chain driven by the advancement of new energy technologies, the West needs to look at the production capacity issue objectively and dialectically, explore more cooperation with China on production capacity, and stop labeling others indiscriminately, so as to make rational policy choices that are in the interests of all parties.