The Debate Over China's 'overcapacity' - Free Websites, Share News And Posts Publicly

In recent weeks, leaders of the United States, France, Germany and other G7 countries have raised the alarm about overcapacity in the Chinese economy in three areas – electric vehicles (EVs), solar panels and batteries.

In response, President Xi Jinping says overcapacity does not exist. What’s at stake for China and the West?

Europe’s auto industry is facing strong pressure from Chinese EVs. In the last year, several car factories have shut, and over 15,000 related job cuts have been announced. The industry is a big part of the economy and contributes to 6 per cent of total EU employment; jobs are a hot-potato election issue.

Over in the US, we documented the effects of the first China shock in Season 1 of When Titans Clash back in 2021. Then, 5 million manufacturing jobs were lost, leading to all sorts of social problems from drug abuse to depression.

Some economists now warn of an impending second China shock, and this time, it will be in advanced manufacturing sectors. On May 14, President Joe Biden announced tariffs on China imports.

In China, the old economic growth model of property and infrastructure development no longer holds. China announced the “Made in China 2025” vision almost 10 years ago, and worked towards global technological competitiveness in EVs, solar panels and batteries.

Now faced with high youth unemployment and lackluster economic growth, it needs these three clean-tech sectors to power the economy – but faces strong resistance with disputes over its “overcapacity”.

How is this tussle between China, Europe and the US unfolding? Are we witnessing a start to a trade war between Europe and China?

Pearl Forss

Producer, When Titans Clash

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