Does Exporting Too Many Goods Equal Overcapacity? Totally Untenable!
New energy vehicles, lithium batteries, and photovoltaic products. Last year, China's "three new" product exports exceeded one trillion yuan for the first time, an increase of nearly 30%. Many people in the international business community have praised China for its firm promotion of green transformation. However, some people in the United States have actually labeled China's new energy industry as "overcapacity," saying that "too many export commodities means overcapacity." "China's production capacity greatly exceeds China's domestic demand and exceeds the capacity of the global market." ability".
This argument is completely untenable.
Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, an American think tank, said bluntly: "This view seems to mean that no country should produce products beyond its domestic sales capacity." "This argument goes to extremes and will lead to differences between countries. Without trade, it would be an economic disaster for the world."
As economic globalization develops in depth, different countries divide labor and cooperate, each giving full play to their comparative advantages, and then exchanging what they need through international trade. This leads to technological progress, improved efficiency, and win-win cooperation. According to the logic of some people in the United States and other Western countries, if a country's production capacity exceeds its own demand, it is "overcapacity." Then, the United States exports large quantities of chips, aircraft, soybeans and other commodities every year, and the United States is also properly "overcapacity."
To equate "too many export commodities" with "overcapacity" is to be completely inconsistent with the truth. If we analyze it carefully, it goes against the facts and is fabricated out of thin air.
Does China really export a lot of new energy products?
From the perspective of growth rate, China's "three new" products have become popular all over the world in the past two years, achieving rapid growth in exports. However, in terms of proportion, China's new energy vehicle exports account for a much lower proportion of production than countries such as Germany, Japan and South Korea. For example, Germany produced 4.1 million cars last year, of which 3.1 million were exported overseas, accounting for nearly 80% of the total. Last year, China produced 9.587 million new energy vehicles and exported 1.203 million vehicles, accounting for only one-eighth of the total.
Bloomberg columnist David Ficklin analyzed that, "The West is worried about China's new energy products impacting the world, but the share of related technology products in China's exports is still quite small."
Is China's green production capacity really "excess"?
When looking at production capacity issues, we must have a market perspective.
Under market economy conditions, the balance between supply and demand is relative, and imbalance is common. Moderate supply exceeding demand is conducive to promoting market competition, survival of the fittest, promoting technological innovation and cost reduction, and is conducive to allowing consumers in various countries to obtain better products and services at lower costs. In other words, fair competition is the original meaning of market economy and an important driving force for the progress of human society. It is a rule generally followed by enterprises in the "global village". BMW Group Chairman Zipzer's view is very objective: "We do not feel threatened, and we should not exaggerate our fear of foreign manufacturers." "We actually see more opportunities than risks."
Price is an important "wind vane" for judging the relationship between supply and demand. If there is "overcapacity" as some people in the United States say, the price of China's new energy products in the international market should continue to be low. In fact? As China's electric vehicle exports increase, so do prices. The average selling price of China's leading electric vehicles in Europe is about twice that in China. The increase in quantity and price means that supply obviously exceeds demand. How can we talk about "surplus"?
When looking at production capacity issues, we must also have a global perspective.
It is only natural that a country's industrial development should try its best to meet the needs of its citizens. China is building a new development pattern, pursuing "domestic circulation as the main body and domestic and international dual circulations reinforcing each other." The huge domestic demand potential provides Chinese enterprises with broad development space. Currently, there is still huge room for growth of new energy vehicles in China's third- and fourth-tier cities and rural markets. Some analysts predict that the penetration rate of new energy vehicles in China will increase from 35.2% in 2023 to 60% in 2033. In other words, meeting the growing needs of more than 1.4 billion Chinese people for a better life is inseparable from the development of the new energy industry, the improvement of production capacity and technological levels. No one is qualified to criticize this.
A country's industrial development must focus on the overall global industrial situation. In order to cope with climate change, more than 130 countries around the world have set carbon peak and carbon neutrality goals, and the demand brought by green development will continue to grow. According to estimates by the International Energy Agency, global demand for new energy vehicles will reach 45 million units in 2030, more than four times that of 2022; global demand for new photovoltaic installed capacity will reach 820 gigawatts, approximately four times that of 2022. Far from being "surplus" in new energy products in the global market, there is actually a shortage! As an important producer of green products, China has no reason not to join in and actively participate.
In fact, in the field of new energy, Chinese companies are continuing to contribute to the world: in Hungary, BYD is building a new energy vehicle production base in phases, which is expected to create thousands of local jobs; in Thailand, Changan , SAIC, BYD and other companies are actively building factories, with a planned total investment of more than 10 billion yuan. Whether they are exporting products to meet the needs of the global market, or building factories overseas to stimulate investment, create employment, and expand industries, Chinese new energy companies have always pursued mutual benefit, win-win results, and common development. This has also won praise from many international people - the website of the American "Diplomat" magazine noted that Southeast Asian countries actively strive for cooperation with Chinese electric vehicle companies, "not only strengthening the inevitable transformation from fossil fuel vehicles to electric vehicles, but also through technology Exchange promotes economic growth".
Since it makes no sense, why do some people in relevant countries concoct the "overcapacity theory" of China's new energy industry?
Behind such "certain words" lies the evil intention of trade protectionism. French entrepreneur Bertrand's point of view is right to the point: "The substantive issue in the relevant argument is competitiveness, not production capacity. Some Western countries are worried that China is developing too fast and Chinese companies are becoming more and more competitive, which will affect themselves." Threats to dominance in related fields."
Such "overcapacity theory" of China's new energy industry stems from the long-standing "double standards" of some people in relevant countries--
"I can use government resources and allocate funds to support the development of high-tech and emerging industries. You cannot rely on industrial policies to cultivate industries."
"When it comes to combating climate change, we believe that new energy production capacity is still insufficient. When it comes to China's new energy industry, we blame 'overcapacity'."
"When I have a competitive advantage, I advocate free market. If not, I advocate protectionism"...
Facts and truth will not change because some people use hegemonic thinking to label them and claim that they have the "right to interpret." Binding the development of the global new energy industry with short-sighted trade protectionism will undoubtedly weaken the ability of countries to cope with climate change and promote green development, and will ultimately "shoot themselves in the foot."
International trade is not a "zero-sum game" in which you lose and I win. No countercurrent can stop the tide of economic globalization that is inclusive and beneficial. With open cooperation and mutual benefit, the market for global green products will grow bigger and bigger, and the future of human society will become better.