Home Voices Please Do Not Disguise Trade Protectionism As Overcapacity

Please Do Not Disguise Trade Protectionism As Overcapacity

by WANG Xuekun 
11:35 am

Chinese Electric vehicles

It has been quite some time that western politicians and media outlets started to play up the allegation of China’s overcapacity in electric vehicles and other new energy industries.

On June 12, the European Commission announced that it will impose extra duties of up to 38.1% on imported Chinese electric cars, following the US plans to quadruple duties for Chinese EVs to 100%.

Those tariff barriers come with little factual basis. Without an internal applicant from the industry, and regardless of WTO rules, the European Commission has forged and exaggerated “subsidy” projects, abused the rule of “Facts Available” and slandered about Chinese subsidies.

To be honest, the prices of Chinese EVs are higher in many western countries than in domestic market. There is little effect of the “subsidy” given the sales condition. The competitiveness of China’s EV and new energy industry overall, comes from the innovation and high efficiency of Chinese enterprises. It is rooted in the large-scale market, complete industrial systems and plentiful human resources of China.

China’s new energy industry is far from overcapacity, either judging from a domestic perspective or from a global perspective. In 2023, there are 435 million motor vehicles in China, of which only 20.4 million are new energy ones and 15.5 million are pure electric. Apparently, the proportion is still low. The export of China’s new energy vehicles accounted for only 12.5% of the total production and the sales accounted for only 8% of global volume. According to the International Energy Agency (IEA), in order to achieve the goal of carbon neutrality, global new energy vehicle sales need to reach about 45 million in 2030, more than three times the number in 2023. Global demand for power batteries will reach 3,500 GWh, more than four times the global shipments in 2023. It means that the world including China needs further development to meet a greater market demand, especially that in developing countries.

It is sheer double standard that some western countries are subsidizing their EV manufacturers and other renewable energy products while they are in a hurry to imposing tariffs on Chinese products.

It is clear hypocrisy that they are trying to force China and other developing countries to shoulder excessive responsibilities of emission reduction, while preventing developing countries to build up their own renewable energy industries.

Certainly, the double standard and hypocrisy are nothing new. Those western countries have selling the fallacy about China’s so-called “overcapacity” as early as the 2000s. When China joined the World Trade Organization (WTO), some western politicians regarded China’s high-quality exports with reasonable price as a threat, not benefit for western consumers. After the “Belt and Road” initiative was proposed, some people repeatedly smeared Chinese public goods and services for their own interest. In recent years, China’s new energy industry enters a “fast lane”. The export of new energy vehicles, lithium-ion batteries and photovoltaic products reached a trillion yuan for the first time, up nearly 30% in 2023. Those people came again, besmirching China’s new energy with arguments like “enormous export means overcapacity”.

Those illogical and irrational actions go against the market. While some countries are restricting China’s export on the supply end, the overseas market demand of Chinese products including EVs keeps surging. While the same countries are impeding their suppliers from exporting to China, especially in hi-tech industries like chips, the Chinese market is also in great demand. It is a simple fact that world’s leading manufacturers are seeking to set up factories in China and many countries are vying for the investment from China and job opportunities created thus. There are mutual needs instead of overcapacity. We shall let the trade flow rather than trenching us with trade protectionism. The cliché of so-called overcapacity will disrupt the stability of the global supply chain, impede international trade, and hinder the green transformation of the global economy, resulting in a lose-lose situation.

We have all learned the historical lessons of trade protectionism, all embarked on the shared journey of globalization and integration, and are all aware of the importance of openness, inclusiveness and win-win cooperation.

Therefore, it will be in the interests of every countries, to foster a fair international environment for trade and competition, and jointly protect stable industrial and supply chains, rather than disguising trade protectionism and double standard as overcapacity, or other easy excuses.

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