China’s Ministry of Commerce (MOFCOM) issued a paper on so-called “China’s excess capacity”, which called for “a comprehensive, objective and fair view” of capacity issues, and for differences to be managed through open and mutually beneficial cooperation. Noting that “excess capacity” is a dynamic feature of a market economy and that capacity supply and demand are never in lasting balance, the document said that shifts in the global capacity landscape reflect international industrial specialization and cooperation. Yan Dong, Vice Minister of Commerce, said at a news conference in Beijing that some economies, concerned about their industrial competitiveness and market position amid sluggish global growth, have repeatedly invoked the so-called “excess capacity” line to justify protectionist measures.
Meanwhile, Washington is pressing ahead with a Section 301 probe launched in March into alleged structural excess capacity and production in manufacturing sectors across 16 economies, including China, the European Union, Vietnam and Mexico. U.S. Trade Representative Jamieson Greer hopes to conclude the probe soon and put forward a proposal that could lead to additional tariffs. Lin Weilong, Director of the Policy Research Department of the Ministry of Commerce, described the U.S. move as “a typical act of unilateralism”, saying that Washington had no right to unilaterally label its trading partners’ production as “excess capacity” and impose restrictions. He urged the U.S. to return to dialogue, emphasizing that China reserves the right to take necessary measures.
Looking beyond the immediate investigation, experts highlighted deeper concerns in the U.S. and Europe regarding industrial competitiveness. Cui Fan, Professor of International Trade at the University of International Business and Economics in Beijing, said that the relative decline in manufacturing competitiveness in the U.S. and Europe, particularly in emerging sectors such as clean energy, is partly due to inconsistent and frequently shifting policy support. “The excess capacity narrative ignores the contribution that China’s manufacturing sector has made to the global economy,” Cui said. “Shifting blame onto China does nothing to solve the problem,” he added, as reported by the China Daily.
