Most G20 members, including the European Union, signed a U.S.-led joint statement calling for action to eliminate industrial overcapacity, a move experts say reflects a coordinated effort to assemble a “multilateral coalition” to pressure China amid growing trade imbalances. In the statement, issued by the Office of the United States Trade Representative, the U.S. and 14 other economies agreed to “take effective actions” to address structural excess capacity in several sectors such as electric vehicles, batteries, semi-conductors and solar panels. Signatories included the Trade Ministers of Argentina, Australia, Canada, the EU, France, Germany, India, Italy, Japan, South Korea, Mexico, Poland, Turkey, the UK and the U.S. China, Brazil, Indonesia, Russia, Saudi Arabia and South Africa – also G20 members – were not signatories.
The statement, which did not name China, also urged countries to end “non-market” policies and practices that distort markets and perpetuate excess production. The agreement was reached on the sidelines of an Organization for Economic Co-operation and Development (OECD) Trade Committee meeting. It came just days after G20 Trade Ministers failed to reach consensus on the issue at a meeting in Milwaukee, Wisconsin. Following the G20 meeting, China’s Commerce Ministry said most participating economies held differing views on excess industrial capacity, while Washington said only a handful of Ministers had opposed efforts to establish a pathway for cooperation.
The joint statement meant the U.S. wanted to “use the overcapacity narrative to assemble a multilateral coalition to put pressure on China”, said Zhao Minghao, Deputy Director of the Center for American Studies at Fudan University. While this strategy had been pursued since the Biden administration, the U.S. was amplifying it further now, he added.
At the same time, Europe wanted to use the statement to demonstrate a willingness to align with the U.S. in pressuring China, Zhao said. “While U.S.-Europe relations face significant challenges and their shared policy objectives are limited, pressuring China over capacity issues is one of the few areas where their goals genuinely overlap.” Similarly, Zhu Feng, Dean of Nanjing University’s School of International Studies, said the statement marked “a clear attempt by the EU to capitalize on Washington’s current momentum to further suppress China”. Zhu said the recent joint appeal by the leaders of France and Germany for tougher measures to address market distortions “aimed to further curb China’s production capacity”. He added that China should not assume it was just a “formal threat” from Europe, as it could turn into new trade measures, the South China Morning Post reports.
