'Overcapacity' just an excuse to undermine fair market practices

The BMW Group recently announced an additional investment of 20 billion yuan ($2.78 billion) at its Shenyang production base in China's Liaoning province, with a view to achieving localized production of new-generation BMW models by 2026.

The move reflects BMW's expectations of China's electric vehicle market, and its refuting of allegations of the "excess production capacity" in China's EV sector. Some politicians in the United States and the media have in recent days hyped up "overcapacity" in China's EV sector, claiming that such overcapacity is putting pressure on industrial development, enterprise survival and people's jobs in other countries.

The groundless accusation is, in essence, an excuse for imposing more economic and trade restrictions on China.

In the context of economic globalization, whether or not there is excess production in relevant sectors depends on a country's domestic market demand and industrial operation, as well as on global market demand, industrial development trends and potential. From a global perspective, the current production capacity of EVs is far from meeting market demand, especially as the potential demand for EVs in many developing countries is huge. According to the International Energy Agency, global demand for EVs will reach 45 million in 2030, more than three times that of 2023.

Some in the US claim that the development of China's EVs is highly dependent on government subsidies, which creates "unfair competition" for other EV producers. This accusation is groundless and absurd. The vigorous development of China's new energy sector relies on the continuous independent innovation of enterprises, a stable and secure supply chain, a higher degree of industrial agglomeration, full-fledged competition and the strong support provided by China's large market to rapid technological iteration. These factors have helped China's EVs lead the world in terms of production and marketing scale, technological innovation, and industry chain cultivation.

Be it the "China threat" or "China shock" or "China's overcapacity", these are all different narratives created by some in the US to smear China in order to undermine the fair market principle and defend their unpopular protectionist economic policies.

-Economic Daily