by Xin Ping
If you have been following Western media reports on China in recent years, you may have noticed something quite interesting: every one or two years, Western politicians would come up with a buzzword for their approach to China, or to profess some sort of concerns about China. Last year, it was "de-risk"; before that it was "decouple", a term coined by some American politicians. The latest is "overcapacity".
Yet none of these words could stand the test of time. Even the inventor of "decouple" has admitted that the goal was "virtually impossible." "De-risk" is losing charm as more and more Europeans realize it would only increase risks for Europe's own development. The narrative of "overcapacity" in China's new energy sector does not bear scrutiny, either. It is a mischaracterization of China's normal industrial transformation and a new variant of the "China threat" theory. The purpose is to undermine China's legitimate right to development. The damage will have to be borne by global green development.
Proponents of the false narrative are in bad need of some reality checks.
Reality Check 1: China's strong manufacturing industry, especially the new energy sector, is an important driving force for world economic growth and price stability.
In 2023, China's lithium batteries, photovoltaic products and electric vehicles, also known as the "new trio", recorded a total export of 1.06 trillion yuan, an increase of nearly 30 percent. China's photovoltaic module production has ranked first in the world for more than ten years, accounting for 80 percent of the world's output. Six of the world's top 10 power battery companies are from China. Affordable and good-quality new energy products as well as direct investment from China have met the needs of the consumers, enterprises and governments of many countries, giving a strong boost to global economic growth and inflation control.
Reality Check 2: China's new energy industry has contributed to the world's scientific and technological progress and facilitated the upgrading and development of the global manufacturing sector.
Thanks to robust innovation in China's new energy technologies, many core technologies were first introduced or put into mass use by Chinese companies. In the PV sector, China has seen rapid technological iterations and has repeatedly broken world records in terms of battery conversion efficiency. On wind power, China is a world leader in the R&D of large-capacity units, long blades and high tower applications. On equipment manufacturing, China has built the world's largest, most complete and competitive new energy industrial and supply chains, and is home to a number of world-class energy equipment manufacturers.
Reality Check 3: China's new energy industry has provided significant support for tackling climate change and promoting green and low-carbon development.
According to the International Energy Agency, in 2022, China's renewable energy power generation was equivalent to roughly 2.26 billion tons of reduction in domestic carbon emissions. Wind power and photovoltaic products exported by China helped other countries cut 2.84 billion tons of carbon emissions. China's contribution to global carbon emission reduction converted from renewable energy generation has reached 41 percent, and the number is 2.5 times, 4.1 times, 7.0 times and 8.6 times that of the U.S., Canada, India and Germany respectively. If the carbon peak and carbon neutrality targets announced by countries are to be realized, global demand for new energy vehicles will reach 45 million in 2030, and China's EV makers can help fill the gap in the global market. Saudi Aramco CEO Amin Nasser noted at the World Energy Congress that China has substantially helped Western countries achieve net zero carbon emissions by lowering the cost of solar panels and electric vehicles. Given the huge global demand for new energy products, China's production capacity is anything but "excess".
Apart from being inconsistent with the facts, blaming China for "overcapacity" is also unfair. In today's modern economic system, the division of labor is interregional and transnational. Output and demand are not to be calculated only within borders or regions, and it is common for countries to produce more than they consume domestically. For example, 80 percent of U.S.-made chips and German-made cars are for export. Boeing and Airbus export in large numbers. Are they dumping excess capacity? Are they hurting other economies? Why is it only different with the green and low-carbon sector, in particular cutting-edge technologies? Only because it is China? If this is the case, it just shows how uneasy and anxious the U.S. is getting when it comes to China's strong manufacturing power.
Hyping up China's "overcapacity" threatens all. It not only hurts consumer interests in many countries, but also makes the global allocation of resources less efficient, undermining stability and order across production and supply chains and slowing down the green transition of the global economy and the development of emerging industries.
The U.S. needs to know that the best way to alleviate its anxiety is cooperation rather than confrontation. Truth is, the so-called "overcapacity" in China's green sector actually broadens the room for China and the U.S., as well as many other countries to work together. After all, a world with new techs and a better environment is what we all want. China is making efforts to contribute its share. Why wouldn't the U.S. get on board?
(The author is a commentator on international affairs, writing regularly for Xinhua News, CGTN, Global Times, China Daily etc. He can be reached at xinping604@gmail.com)
