Workers install engines in new energy vehicles at the Dayun New Energy Vehicle Production Base in Yuncheng, Shanxi province, on Jan 25, 2024. [Photo/VCG]

New green sector issue political, not based on economic concerns

Despite external pressures and narratives surrounding the so-called overcapacity in manufacturing, China should and will remain steadfast in its commitment to fostering new quality productive forces and developing emerging fields with hard-won advantages, a senior economist said on Thursday.

In an exclusive interview with China Daily, Liu Xueyan, director of a key research department of the Chinese Academy of Macroeconomic Research, said: "China's edge in emerging fields like new energy vehicles is powered by market behaviors, especially sufficient market competition, rather than government subsidies.

"Overcapacity signifies a situation in which there is too much production capacity relative to demand levels. However, for the emerging industry, demand is uncertain.

"We don't know where demand peaks, so it's difficult to directly determine overcapacity based on the current production capacity and demand levels."

According to a report by the International Energy Agency, global total electric vehicle sales are estimated to reach 45 million units in 2030, more than triple the global sales volume in 2023 and 4.5 times that of 2022.

"The proportion of China's NEV exports in its NEV output remains significantly lower than that of countries and regions like South Korea, the United States and Europe," she said. "And the capacity utilization rates in China are reasonable.

"The narrative of Chinese overcapacity by some Western nations is more of a politically colored issue instead of purely economic concerns."

In fact, the Western narrative is more focused on China's advanced manufacturing, particularly in clean energy sectors such as EVs — areas where there is intense competition between China and the US and where China has a competitive edge.

He Yadong, spokesman for the Ministry of Commerce, told a news conference on Thursday that China has firmly rejected the allegations of overcapacity put forth by some Western nations, as such claims lack a rational basis and are driven by sensationalism rather than objective analysis.

During US Treasury Secretary Janet Yellen's trip to China in early April — her second visit to the country in nine months — she made the comment that China is flooding global markets with cheap goods, particularly in new green industries.

He said there is no overcapacity but rather a shortage on a global scale in the case of new energy sources, stressing that the development of green, low-carbon and environmentally friendly new energy sources is a vital measure for global climate change mitigation.

China's new energy industry continues to provide affordable and high-quality production capacity, and cater to the growing demand for new energy products. The country's efforts have played a crucial role in advancing global green development, He said.

China is willing to strengthen communication and coordination with all parties, based on market principles, to promote industrial cooperation, achieve mutual benefits and jointly advance global green development, He said.

"China is providing more growth opportunities to global stakeholders instead of posing challenges, with a rising number of foreign companies developing in China's ultra-large domestic market," said Liu from the CAMR.