China and Trade Partners at Odds Over How to Define and Address Industrial Overcapacity

China sees overcapacity and overproduction differently than the US and its trade partners. China is worried about disorderly competition and low factory utilization rates rather than total capacity and production volume.

The US and others are concerned about the rapid rise in China's overall production capacity, especially in green sectors like EVs and solar panels. This could flood global markets and hurt industries in other countries.

China has pushed back against criticism, pledging to prevent overcapacity but letting market forces play a role. China says linking economic issues like this to national security is counterproductive.

The different perspectives mean China's oversupply across sectors will likely persist, especially with its large trade surplus reducing pressure to tackle it.

Despite trade disputes, analysts expect China to continue dominating global green manufacturing with its efficient supply chains and intense private sector competition.