China Faces Overcapacity and Trade Barriers in Key Clean Energy Sector
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China's new-energy industry, like electric vehicles and solar panels, is facing a major overcapacity problem due to overinvestment and competition. This could stall growth in a key economic sector.
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The overcapacity stems from insufficient domestic demand and infrastructure to utilize the supply. Exporting more new energy products is seen as the best solution.
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However, China faces rising trade barriers and backlash in western markets over its dominance and perceived unfair competition from Chinese manufacturers.
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To address this, China aims to increase infrastructure to boost domestic demand. It also wants more influence in setting international industry standards.
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The overcapacity results from market players rushing into the same profitable industries, leading to redundancy. This "involuted" competition creates a self-defeating cycle.