'Overcapacity' an excuse to target 'made-in-China'

Recently some US and EU officials have said China's overcapacity distorts global pricing and production patterns. Concurrently, the Joe Biden administration is considering imposing high tariffs on Chinese steel and aluminum, potentially opening a new front in the ongoing trade conflicts in order to contain Beijing's "made in China" drive.

Overcapacity is an economic term that signifies a situation in which there is too much production capacity relative to current demand levels, and hence it should not be overly "pan-securitized". Capacity utilization rates are crucial indicators of whether capacity is adequately leveraged, with a very high rate generally indicating a shortage and a low rate suggesting excess capacity or an irrational capacity structure.

According to the latest data from Trading Economics, the US has a capacity utilization rate of 78.3 percent while China's stands at 75.9 percent. Developed countries including the US and European nations consider any rate between 79 percent and 83 percent an indicator of supply and demand. China's rate is not significantly lower than the healthy range.