Western industrial rhetoric nothing but an economic fallacy

The United States and its Western allies have been hyping up the non-existent China's "overcapacity" issue to justify their protectionist measures and to paint China as a threat to international trade. A closer analysis, however, shows this narrative is deeply flawed and those using it are overlooking the complexities of global economic dynamics. Rather than representing an existential threat, China's purported overcapacity reflects the evolution of its industrialization process and its efforts to meet shifting market demands.

Overcapacity, in general, refers to a situation in which production capacity exceeds market demand. While it is undeniable that China experienced periods of overinvestment and misallocation of resources during its rapid industrialization process, viewing the country's current economic landscape solely through the lens of overcapacity is oversimplifying a complex reality. By resorting to such accusations, the US-led West refuses to acknowledge the significant strides China has made in optimizing its industrial structure and enhancing the quality and competitiveness of its products.

During the initial stages of China's industrialization, spurred by market reforms and globalization, there were instances when the country's industrial output outpaced domestic and global demand projections. Sectors such as steel, coal and cement had overcapacity as a result of ambitious investment initiatives and optimistic growth forecasts. However, it is necessary to recognize that overcapacity is not a static phenomenon but rather a dynamic process influenced by market forces and technological advancements.