Published: 09:57, June 6, 2024
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Overcapacity notion is a false proposition
By Kevin Lau

If some people consistently lie and indulge in inconsistent behavior and self-contradictory actions, what they say must always be nonsense.

Recently, some Western politicians and media outlets, primarily from the United States, have been making a big deal about the so-called overcapacity in China’s new energy products, with some even alleging that it poses a global threat. These people are detestable and malicious. When their own products sell well in the global market, they claim that it demonstrates the superiority of the free market mechanism. But when their products don’t sell and they see other countries’ products growing their market share, they become envious and forget all about the free market mechanism, and simply accuse other countries of having overcapacity.

It’s acceptable for them that Microsoft Windows dominates the global market, but it’s not okay if China’s new energy vehicles sell well because of their high quality and low prices. This is utterly unreasonable and tyrannical behavior that should not be tolerated.

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Not too long ago, US President Joe Biden announced new tariffs on some Chinese goods, including a 100 percent tariff on Chinese-made electric vehicles. In April, US Treasury Secretary Janet Yellen visited China, with one of her main objectives being to discuss the so-called overcapacity issue regarding Chinese electric vehicles, solar panels, and other clean energy products.

Since the United States keeps claiming to uphold the free economy and free market mechanism, it should not indiscriminately equate market popularity with overcapacity

Yellen alleged that China has overcapacity in new energy products. But when her boss President Biden explained the substantial increase in US tariffs on Chinese electric vehicles during an interview, he candidly stated that his action was intended to “protect American auto workers” from Chinese electric vehicles taking too big a market share. Any clear-thinking person can see that Biden’s explanation is the real reason, and Yellen’s overcapacity notion a false proposition. Their inconsistent narratives are clear for all to see.

The accusations from the US side against China over electric vehicle exports largely ignore the facts. And what are the facts? The fact is that most Chinese new energy vehicles are already sold at much higher prices overseas than domestically, with the average price of some leading models in Europe about twice that of their domestic prices. Thus, the allegation of “low-price dumping” by China is completely unfounded. From an economic perspective, industrial production involves the objective reality of international division of labor. Some countries produce and export certain products at lower prices, achieving mutual benefits through international trade, thereby improving the welfare of people in all countries. The fruit and other agricultural products produced and exported by Southeast Asian countries are cheap, but we can’t say they have “overcapacity” and use their “overcapacity” to harm the interests of our domestic fruit farmers, can we?

Recently, I saw a news report on television featuring a US automotive industry expert who said that after disassembling and analyzing electric vehicles made in China, they found that most of the performance metrics were very close to those of much higher-priced American brands, leading to the view that US manufacturers need to lower their prices. Therefore, the global popularity of China’s new energy products not only provides diverse choices for consumers worldwide but also promotes technological innovation and cost reduction through healthy competition.

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Since the US keeps claiming to uphold the free economy and free market mechanism, it should not indiscriminately equate market popularity with overcapacity. Nothing lasts forever; the US and other Western countries don’t have the right to monopolize the global new energy market. Feeling envious and badmouthing others for having overcapacity is simply wrong.

The author is a specialist in radiology with a Master of Public Health from the University of Hong Kong, and is an adviser to Our Hong Kong Foundation.

The views do not necessarily reflect those of China Daily.