BEIJING/LONDON, April 12 (Xinhua) -- As an old Chinese saying goes, "A common man is not guilty, but he is guilty of having a jade in his possession." A person's talent could easily arouse the envy of others. Such old wisdom seems to be relevant in recent U.S.-led peddling of "overcapacity" claims targeting China's booming green industries. For fear of losing hegemony in advanced technologies and of losing the lion's share in global value chains, a handful of Western politicians and media have been hyping up the rhetoric surrounding China's "overcapacity" in the new energy sectors, claiming that the high-quality Chinese EVs at affordable prices are "distorting global markets." An examination of data shows that the competitiveness of China's new energy sector comes from continuous innovation investment amidst fierce market competition. The so-called "overcapacity" is merely protectionism in disguise that aims to curb China's technological development and industrial upgrading. Such rhetoric, if not debunked, will hinder the world's transition to clean energy while hurting global consumers' wallets. ROBUST GLOBAL DEMAND Overcapacity typically refers to the situation where industry production capacity exceeds effective market demand, primarily prevalent in manufacturing. Overcapacity is an expression of the functioning of market mechanisms. The supply-demand balance is always relative, with imbalances often being the norm. Under any market economy system, such as that of the United States and other Western countries, overcapacity issues can arise, as seen in sectors like coal, steel and shale gas. Data analyses in the emerging industries of China show no evidence of overcapacity. In the new energy vehicle industry, for example, demand is growing rapidly, reflected in the increasing penetration rate (the proportion of new energy vehicles in total vehicle sales), indicating considerable development potential. The National Information Center of China recently predicted that the penetration rate of new energy vehicles would increase from 35.2 percent in 2023 to 60 percent by 2033 in the country. Considering global division of labor and international market conditions, the International Energy Agency estimates that global total electric vehicle (EV) sales will reach 45 million in 2030, 4.5 times more than those in 2022, and Solar PV additions will expand almost fourfold to 820 GW by 2030. Current capacity falls far short of market demand, with many developing countries exhibiting significant potential demand for new energy products. It can be said that from the perspective of the huge potential demand, China's new energy capacity is far from "excessive." The growth potential in third- and fourth-tier cities and rural markets in China is huge, providing sufficient demand support for EVs over a longer period, said Jiang Xiaowei, chief analyst of the auto sector at Huaan Securities. Although Chinese new energy vehicles are generally sold at higher prices overseas than domestically, they still sell well in many Western markets. This demonstrates that China's competitive advantage in relevant capacities is determined by global market demand and the efficiency of Chinese enterprises, among other factors. Looking at the process of global economic development, every time an industry or consumption upgrades, the surplus usually consists of products that fail to keep pace with new technologies and meet consumer demands. For instance, the proliferation of digital cameras led to overcapacity in film production. Some Western media define "overcapacity" as the production capacity exceeding domestic demand, which is extremely narrow-minded and contrary to economic common sense and facts. Once domestic demand is satisfied, surplus products will naturally turn to export markets. Without cross-border trade, if each country only produced to meet domestic demand, there would be no international trade. Lu Feng, director of the China Macroeconomic Research Center at the National School of Development of Peking University, said that in the context of globalization, it is a rational choice for companies to consider both domestic and international markets in designing and allocating capacity, and it is a natural right of Chinese enterprises to gain a relative share of the international market through fair competition. COMPETITIVENESS AS A SIN Despite weak global economic recovery, China's new energy industries have been flourishing, thanks to continuous technological innovation, mature supply chains, and healthy market competition. Lan Jianping, deputy director of the Zhejiang Provincial Development and Planning Research Institute, said that China's "new three," i.e., EVs, lithium batteries, and photovoltaic products, are born out of its industrial policy responding to the global consensus on addressing climate change, making the manufacturing sector more cost-effective and green. The fact that such technology breakthroughs occurred amid Western sanctions against China showcases its economic resilience and market advantage in size. However, this competitive advantage is framed as a "sin" by some Western media and politicians, totally ignoring the fact that it meets the demand of global consumers and contributes to global efforts to tackle climate change. In October, the European Commission launched an anti-subsidy investigation into Chinese EVs, claiming that the Chinese government subsidizes its domestic EV industry and distorts the market. However, many industry insiders both in China and abroad believe this is a misunderstanding of the source of China's competitiveness in the electric vehicle industry. In fact, early industrial layout, large industrial cluster effects, high management efficiency, increased research and development investment, and consumer preference for EVs are the real reasons for the rapid development of China's electric vehicle industry, said Jiang. According to a report by the investment bank UBS, 75 percent of the components of a 2022 BYD Seal sedan were manufactured in-house. Xiaomi Group recently launched its first new energy vehicle, the SU7, only three years after announcing its entry into the sector. Both showcase the vibrant EV ecosystem in China. A recent report by Bloomberg finds that the majority of China's leading exporters in this sector boast capacity utilization rates well within internationally recognized norms. Contrary to the narrative of "overcapacity" often attributed to China, the real challenge facing the United States and Europe lies in their comparative inefficiencies. Ironically, it's the United States, Britain, and France that are now implementing robust subsidy policies in the electric vehicle domain. The U.S. government, through the Inflation Reduction Act, is providing approximately 369 billion U.S. dollars in tax incentives and subsidies for clean energy industries, including electric vehicles. Several European countries are also implementing subsidy measures for the electric vehicle industry, ranging from corporate tax breaks to individual purchase incentives. "CHINA THREAT" MASKS PROTECTIONIST INTENTIONS U.S. Treasury Secretary Janet Yellen recently visited a Suniva solar cell manufacturing plant in the U.S. state of Georgia benefiting from the Inflation Reduction Act. She said at the factory that she will raise concerns China is now "overproducing" solar panels, EVs, and lithium-ion batteries in the same way that it built too much capacity to make steel and aluminum, distorting global markets and hurting jobs in other industrial and developing economies. "Do as I say, not as I do," observed Scott Lincicome, a trade expert at the Cato Institute, highlighting the typical double standards exhibited by the United States in its accusations against China. The motives behind the Western double standards are not hard to decipher. China's evolution from initial OEM trading to high-value-added segments in the global industrial chains, coupled with its growing competitive advantage in global markets, has touched sensitive nerves in Western monopoly capital interest groups. Concerned about potentially losing opportunities due to China's development in the new energy sector, these groups resort to smearing and suppressing China in bid to preserve their vested interests in the global supply chain. Facing an upcoming general election, American politicians seek to garner votes by adopting a tough stance on China, hence the continuous hype around the "China overcapacity theory" to pave the way for restricting Chinese electric vehicle exports. On the one hand, the United States demands fair treatment for American workers and businesses; on the other, it subjects foreign companies to unfair treatment, blocking Chinese new energy enterprises from the U.S. market through high tariffs, rules of origin requirements, and propagating so-called "data security threats" as grounds for scrutinizing Chinese companies under the pretext of "national security." In February 2023, Ford's partnership with CATL, a Chinese battery manufacturer, to construct a U.S. battery factory faced opposition from lawmakers fearing Chinese influence over the American electric vehicle supply chain, raising national security concerns. The future of this collaboration is now uncertain, pending further review. The Wall Street Journal argues that excluding Chinese companies from Western electric vehicle subsidies would significantly slow down the Western transition to electric vehicles. Experts at the Brookings Institution believe that treating this sector as another battleground for "zero-sum competitions" would disrupt global supply chains and undermine the global climate agenda. Across the Atlantic, the European Commission has started probing Chinese electric vehicles for subsidies without industry requests. As the investigation progresses, records of Chinese electric vehicle sales in Europe have been filed for potential retrospective penalties. Additionally, the Commission has initiated a similar investigation in the solar photovoltaic sector under the Foreign Subsidies Regulation, targeting Chinese firms. An article in the South China Morning Post suggests that if the EU and the United States truly uphold the "rules-based international order" they advocate for, they should resolve trade issues with China through the World Trade Organization (WTO) rather than acting as judges themselves. The actions of the EU and the United States undermine the authority and credibility of the WTO, casting doubt on the reliability of their accusations. GLOBAL QUALITY CAPACITY SEVERELY INADEQUATE From a global perspective, high-quality capacity is not excessive but severely lacking. The West should adhere to economic laws and market rules, cooperate with China for mutual benefit, and allow countries worldwide, especially developing countries, to benefit from the development of high-quality capacity. China's green capacity is effectively helping developing countries achieve carbon reduction goals and accelerate green transformation. In the Mymensingh region, about 120 km from the Bangladeshi capital Dhaka, stands the country's second-largest solar power station. With around 170,000 solar panels from China, the station converts solar energy into electricity, illuminating countless households. Since its operation over three years ago, the station has generated approximately 300 million kilowatt-hours of electricity, helping Bangladesh reduce carbon emissions by over 50,000 tons annually. In Hungary, Chinese automakers such as BYD and NIO are expanding their sales networks, establishing production bases, and facilitating the transformation and upgrading of the Hungarian automotive industry. Istvan Joo, CEO of the Hungarian Investment Promotion Agency, said that the automotive manufacturing industry and its related supply chain play a pivotal role in the Hungarian economy, a sector significantly strengthened by Chinese investments. At a time when the West feels uneasy about China's new energy products going global, China has comprehensively lifted restrictions on foreign investment in the manufacturing sector, allowing companies from various countries to fully enjoy the dividends of the vast Chinese market. In 2023, China secured its position as Tesla's second-largest global market, with Tesla's sales in China exceeding 600,000 units, representing a 37.3 percent increase over the previous year, with annual revenue reaching 21.75 billion U.S. dollars. Scheherazade S. Rehman, a professor of International Business and Finance and International Affairs at George Washington University, said while "it's an election year, so all the rhetoric is going to be sharper, the U.S. and China are in a symbiotic trading relationship and ultimately need each other." Against the backdrop of technological advancements in new energy, the West needs to objectively view capacity issues and have more discussions on capacity cooperation with China. Baseless accusations will serve no one's interests.  

（Editor:Liao Yifan）