US should enhance competitiveness instead

The United States has started expressing concern over China’s “overcapacity” in new energy recently. However, this argument is unworthy of even rebutting.

In a highly specialized global economic system, output and demand cannot be limited to a certain country or region. For example, 80 percent of chips produced in the US and cars produced in Germany are exported, but did anyone ever call it “overcapacity”?

According to the International Energy Agency’s projections, to achieve carbon neutrality goals, the global demand for new energy vehicles will reach 45 million in 2030, and the demand for new photovoltaic installed capacity will reach 820 gigawatts, approximately 4.5 times and four times those in 2022, respectively. As the world’s largest renewable energy market and equipment manufacturer, China’s high-quality production capacity is not overcapacity, but capacity urgently needed by the world.

The reason why China’s new energy products have a comparative advantage over those of their Western counterparts is not because of government subsidies, but because of enterprises’ independent innovation, the complete industry and supply chains, large-scale market and rich human resources. Some in the US also accuse China’s new energy industry of affecting the future of US enterprises and workers. But it is the US’ Inflation Reduction Act that supports auto companies to transform to new energy vehicles, leading to traditional car manufacturing workers losing their jobs.

From a political perspective, with the US presidential election later this year, both candidates are promising measures against Chinese electric vehicles. It is evident that the “overcapacity” argument put forward by the US is merely a pretext for protectionism and a tool to woo votes and seek personal gains. Blocking the entry of high-quality and affordable Chinese new energy products will only hinder the global green transformation.