Having a high export volume and a trade surplus does not necessarily indicate overcapacity in a country, according to a recent report by China’s Ministry of Commerce.
Overcapacity is a common occurrence during periods of industrial modernization, market fluctuations, and changes in the division of labor, as the global economy evolves. Nations should evaluate capacity issues without bias, emphasizing cooperation over confrontation, and collaborate to remove bottlenecks in supply and demand globally.
China’s foreign merchandise trade grew by 17% in the first half of the year, reaching 25.47 trillion yuan (about $3.76 trillion), surpassing the 25 trillion yuan mark for the first time. Despite this, the trade surplus decreased by 4.7% during the period, noted He Shaojun, head of the foreign trade department at the ministry. He added that the country’s surplus makes up roughly 3.7% of its gross domestic product, a figure deemed reasonable by international standards. Meanwhile, China’s service trade and capital and financial account deficits suggest the overall balance of payments remains stable, with no significant issues.
China has never intentionally sought to maintain a trade surplus and plans to continue boosting imports. It intends to hold more than 100 import events annually to promote its “Export to China” initiative and share its development opportunities globally, He explained.
Over the past decade, China has contributed approximately 30% to global economic growth. Its strengths in market size, industrial development, and technological advances have provided the world with increased opportunities for growth, innovation, and development—what the international community now refers to as “China Opportunities 2.0,” according to Vice Minister Yan Dong.
Assessing capacity utilization rates should consider the specific circumstances of each country and industry, as there is no single global standard for measurement, stated Lin Weilong, director of the policy research office at the ministry. He noted that last year, China’s capacity utilization rate for large-scale industrial firms was over 74%, falling within a reasonable range. Some traditional sectors experienced temporarily lower utilization rates, mainly due to structural changes and a shift towards greener practices. Lin described these as normal parts of industrial upgrading.
Han Yong, director-general of the department overseeing World Trade Organization affairs, emphasized that industrial subsidies are not inherently problematic and are not directly linked to overcapacity issues. Regarding global economic policies, he mentioned that the United States pledged to invest $750 billion into climate, energy, and healthcare from 2022 to 2031 through its Inflation Reduction Act. The act limits subsidies for electric vehicles to those produced domestically or within North America. Similarly, the European Union plans to spend over EUR 1.44 trillion (about $1.64 trillion) on clean energy between 2021 and 2030. It has also proposed the Industrial Accelerator Act to accelerate capacity building and decarbonization in key sectors, tying financial support to “Made in EU” investments that could potentially create investment barriers and institutional discrimination.