China responds adequately, rationally to US overcapacity narrative

BEIJING, April 8 (Xinhua) -- China provided a full and rational response to the issue of industrial capacity during the meetings and talks between the Chinese side and U.S. Treasury Secretary Janet Yellen, who made a trip to China from April 4 to 9, according to China's Ministry of Finance.

In a press briefing on the visit, Chinese Deputy Finance Minister Liao Min said the issue of industrial capacity should be looked at by upholding the principles of market economy and the law of value.

"The so-called 'overcapacity' is the manifestation of the market mechanism that plays its role. The balance between supply and demand is relative, while imbalance is often the norm," said Liao.

Noting that overcapacity appeared in both the United States and other Western countries many times in history, Liao said, "The solution to these problems mainly depends on the market adjusting itself according to the law of value."

The official said that the industrial capacity issue should also be analyzed from the perspectives of both the global division of labor and the real situations of the global market.

"The current production capacity is far from meeting the market demand, especially the potential demand for new energy products in many developing countries," Liao said, giving the example of new energy vehicles (NEVs).

"Taking NEVs as an example, according to an estimate by the International Energy Agency, global demand for NEVs will reach 45 million units in 2030, 4.5 times that of 2022, and global demand for new photovoltaic capacity will reach 820 GW, about four times that of 2022," he said.

Liao said that after decades of rapid development, China's new energy industry has now gained a competitive advantage rooted in the country's super-large market, a complete industrial system and abundant human resources, and is inseparable from the huge investment in R&D and innovation and the unremitting spirit of entrepreneurs.

"Enterprises reduced production costs through technological innovation and improved the affordability of new energy products," he said, adding that this means that China, apart from meeting its own carbon emission goals, has also made positive contributions to the global response to climate change and green development. "And this must be objectively evaluated," he said.

The official said he believed trade protection measures will not help in addressing the issue of industrial production capacity, and called for "pragmatic" and "rational" policy decisions.

"China has taken note of the concerns of the United States and other relevant parties, and is willing to strengthen communication and coordination with all parties to view and properly handle differences in a rational manner, on the basis of adhering to the principle of marketization," he said, adding that China will continue to pursue communications with the U.S. side on this matter at the working group level.