Responding to the massive hype surrounding the so-called "China's excess capacity" narrative in Western circles, officials and experts said that it only politicizes trade, deflects attention from structural economic problems at home and acts as a cover for protectionist measures.

They said that China's modern industrial development represents "China Opportunity 2.0" for the global economy, not "China Shock 2.0", and warned that such negative narratives can distort global trade, destabilize industrial and supply chains and hinder long-term growth worldwide.

Their comments came after the Ministry of Commerce released a document on Tuesday titled "China's Position on the So-called Excess Capacity Issue", which called for "a comprehensive, objective and fair view" of capacity issues, and for differences to be managed through open and mutually beneficial cooperation.

Noting that "excess capacity" is a dynamic feature of a market economy and that capacity supply and demand are never in lasting balance, the document said that shifts in the global capacity landscape reflect international industrial specialization and cooperation.

Detailing the document, Yan Dong, vice-minister of commerce, said at a news conference in Beijing that some economies, concerned about their industrial competitiveness and market position amid sluggish global growth, have repeatedly invoked the so-called "excess capacity" line to justify protectionist measures.

Meanwhile, Washington is pressing ahead with a Section 301 probe launched in March into alleged structural excess capacity and production in manufacturing sectors across 16 economies, including China, the European Union, Vietnam and Mexico. Reuters reported on Monday that United States Trade Representative Jamieson Greer said that his office hoped to conclude the probe soon and put forward a proposal that could lead to additional tariffs.

Lin Weilong, head of the policy research department of the Ministry of Commerce, described the US move as "a typical act of unilateralism", saying that Washington had no right to unilaterally label its trading partners' production as "excess capacity" and impose restrictions. He urged the US to return to dialogue, emphasizing that China reserves the right to take necessary measures.

Looking beyond the immediate investigation, experts noted deeper concerns in the US and Europe over industrial competitiveness.

Cui Fan, a professor of international trade at the University of International Business and Economics in Beijing, said that the relative decline in manufacturing competitiveness in the US and Europe, particularly in emerging sectors such as clean energy, is partly due to inconsistent and frequently shifting policy support.

"The excess capacity narrative ignores the contribution that China's manufacturing sector has made to the global economy," Cui said. "Shifting blame onto China does nothing to solve the problem."

Tu Xinquan, dean of the China Institute for WTO Studies at the UIBE, said US trade measures — from Section 301 tariffs to "reciprocal" tariffs — are a response to the rise of an emerging major power and its impact on existing balance of interests, power and division of labor.

"Claims of Chinese 'excess capacity' are, in essence, no different from earlier allegations of currency undervaluation or the 'non-market economy' label," Tu said. "Such a narrative is clearly intended to sow discord."

The ministry document also challenged the economic logic underpinning that narrative. "Large exports or trade surpluses are not synonymous with excess capacity," it said.

It noted that 80 percent of US chips are exported, as are two-thirds of Boeing's commercial aircraft, and asked whether such exports should also be seen as excess capacity.

Trade surpluses reflect global specialization and supply-demand patterns, not excess capacity, it said.

Alongside wider market access, China's innovation-driven industrial development offers the world "China Opportunity 2.0" rather than "China Shock 2.0", the document said — an opportunity multinational corporations are already tapping into.

Kilian Aviles, executive vice-president of Germany's Dekra Group and head of its Asia-Pacific region, said China's innovation ecosystem, powered by AI, digital technologies and green technologies, is boosting productivity and contributing to technological progress worldwide.

source: chinadaily.com.cn

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