China's industrial overcapacity in solar panels, lithium batteries, and EVs exceeds global demand, driven by economic policy rather than market forces. This surplus, fueled by high investment and a shift from real estate to advanced manufacturing, poses a significant challenge to European industries, particularly the automotive sector.
A Chinese scholar argues that global economic adjustments, not just China's industrial overcapacity, are the root cause of trade imbalances. Huang Yiping noted China's progress in reducing its current-account surplus but stressed the need for increased domestic consumption.
China threatens countermeasures if EU imposes new trade restrictions to combat Beijing's industrial overcapacity, which is undermining European manufacturing and causing a growing trade deficit.
Spain, Italy, Netherlands, France, and Lithuania are pushing the EU to adopt a more aggressive stance against China's industrial overcapacity, advocating for broader safeguard measures and a new "resilience tool" to counter concentrated supply sources.
