On May 14, the U.S. government announced that it would impose tariffs on Chinese electric vehicles and other products, and according to the official website of the White House, tariffs on Chinese electric vehicles will be increased from the current 25% to 100%. Recently, some Western countries, led by the United States, have ignored objective facts and frequently hyped up the "theory of China's overcapacity". What are the intentions of Western politicians hyping up the so-called "theory of China's overcapacity"? What is the purpose of the United States imposing tariffs on China and insisting on raising tariff barriers? How can China's new energy and other industries contribute to global climate goals? What does it mean for the global energy transition?
China Dialogue invited Wang Yiwei, EU Jean Monnet Chair Professor and Director of the Institute of International Affairs at the Chinese University of China, Warwick Powell, Visiting Professor at Queensland University of Technology and Senior Research Fellow at Taihe Think Tank, and Benjamin Norton, founder of the Geopolitical Economy Report and foreign policy expert, to share their views on these issues.
Wang Yiwei believes that the West's hype of China's "overcapacity" is a discursive narrative trap, and its precondition is not to recognize China's market economy status and China's status as a developing country.
Bao Shaoshan bluntly said that the "theory of China's overcapacity" is pure nonsense. "The huge scale of China's manufacturing industry is conducive to reducing the cost of technology and means of production, which is beneficial to the global economic development."
In Ben's view, the world is currently undergoing an energy transition, and China has become the world's leading producer of electric vehicles, which is of great significance for the implementation of the Paris Agreement, mitigating climate change, and reducing dependence on fossil fuels. He pointed out that the United States is unhappy about this, not because China has done anything wrong, but because American monopolies have difficulty competing with Chinese companies in this regard.
Data map: On January 22, 2024, in Ningbo, Zhejiang, the new energy vehicle frame welded by Geely's Zeekr Smart Factory was transmitted on an automatic conveyor belt. Photo by China News Service reporter Wang Gang
Excerpts from the transcript of the conversation are as follows:
China News Service: The US announced on May 14 that it will impose tariffs on a range of Chinese goods, including electric vehicles, computer chips and medical supplies. What are your thoughts on the increase in tariffs on electric vehicles in China from the current 25% to 100%?
Wang Yiwei: Chinese electric car sales in the United States are very small, so the Biden administration's tariffs [on China] are purely out of election needs. The United States wants to suppress China and hopes that industries and funds will flow back to the United States, so this move is to shout to the indebted regions and allies, and to pursue "political correctness", so it will impose tariffs.
Now, for the sake of the presidential campaign, the Biden administration continues to build the "American myth" for the sake of the return of capital, industry, and jobs, and constantly calls on allies and the world to sing down China and suppress China. The increase in tariffs on Chinese electric vehicles is a standout example. The United States calls the competitiveness of China's all-round and systemic superiority a "systemic threat", and finally counter-narrative. This behavior also reflects a set of American practices, which are, "You can do what I say, but you can't do what I do."
Ben Jiemin: When the U.S. first accused China of "overcapacity," I realized that they were trying to make excuses for imposing tariffs.
The U.S. is trying to weaken China's industrial development through this approach, but I don't think it will work. China will continue to export electric vehicles and solar panels to other countries, especially countries in the Global South. China will help these countries reduce carbon emissions, better cope with climate change, and reduce their dependence on oil and gas imports.
This incident shows the hypocrisy of the United States Government. It criticizes China's industrial policies and subsidies while doing exactly the same thing itself.
China News Service: The US and some Western countries claim that there is "overcapacity" in new energy industries such as Chinese-made electric vehicles and solar panels. Some experts also believe that the production capacity of China's new energy industry conforms to the requirements of high-quality development and conforms to the laws of economics. What do you think of these two statements?
Wang Yiwei: The premise of the West's hype about China's "overcapacity" is that it does not recognize China's status as a market economy or a developing country. So, it's a kind of discursive narrative trap.
In the past, the West has accused China of proposing the Belt and Road Initiative to "solve excess capacity" and "create a debt trap", and this logic has been consistent, and now it has labeled China's "new three things" as "overcapacity". China is the "factory of the world" and produces for the world. When Western countries talk about "overcapacity", they mean that "China's overcapacity has squeezed the Western market", and the West has rushed early and got up late, allowing China to overtake in a corner, so (they) will come to blame China. On the other hand, Western countries themselves want to develop, but they can't develop such a strong production capacity as China, so there is a "threat" thesis in this regard.
Ben Jiemin: We have to figure out what "overcapacity" is. According to the logic of some in the United States, if a country has net exports, it can be accused of "overcapacity". And at the moment, this logic is only for China. Therefore, this practice is very hypocritical.
In fact, in 2023, for example, China's domestic sales will account for 80%, and exports will account for less than 20% of production. China's auto industry is actually not as heavily dependent on exports as Japan, South Korea, and Germany. If, as the United States claims, there is "overcapacity" in China, then Japan and South Korea will have 10 times more "overcapacity" than China. The question is, why didn't the United States blame its allies Japan, South Korea and Germany? It is clear that the United States pursues double standards. If countries around the world really want to mitigate climate change, then everyone should be aware that China's high-quality and affordable new energy industries, such as electric vehicles and solar panels, have made important contributions to the implementation of the Paris Agreement and the reduction of global carbon emissions.
Bao Shaoshan: Whether in new energy vehicles or other related fields, most of China's growing production in these areas can be absorbed by its growing domestic demand. The green industry is an emerging industry, which is developing rapidly and has a great impact on various industries.
Data map: The White House. Photo by China News Service reporter Chen Mengtong
China News Service: What do you think is the real purpose of Western countries' accusations of "overcapacity"?
Wang Yiwei: The real purpose of Western countries' accusations of China's "overcapacity" is to deal with the "systemic threat" posed by China's policies. China has not developed its economy according to the formula designed by the West, so Western countries do not recognize this development model. At the same time, some countries also want to dump the blame on China. 2024 is an election year in the United States, and the narrative of politicians is "it's not that I can't do it, but you are too cunning", and there are many international responsibilities that "need to be borne by China". These are discursive hegemony.
Ben Jiemin: The United States intends to use the "overcapacity theory" to weaken the competitiveness of China's new energy and other industries and protect the large technology monopolies in Silicon Valley. The United States has also used this to encourage countries to reduce trade with China, declaring that China is engaged in "unfair trade" and hoping that other countries will join in isolating China.
With the U.S. election looming, accusations of "overcapacity" in China are also a means for Biden and the Democratic Party to win votes. The Biden administration has emphasized that the United States needs to invest trillions of dollars to support domestic industries, and more sanctions and tariffs on China will attract some state voters whose manufacturing depends on government investment. The Biden administration has also sought to project itself as a tougher version of China.
Regrettably, in this election, both parties in the United States are competing to see who can be tougher on China. As an American, I think this is very unfortunate, and I think industrial cooperation with China should be encouraged.
Bao Shaoshan: The US has developed a habit of blaming other countries for the problems caused by its own policies. Over the past few decades, the U.S. financial sector has expanded massively, and the influence of financial capital in the overall economy has expanded. The financialization of the United States has driven the growth of virtual capital at the expense of the real economy. Financial capital and financial institutions make a lot of money, while ordinary people suffer and fall prey. As manufacturing gradually hollows out, the United States has become a net importer of finished and intermediate goods in the manufacturing sector. So, to solve this problem, what the United States needs to do is maintain the dominance of its financial capital, promote the definancialization of the political economy, and invest heavily in education, skills training, and industrial research and development.
China News Service: Is the hype of "China's overcapacity" a manifestation of trade protectionism? What impact will it have on the development of the world economy?
Wang Yiwei: I think this "theory of China's overcapacity" is definitely a manifestation of trade protectionism, and China's developed production capacity contrasts with the West's lack of production capacity. On the track of new quality productivity, in fact, the West has lost some of it to China. Or they feel that they have lost – a complaint or a rhetoric – and they demand China at a pace and capacity that they define. In fact, their purpose is not only to protect the domestic market, but also to try to seize some of the right to speak in the field of new energy vehicles, so the United States and Europe will sing and harmonize.
Ben Jiemin: The U.S. government accuses China of subsidizing domestic industries, but in fact, over the years, the U.S. has provided billions of dollars in subsidies to its own local companies, such as Tesla and others. On top of that, the U.S. is providing trillions of dollars in government support to local businesses through measures such as the Inflation Reduction Act and the CHIPS and Science Act. Therefore, the United States' unashamed accusations against China are aimed at the policies it is pursuing.
The U.S. is also proposing more tariffs on Chinese exports to restrict Chinese exports. The EU is also currently discussing tariffs on Chinese exports, including an anti-dumping investigation into Chinese electric vehicles. Thus, "overcapacity" is, like "national security," a pretext used by the United States to try to rationalize its tariffs, protectionist policies, and sanctions against China.
Bao Shaoshan: The so-called "theory of China's overcapacity" is pure nonsense. Much of China's growing production capacity in areas such as new energy vehicles can be absorbed by its growing domestic demand. The huge scale of China's manufacturing industry is conducive to reducing the cost of technology and means of production, which is beneficial to the global economic development.
On April 25, the 2024 (18th) Beijing International Automobile Exhibition was held in Beijing.
China News Service: How can China's new quality productivity help achieve global climate goals? What does it mean for the global energy transition?
Wang Yiwei: As far as China is concerned, the current so-called "new quality productivity" is no longer a fuss about the original level of productivity or the system, but a study and discussion on the dimensions of productivity in the new era, such as ecological civilization and digital civilization. From the perspective of productivity under the past industrial and commercial civilization, China has indeed achieved corner overtaking. Its contribution to the global digital and green transition is unprecedented in history.
In the past, China's agricultural civilization was very developed, but at that time it was relatively isolated, and the center of industrialization was in the West. In today's Industry 4.0 era, China has begun to overtake in corners.
China has broken the path of power transfer in the past, and also changed the history of industrialization and innovation in the past internal circulation in the West, truly leading the great changes unseen in a century, and leading the global energy transition. The combination of China's strong production capacity and digital ecological civilization, such as the development of new energy vehicles and other achievements, has contributed Chinese solutions and Chinese wisdom to the energy transition of mankind. China has provided a model for the world to reduce emissions and green transformation, including digital transformation.
Ben Jiemin: China has caught up and continued to move forward in the process of industrialization, lifting hundreds of millions of people out of poverty. At a time when the world is undergoing an energy transition, more electric vehicles need to be produced to reduce dependence on fossil fuels. China has become the world's leading producer of electric vehicles, which is important for the implementation of the Paris Agreement, mitigating climate change and reducing dependence on fossil fuels. However, the United States is unhappy about this, not because China has done anything wrong, but because American monopolies have difficulty competing with Chinese companies in this regard.
Bao Shaoshan: Reducing the cost of clean energy and low-carbon technologies will promote the adoption of clean energy and green productivity, especially in developing countries. Universal access to cost-effective, reliable renewable energy is transformative, as it contributes to energy sovereignty and the socio-economic development of energy-dependent countries. Only by reducing energy costs can the added value of production be increased.
Source: China News Network