Senior U.S. and European Union officials recently visiting China repeated concerns about the country’s “overcapacity” during discussions with their Chinese counterparts.
Prior to her latest trip to China in early April, the second in nine months, U.S. Treasury Secretary Janet Yellen said China’s “overcapacity” in new industries like solar energy, electric vehicles (EVs) and lithium-ion batteries “distorts global prices” and “hurts American firms and workers, as well as firms and workers around the world.”
Some Western economists believe overcapacity can lead to oversupply. And an oversupply in this scenario could mean that Chinese companies must accelerate their sales, including by boosting exports. The fear is that doing so might increase tensions with key trading partners as well as limit space
