BEIJING, China: The China overcapacity dispute intensified on July 28 after the Ministry of Commerce rejected US and EU claims that subsidies and weak demand had created excess manufacturing capacity.
The ministry said China’s industrial capacity utilisation stood at 74.4% in 2025 and remained within a reasonable range, according to its official policy paper.
The document reported three-year utilisation averages of 73.3% for vehicle manufacturing and 76.9% for computers, communications and other electronic equipment.
Beijing attributed its manufacturing competitiveness to research, technological development, supply-chain integration and market competition.
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It rejected claims that government subsidies represented the primary source of growth in electric vehicles, batteries and solar products.
The ministry also disputed allegations that weak consumption forced Chinese producers to sell surplus goods abroad. It said domestic demand contributed an average of 93% to economic growth from 2013 through 2024.
China reframed warnings about a second “China Shock” as a “China Opportunity 2.0.” The paper argued that affordable Chinese products supported the global green transition and reduced inflation pressure.
However, the US Trade Representative said in March that subsidies, subsidised lending and suppressed domestic demand could create structural excess capacity. Its investigation included China and several other economies.
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The European Commission imposed five-year duties on Chinese electric vehicles in October 2024 after concluding that China’s battery-electric vehicle industry benefited from unfair subsidies and posed a threat of economic injury to EU producers.
China’s policy paper called for talks on industrial subsidies through the World Trade Organisation. It announced no new tariffs or countermeasures.
