China’s overcapacity dilemma solvable with ‘painful’ industrial revamp, scholars say
- An industrial reshuffle, ‘painful’ in the short term but beneficial in the long run, has been proposed to help with China’s overcapacity issues
- Scholars recommend revamp as supply in several sectors – particularly new energy – outstrips demand and governments ready battery of trade restrictions
Lu Feng, a professor at the National School of Development at Peking University, admitted supply overflows exist – naming petrol cars, petrochemicals, low-end computer chips, batteries and electric vehicles (EVs) as examples – but the rearrangement of the industries involved would ultimately be beneficial.
“Serious excess production will trigger painful restructuring and adjustment, eventually leading to a more mature and stable sector,” Lu said in an interview with the state-backed Economic Observer on Sunday.
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The subject remains a controversial one. While leaders in China’s steel and petrochemical sectors have openly acknowledged imbalances in supply and demand, those in emerging technologies have argued the issue is not relevant to their still-developing industries.