Fresh US tariffs targeting China’s new-energy sector are imminent, threatening to thwart export efforts aimed at alleviating a market oversupply. Fresh sparks are flying as risks associated with an overcapacity overflow in China’s electric vehicle industry have turned up the heat between Beijing and the West, intensifying frictions and hearkening back to ghosts of trade past.
At the weekend, reports in the US were rife with speculation of a rise this week in import tariffs on Chinese EVs and a range of other goods related to the new-energy economy. And on Sunday , a Communist Party’s mouthpiece took aim at Washington’s hard line. “A utilisation rate of 76 to 80 per cent is considered normal for most industries,” Zhong Zhengsheng, chief economist at Shenzhen-based Ping An Securities, said in a recent report.
There is also a consensus among domestic analysts. Guangxi-based Sealand Securities warned in an April research note that EV production accounts for just one of many sectors bogged down by overcapacity. Notwithstanding the speed and scale of China’s EV adoption and the tech self-sufficiency crusade fuelled by geopolitics and tech disputes, Lu raised concerns about some initial “signs of structural excess output” in the chip sector and lurking risks in the EV bonanza.
China’s EV sector is championed by private players such as BYD, which dethroned Tesla last year as the world’s largest producer. Similarly, the lithium battery sector is dominated by the privately run Contemporary Amperex Technology, known as CATL. “The population is ageing, potential growth declining, and property demand peaking … This means tougher competition among businesses for a bigger slice of a pie when the pie itself may not become too much bigger,” he said.
In subsequent years, Beijing issued quotas to reduce output in China’s coal, steel and cement industries, while striving to shut down “zombie” SOEs. Beijing’s policymakers have signalled that central authorities will remain hands-off amid such a market-led restructuring, deeming it a necessary step to forge competitiveness among Chinese manufacturers.
Adding that the advantages are shaped by market competition, Wang contended that the West’s characterisation of these industries’ dynamism as “overcapacity” smacked of trade protectionism. But against the backdrop of a febrile geopolitical climate and tech disputes, freewheeling output and export growth may be impeded as the US and Europe are closing ranks, alleging that Chinese goods are being dumped on them.in October, and earlier this year US President Joe Biden vowed “unprecedented action to ensure that cars on US roads from countries of concern like China