Recently, some countries have hyped the so-called China's "overcapacity theory", accusing China's new energy industry of relying on subsidies for a large number of exports, and the impact of excess capacity on the international market. This fallacy is contrary to common sense and facts, and is essentially a new trick of "double standards" and trade protectionism. China's new energy industry has acquired real skills in open competition, representing advanced production capacity, which not only enriches global supply and alleviates global inflationary pressure, but also makes great contributions to the global response to climate change and green transformation.

First, the problem of production capacity should be treated objectively and dialectically based on the law of market economy.

The principle of market economy shows that the matching of supply and demand based on the global market is beneficial to improve efficiency. The principle of supply and demand is the basic principle of market economy. Under the realistic conditions of economic globalization, the world economy has long become an indivisible whole, production and consumption are global, and it is necessary to effectively match and adjust supply and demand on a global scale. In fact, it is difficult to use only domestic or "coterie" production capacity to meet demand, and it will inevitably lead to repeated construction, inefficiency and high costs around the world, breaking up the global production and supply chain and attacking the global economic system. For example, the automobile industry has grown up in global production and global sales. In 2023, only 20% of German car production is sold in China, about 80% is sold to the international market, about 50% of Japanese car production is sold abroad, while overseas sales of Chinese new energy vehicles account for only 12.7% of production. It is unreasonable to accuse China of "overcapacity".

International trade practice shows that division of labor and cooperation based on comparative advantages is conducive to global well-being. The emergence and development of international trade means that countries carry out international division of labor and cooperation on the basis of comparative advantages, so as to promote the global allocation of high-quality goods and services, drive the global layout of capital and industries, and add impetus to the development of the world economy. to provide consumers with more and better choices. China's new energy products are widely welcomed in the international market, on the one hand, they meet the urgent needs of global green transformation and help to achieve the goals of the Paris Agreement. It is estimated that each new energy vehicle will reduce about 1.66 tons of carbon per year. China will export 1.203 million new energy vehicles in 2023, which can reduce about 2 million tons of carbon per year. On the other hand, because China's new energy products have high performance-to-price ratio, the comparative advantage is obvious. The price of new energy vehicles exported from China to Europe is lower than that of similar models in Europe, but it is still one to two times higher than the price in China, which is profitable and there is no dumping at all.

The law of industrial development shows that high-quality production capacity based on scientific and technological progress is conducive to sustainable development. Green and low carbon is the general trend, the global demand for new energy products continues to expand, and the space for the development of new energy industry is still very broad. According to the research of the International Energy Agency, in order to achieve the goal of carbon neutralization, global sales of new energy vehicles need to reach about 45 million in 2030, more than three times that in 2023; the global demand for power batteries in 2030 will reach 3500GWh, more than four times that of global shipments in 2023, all far exceeding the current global supply capacity. At the same time, the global new energy industry is changing from the "gestation period" to the "growth period", and there is still a considerable distance from the "maturity period". The rapid updating and iteration of technology and products will continue to generate new demand, stimulate new kinetic energy, and create new production capacity. Instead of excess capacity, advanced production capacity is relatively insufficient.

Second, the advantages of China's new energy industry are achieved in the open competition.

We will continue to promote technological innovation. Since more than 20 years ago, Chinese enterprises have continued to invest in R & D and industrial layout in the field of new energy, forming a unique technological advantage. Take batteries, a key component of new energy vehicles, as an example, from liquid lithium batteries to semi-solid lithium batteries, from Kirin batteries with a range of 1000 kilometers on a single charge, to 800V high-voltage silicon carbide platforms with a range of 400km in five minutes, the battery core technology continues to break through, with higher safety performance, longer mileage and faster charging speed.

Continuously improve the production and supply chain system. Chinese enterprises have gradually gathered to form an efficient and complete production and supply chain in practice. At present, the industrial supporting system of new energy vehicles in China includes not only the traditional production and supply network of car body, chassis and auto parts, but also the emerging supply system of battery, electric control, electric drive system and electronic products and software. In the Yangtze River Delta, the whole vehicle factory of new energy vehicles can solve the supply of necessary spare parts within 4 hours, forming a "4-hour production and supply circle".

Continue to optimize the market ecology. The Chinese market has a huge scale, rich scenes, full competition, accelerating the application and industrialization of digital, green, artificial intelligence and other technologies, in the active entrepreneurial innovation and fierce survival of the fittest, high-quality enterprises and products with strong competitiveness and wide popularity continue to emerge. In 2023, production and sales of new energy vehicles in China increased by 35.8 per cent and 37.9 per cent respectively, of which about 8.3 million were sold in China, accounting for 87 per cent.

We will continue to promote openness and cooperation. China actively welcomes foreign-funded enterprises to participate in the development of new energy industry. Volkswagen, Strandis, Renault and other multinational car companies have set up joint ventures with Chinese new energy vehicle companies. Tesla accounts for more than 1x3 of China's new energy vehicle exports. "the Chinese market has become our fitness center," said Volkswagen Global CEO. At the same time, Chinese enterprises have actively carried out foreign investment and technological cooperation, which has led to the development of the local new energy industry.

Third, blaming China's industrial subsidies for causing "overcapacity" is totally untenable.

China's industrial subsidy policy is reasonable and compliant. It is a common practice for countries all over the world to use industrial subsidy policy to guide industrial development and adjust industrial structure. the key is to comply with WTO rules and adhere to fairness, transparency and non-discrimination. China's industrial subsidy policy strictly abides by the rules of the WTO and is applicable to all kinds of market entities, and all enterprises can enjoy it equally. China's relevant subsidy policies have been notified to the WTO in a timely and comprehensive manner, and there is no prohibited subsidy stipulated by the WTO. In contrast, in the United States and Europe, subsidies have increased significantly in recent years, with a large number of exclusive and discriminatory practices. For example, the subsidy policy for electric vehicles under the inflation reduction Act of the United States discriminates against Chinese enterprises and excludes electric vehicles, batteries and key minerals produced by Chinese enterprises from the scope of subsidies. the imposition of numerous obstacles to the entry of Chinese-related products into the US market is a typical protectionist approach. The European Commission has also approved a large number of subsidy programs.

Hype about "overcapacity" is actually anxiety overcapacity. To use "overcapacity" as an excuse to smear and suppress China is actually worried about its competitiveness and market share, reflecting the anxiety of the relevant countries. Trade protection will not achieve the desired results, it will only backfire. By "labeling" and "pinning labels", setting restrictions on the export and investment cooperation of Chinese products will not stop China's progress, but will trip itself, undermine the stability of the global new energy production and supply chain, disrupt the international economic and trade order, and drag down the global economic recovery. Green "double label" can not achieve both sides of the profit, it will only be counterproductive. The United States and Europe cannot hold high the banner of dealing with climate change, demand that China take greater responsibility for it, wave the stick of green protectionism with the other, and hinder the free trade of China's green products. Such an approach will not help solve its own problems, but will undermine global climate change cooperation and hinder the global green transformation. If we talk about climate change cooperation, we cannot engage in protectionism, and if we engage in protectionism, there can be no real climate change cooperation.

China will always adhere to opening up and cooperation and promote mutual benefit and common development. China continues to promote a high level of opening up to the outside world, create a market-oriented, legalized and international first-class business environment, and share new opportunities for Chinese-style modernization with the rest of the world. China firmly upholds the multilateral trading system with the WTO at its core, firmly supports trade and investment liberalization and facilitation, and resolutely opposes trade protectionism. China is willing to deepen cooperation with other countries in the new energy production and supply chain, promote technological innovation and industrial development, promote inclusive and inclusive economic globalization, jointly deal with global climate change, and promote the building of a community with a shared future for mankind. Source: press Office of the Ministry of Commerce