Jeffrey Sachs rejects US claims of Chinese overcapacity: ‘absolutely wrong’

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Jeffrey Sachs rejects US claims of Chinese overcapacity: ‘absolutely wrong’

A prominent American economist has dismissed claims China is deliberately cultivating industrial overcapacity as “absolutely wrong”, asserting the world needs Beijing’s manufacturing strength to drive the global transition to green energy sources.

“US government officials said China has overcapacity. This is absolutely wrong,” said Jeffrey Sachs, a professor of economics at Columbia University, on the sidelines of the Boao Forum for Asia on Wednesday. “China has great capacity, but not overcapacity. The world needs China’s capacity.”

The economist’s comments came amid accusations of misconduct directed at China’s top manufacturers of electric vehicles, solar panels and lithium batteries.

Politicians in the United States and other countries have said these companies are heavily subsidised by Beijing, creating surplus inventory that is then dumped in markets such as the European Union.

Numerous tariffs and trade restrictions have consequently been imposed on these products, raising their prices in the EU and outright barring them from entering the US market.

While China admitted “overcapacity in some industries” was a problem during a high-level conference in 2023 – and frequent mention has been made of neijuan, the excessive industrial competition that can lead to redundancies in supply chains – officials and state media have refuted charges from the US and EU that Beijing is weaponising its vast manufacturing power to disrupt global trade.

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