photo: cri.cn
On May 30, 2024, the Ambassador of the People's Republic of China to the Czech Republic, Feng Biao, published an article in the Czech media, "The Absurd 'Chinese Exports Excess Capacity Theory'", purposely refuting the absurd argument that China exports excess capacity to the world.The full article is as follows:
Recently, individual European and American politicians and think tanks have continued to hype the topic of "Chinese export of excess capacity to the world" and point the finger at Chinese electric vehicles, lithium batteries, photovoltaic products, i.e. the "New Three" industry. In fact, this argument is absurd both from a theoretical and practical point of view and from the point of view of comparative advantages and demand on the world market. I would like to take this opportunity to inform friends from all areas in the Czech Republic of the relevant current situation.Firstly, the issue of production capacity needs to be looked at objectively, comprehensively and in the long term, taking into account the laws and facts.As regards the relationship between supply and demand, in the context of the reality of economic globalisation, the issue of supply and demand should be looked at from a global perspective, not just from the perspective of one country.
Today, the economies of the world's countries have long been interacting, and production and consumption are global, which requires matching supply and demand in a global perspective. Just because a country's productive capacity exceeds its own demand, it cannot be called "surplus".In terms of the practice of international trade, the emergence and development of international trade is based on countries' comparative advantages, international division of labour and cooperation. Developed countries such as the United States, Europe and Japan have long exported a large number of goods to the world; for example, about 80% of chips made in the United States are exported, about 80% and 50% of automobiles made in Germany and Japan are exported, and a large number of airplanes made by Boeing and Airbus are also exported.
In terms of industrial development trend, green low-carbon industry is a general trend, the global demand for new energy products is expanding. According to a study by the International Energy Agency (IEA), to achieve the goal of carbon neutrality, global sales of new energy vehicles will need to reach about 45 million in 2030, more than three times the global sales in 2023, and the demand for the installation of photovoltaic equipment must theoretically increase tenfold. In fact, the global new energy industry is still in the initial development and rapid growth stage, and the relevant production capacity is relatively insufficient instead of being in surplus.Second, China's new energy industry has perfected its actual skills in open competition, and represents a mature production capacity and a reflection of many advantages.
First, the advantage of the first move. Timely layout of China's relevant industrial development, long-term investment in research and development in creating a leading technological advantage. Second, the supporting advantages. China's industrial and supply chain is complete, with strong supporting industrial advantages, greatly reducing the cost of enterprises to make purchases, etc. Third, market advantage. China has a large market, "applicable technology + market application" combined with high degree, sustained promotion of new energy-related products and promotion of their use, can dilute the cost of technology research and development, production, etc. Fourth, the advantage of manpower. Chinese entrepreneurs are struggling, the quality of workers is improving, and they are hardworking. These advantages enable Chinese enterprises to reduce costs and improve efficiency, and provide high-quality and cost-effective products.
For example, according to the industry association's forecast, the average production cost of Chinese lithium battery cells in 2023 will be 0.6-0.7 RMB/Wh, which is approximately 45 % and 35 % less than the United States (1.1 RMB/Wh), respectively. The production cost of PV modules will be approximately 0.9 RMB/Watt, which is approximately 50% less than in the United States and Europe, and China does not have prohibited subsidies under WTO rules. Providing subsidies is a common practice in the early stages of industrial development in various countries. At present, China does not subsidize new energy vehicles, photovoltaics and lithium batteries at the production level, and provides support such as tax incentives at the R&D level as well as consumer incentives at the consumption level, and this policy has been phased out.
These subsidies are not tied to exports and are not banned by the WTO, and are equally available to foreign-invested enterprises operating in China.Third, China's exports of new energy products have enriched global supply and contributed significantly to the global response to inflation and climate change.China's exports of new energy products have helped European countries overcome the energy supply crisis, reduced inflation levels, and significantly promoted green and low-carbon transformation. The International Renewable Energy Agency(IRENA) reports that over the past 10 years, the average cost of electricity generated from wind and photovoltaic projects worldwide has fallen by more than 60% and 80% respectively, with much of the credit going to China.
Fatih Birol, Executive Director of the International Energy Agency (IEA), noted that China has provided relevant services and support to other countries, which has greatly improved the availability of clean energy technology and reduced the cost of using green technologies globally.It should be pointed out that China's new energy-related products are mainly consumed domestically and there is no intention to export excess capacity, for example, the production and sales of China's new energy vehicles in 2023 are 958.7 and 949.5 units respectively, of which domestic sales account for 87.3% and foreign exports only 12.7 %. It is worth noting that the average selling price of Chinese EVs in Europe in 2023 was more than 31,000 euros, which is higher than the selling price in China.
Climate change is a global challenge, and the development of a new energy industry and the implementation of a green and low-carbon transition are a common desire of all countries in the world that requires cooperation, not confrontation. Some countries and regions have increased subsidies for the new energy industry, but they accuse China of providing large-scale subsidies that lead to overcapacity and the export of excess production capacity, which is essentially politicising and securitising economic and trade issues and creating pretexts for exercising trade protectionism and restricting and suppressing China's industrial development, which China firmly opposes.The essence of cooperation between China and the EU is to complement each other's strengths and achieve mutual benefits and win-win results, with both sides having extensive common interests and huge scope for cooperation in the field of green and digital transformation.
China is willing to work with the European side to build a key partner in economic and trade cooperation, a priority partner in science and technology cooperation, and a trusted partner in industrial and supply chain cooperation, so that we can improve understanding through dialogue, resolve differences through cooperation and eliminate risks through mutual trust, and join forces to build a better future of China-EU cooperation.
china-embassy.gov.cn/gnews.cz-jav
http://cz.china-embassy.gov.cn/cze/xwdt/202405/t20240530_11366376.htm
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