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Concerns over China's overcapacity not backed by data: Bloomberg

Source:Xinhua 2024-04-04

Visitors look at BYD's electric vehicle "Sealion" during the 45th Bangkok Motor Show in Bangkok, Thailand, March 26, 2024. [Photo/VCG]

WASHINGTON - The concerns of the United States and Europe that China's overcapacity in electrical vehicles (EVs) and solar panels could wipe out overseas industries are not backed by data, Bloomberg reported on Wednesday.

For EVs, the real issue for advanced economies is that Chinese carmakers are more efficient and competitive, thanks to technology, local supply chains, brand-new transport infrastructure, and lower energy and land costs, said the report.

"From the rest of the world's perspective, overcapacity can be felt through lower prices. China's automobile exports, which surged last year as the country overtook Japan as the world's top car exporter, actually became more expensive. That suggests their rising attractiveness isn't due to price cuts," it said.

Chinese companies aren't dumping electric vehicles on global markets at a lower cost either as leading Chinese EVs fetch roughly double on average in Europe than domestically, said the report.

For solar panels, it said there is a possibility that future demand growth could surpass expectations. This potential for underestimation is particularly significant for green goods, as carbon reduction targets may be raised in the years ahead.

It noted that new capacity can often replace older capacity, rather than sitting alongside it when an industry is developing new techniques.

"The old factories are obsolete and any firm that doesn't replace them will likely fail. This is one argument for the sheer levels of planned over-investment," Antoine Vagneur-Jones, an analyst with BloombergNEF, a research organization, told Bloomberg.

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