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‘Overcapacity’ claim groundless as China’s green tech fuels global growth: Tian Xuan_我的网站

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    Tian Xuan Photo: Courtesy of Tian
In economic theory, "overcapacity" - for which no universally accepted definition exists - is inherently a recurring feature of the market economy's dynamic "balance - imbalance - rebalance" cycle. The Western narrative that equates China's sizable production capacity directly with "overcapacity" defies economic logic and rigor; in reality, it represents a politicization of trade and economic issues.
First, it confuses the concepts of "capacity scale" and "overcapacity." China's overall industrial capacity utilization remains within a reasonable range. Periodically lower utilization in traditional sectors reflects a normal adjustment as these industries advance toward high-end, intelligent, and green production. Ample capacity in certain emerging industries is precisely what meets surging global demand for high-end, smart, and green solutions. Therefore, equating scale with excess is typical equivocation.
Second, "overcapacity" itself is a dynamic feature of market economies, where no fixed balance persists indefinitely. Judging capacity based solely on static snapshots violates basic economic principles.
Third, it is erroneous to simplistically link trade surpluses or industrial subsidies to overcapacity, while ignoring the macro context of global specialization and cross-border savings-investment structures. It also disregards the reality that reasonable capacity utilization ranges differ across economies at varying stages of development. Imposing a single standard on China is neither scientific nor rigorous.
China's global competitiveness in green technology stems from sustained, large-scale investment in innovation, a comprehensive industrial and supply chain system, massive application scenarios, and intense market competition - not from alleged government subsidies. After decades of long-cycle R&D, Chinese industries have achieved breakthroughs in core technologies such as power batteries and photovoltaic modules.
During the 14th Five-Year Plan period (2021-25), China's nationwide R&D spending grew at an average annual rate of 10 percent. Economies of scale have continuously diluted production costs. China's ultra-large domestic market and full-chain supporting ecosystem provide an optimal testing ground for new technologies - from pilot verification to mass deployment. With more than 200 million market entities driving fierce competition, enterprises are constantly compelled to cut costs, raise efficiency, and upgrade products, thereby forging dual advantages in price and performance that we see today.
There is no direct causation between subsidies and overcapacity. Industrial subsidies are a globally recognized practice, typically aimed at correcting market failures and advancing critical technologies. China's subsidies are granted on an impartial basis to all types of market entities, in full compliance with WTO rules, and have not triggered disorderly capacity expansion.
Currently, capacity utilization in China's green industries remains within a reasonable range. Support is primarily directed toward R&D, technological breakthroughs, and consumer-side incentives through market-based mechanisms - not toward fueling overcapacity. Crucially, China's high-quality capacity has reduced the global cost of green transition, representing an opportunity rather than a shock to world development.
Against the backdrop of global carbon neutrality goals, labeling China's new energy capacity as "overcapacity" is entirely untenable. According to the International Energy Agency, global data center electricity consumption will approach 1 trillion kWh by 2030, with 40 percent of incremental power needing to come from renewables. Demand for wind power, photovoltaics, power batteries, and related green energy solutions remains far from saturated - so claims of "overcapacity" are groundless.
China's capacity plays a central role in advancing the global energy transition. Over the past decade, the levelized cost of electricity from wind and solar globally has fallen by more than 60 percent and 80 percent respectively - improvements largely attributable to Chinese innovation and manufacturing, which have directly lowered the cost threshold for worldwide green transformation.
The US journal Science crowned the global renewable energy surge led by China among its Top 10 Breakthroughs of 2025. Leveraging its technological and scale advantages, China is well positioned to supply abundant, high-quality green energy equipment and solutions, meet fast-growing renewable demand from data centers, industrial production, and other sectors, and tangibly support countries in implementing the Paris Agreement. In short, China is a pivotal force driving the global low-carbon transition.
The so-called "China Shock 2.0" is fundamentally a protectionist narrative rooted in Cold War thinking - a politically motivated claim inconsistent with facts. The rapid development of China's modern industries is driven by innovation and sustained institutional reform, not by dumping allegedly excess capacity abroad. Rather than posing a shock, China's industrial progress offers a "China Opportunity 2.0." It delivers multiple dividends to global development - innovation dividends, market dividends, and growth dividends - while injecting stability and vitality into global industrial chains through an open and win-win approach.
China's high-quality green and high-tech exports have tangibly accelerated the global green transition and reduced production costs worldwide. Meanwhile, as the world's largest goods consumption market and the second-largest importer for 17 consecutive years, China provides enormous market opportunities for economies around the globe. Moreover, China's open-source collaboration and technology sharing in frontier fields such as artificial intelligence and the digital economy enable developing countries to bridge the digital divide at lower cost and share in the benefits of the technological revolution.
The facts demonstrate that China's emerging technologies and products represent a "China Opportunity 2.0" - driving global technological progress, accelerating the green transition, improving livelihoods across nations, and bolstering the industrialization of developing economies. This open and mutually beneficial cooperation stands as the true engine of global economic recovery and sustainable development. 
This article is compiled based on an interview with Tian Xuan, dean at the Guanghua School of Management and Boya Distinguished Professor of Finance of Peking University. [email protected]

。         Fishermen in South China’s Guangxi Zhuang Autonomous Region return to port to shelter from the typhoon on August 21, 2026. Photo: VCG
China Meteorological Administration (CMA) issued a Level IV emergency response for typhoon and heavy rain on Saturday, when typhoons including Gaenari, Narra, and Saudel created a rare situation in which three typhoons were active simultaneously over the South China Sea and the Northwest Pacific. 
As Typhoon Gaenari, the 20th typhoon of this year, formed on Saturday afternoon, a total of 20 typhoons have formed since January this year, well above the historical average of 13.4 typhoons form from January to August, despite August is not yet over. Statistics also show that typhoons have formed every month from January through August this year, with the number of typhoons generated each month exceeding the average for the same period in previous years, Beijing Daily reported. 
Typhoon Gaenari was about 320 kilometers east-northeast of Taipei on China’s Taiwan, as of 2 pm on Saturday, packing maximum winds of 18 meters per second near its center. 
Typhoon Gaenari is expected to move rapidly northwestward at a speed of 35 to 40 kilometers per hour, with little change in intensity, China Central Television reported on Saturday.
While the combined influence of Typhoon Narra, the 19th typhoon of this year,and the southwest monsoon is set to bring heavy rain to parts of South China and coastal areas of East China’s Zhejiang and Fujian provinces over the next three days, Typhoon Saudel, this year’s 18th typhoon, is forecast to move northwest and strengthen. 
China’s National Meteorological Center maintained a blue typhoon warning on Saturday morning, with Typhoon Narra centered over the Beibu Gulf, about 30 kilometers south of Dongxing city, South China’s Guangxi, China Central Television (CCTV) reported. 
Typhoon Narra is forecast to linger over the Beibu Gulf from Saturday afternoon to Sunday night, strengthening to a severe tropical storm before slowly moving northeastward and northward from Monday. It is expected to weaken as it approaches the Leizhou Peninsula in Guangdong and coastal areas of southern Guangxi. 
Typhoon Narra and the southwest monsoon are expected to bring heavy to torrential rain to Hainan, southern Guangxi and coastal Guangdong over the next three days, with some areas facing extreme rainfall. 
China’s National Flood Control and Drought Relief Headquarters and the Ministry of Emergency Management activated a Level IV emergency response for flood and typhoon control in Hainan, Guangxi and Guangdong at 8 pm on Friday.
Meteorological experts warned that Typhoon Narra will follow a complex track and linger over the Beibu Gulf, urging heightened precautions for maritime activities, transportation and coastal tourism. Heavy rain could trigger mudslides, landslides and flooding, while localized severe weather may also cause secondary disasters, chinanews.com reported. 
In addition, Sun Qianqian, a meteorological analyst with the CMA, said that sea surface temperatures along Typhoon Saudel’s path are relatively high, and the storm is expected to intensify rapidly in the coming days, potentially reaching super typhoon strength. Around Wednesday, it is expected to pass through the Ryukyu Islands and move into the East China Sea, after which its track remains somewhat uncertain.
According to Sun, an active South China Sea monsoon and multiple interacting tropical systems are expected to bring heavy rain to coastal areas from southern to eastern China through Monday. Southern Guangxi, Hainan, southern Taiwan Island, eastern Guangdong, southern Fujian and southern Shandong are likely to see the heavy rainfall, with risks of rain-related secondary disasters, CCTV reported. 
Global Times
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