Overcapacity – from electric vehicles to high-speed rail to housing – is destroying profits as well as GDP

Overcapacity – from electric vehicles to high-speed rail to housing – is destroying profits as well as GDP

China’s astounding technological success in mass-producing quality electric vehicles (EVs) sits alongside a serious flaw in its industrial model: overcapacity.

It has the capacity to produce about three times as many units as it can sell at home. The consequences so far have included widespread price cutting, large losses, misallocation of capital, and surging low-cost EV exports leading to trade conflict.

The bigger problem, though, is that EVs are just a part of a broader overcapacity problem involving a myriad of sectors and products.

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    6 months ago

    China polysilicon firms plan $7 billion fund to shut a third of industry capacity

    Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings said.

    A first step maybe? It’s too little, and very late. Seems China’s Leninist changes only if they run out of money. What a difference to the neo-liberal stance (s/)