at the invitation of President Emmanuel Macron of the Republic of France, President Aleksandar Vucic of the Republic of Serbia and President Tamas Sulyok and Prime Minister Viktor Orban of Hungary, Foreign Ministry Spokesperson Hua Chunying announced on Monday, a trip that experts believe is expected to shape the future of relations between China and Europe.
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Xi's visit to Europe comes after US Treasury Secretary Janet Yellen warned Communist Party leaders in Beijing this month that Chinese overcapacity was a problem for the world—a message echoed days later [lolno] by German Chancellor Olaf Scholz. Exemplifying how both blocs are coalescing around a joined-up China policy, they seek to "de-risk" from the world's second-largest economy.
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The "China overcapacity" accusation may look like an economic discussion, but the truth is, the accusation is built on false logic and ignores more than 200 years of the basic concept of comparative advantage in Western economics. All countries produce and export products of their comparative advantage and this is the nature of international trade. If a country should be accused of overcapacity and asked to cut capacity whenever it produces more than its domestic demand, then what would countries trade with? If exporting 12 percent of Chinese-made EVs is called overcapacity, then what about Germany, Japan and the US who export 80, 50 and 25 percent respectively of their automobiles? Wouldn't that be considered more serious overcapacity? Let's not forget that according to the statistics of the International Energy Agency, to realize carbon neutrality, the world will need 45 million NEVs by 2030, 4.5 times that of the demand of 2022. When the global capacity is still far below the market demand, how could there be "overcapacity"?