Summary of Key Points
The United States plans to impose new tariffs on China on the grounds of "overcapacity," which essentially reflects anxiety about the rise in China's manufacturing competitiveness and industrial prominence. China argues that the concept of "overcapacity" is overly broad—high exports do not necessarily equate to excess production capacity, as international trade is about the allocation of supply and demand across countries. It is unfair for developed countries to shift their own industrial challenges onto China, as tariffs will not address the root issues, such as high energy costs and outdated infrastructure. China is also working to address its own problems, such as redundant investment and local protectionism. The world needs to adapt to China's development through reform and cooperation to establish a new, inclusive industrial order.
Detailed Analysis
1. Is "Overcapacity" a Misconceived Issue?
What constitutes true overcapacity? It requires long-term losses for enterprises, idle equipment, and the inability to phase out outdated production. However, what the United States refers to as overcapacity is simply China's high level of exports and trade surpluses—two different things! For example, China exports a large amount of photovoltaic products because many countries need clean energy and are willing to purchase them, not because there is an oversupply.
The deeper reason is that in the past, China focused on low-end processing, while developed countries held the core technologies and rules. Now that China has become a leader in sectors like new energy vehicles and photovoltaics, developed countries use the pretext of overcapacity to suppress competition. The reality is that the global industrial landscape has changed, and they are struggling to adapt.
2. Tariffs Are a Painkiller, Not a Cure
Developed countries' industrial challenges (high energy costs, outdated infrastructure, shortage of skilled workers, and inconsistent policies) cannot be resolved by tariffs. For instance, when the U.S. imposes tariffs, domestic consumers pay more for Chinese goods, and companies become complacent and less inclined to innovate and upgrade. This is like giving a sick person painkillers; the pain may be temporary, but the problem remains, and the country may become even weaker.
For example, U.S. tariffs on Chinese photovoltaic products have increased the cost of domestic production, delaying the country's transition to clean energy. Tariffs can only temporarily hinder competition but cannot create new technologies, skilled workers, or a complete supply chain.
3. China Is Not Avoiding Its Problems
China acknowledges issues in certain industries, such as local subsidies leading to redundant investment and unfair pricing. It is taking steps to address these issues, such as regulating competitive practices and creating a unified national market to eliminate local protectionism. These actions are not only in response to external criticisms but also for China's own benefit—eliminating inefficient capacity and allowing more competitive companies to thrive, which will make Chinese manufacturing more sustainable in the long run.
4. How Should the World Coexist with China?
- Developed Countries: Stop trying to restrict China's progress and focus on strengthening their own weaknesses, such as investing in infrastructure and vocational education, and stabilizing industrial policies. Avoid using "national security" as a pretext for trade restrictions. While competition can be painful, isolating oneself from it will weaken industries.
- Developing Countries: There is no need to fear Chinese goods; instead, they can benefit from China's infrastructure and green technologies to reduce industrialization costs. They can also encourage Chinese companies to localize operations by hiring local workers, providing training, and building supporting industries.
- China: China needs to make adjustments, such as increasing people's incomes and encouraging consumption to boost the domestic market, reducing local protectionism, and opening up the service sector to the world. It should also seek mutually beneficial investments abroad, such as building factories and creating jobs.
5. Cooperation Is More Effective than Isolation
China's large and diverse manufacturing base ensures its continued growth. Trying to revert to the past through tariffs and isolation is unrealistic. The key to a stable global economy is for all countries to adapt to change. China is willing to take responsibility, and other countries should face reality. Through reform, cooperation, and fair competition, a new order where everyone benefits can be established. Blocking China's development will not return things to the way they were; instead, cooperation can lead to a better future.