Real goal behind U.S. concern over so-called 'overcapacity' is to curb China's tech competitiveness: analysts

2024-04-09 Editor : Zhao Li ECNS App Download

(ECNS) -- Analysts have pointed out that the real goal behind the U.S. concern, as raised by U.S. Treasury Secretary Janet Yellen during her visit to China, is to stop the latter from competing with its big tech monopolies.

Yellen highlighted concerns over so-called "China's overcapacity" in electric vehicles (EVs), solar panels, chips, and other sectors.

Benjamin Norton, founder and editor-in-chief of Geopolitical Economy Report, quoted a Reuters cover story about Yellen’s concerns on his X account, saying “But (U.S.) Commerce Secretary (Gina) Raimondo admitted to the real goal: stop China from competing with U.S. Big Tech monopolies. Janet Yellen's trip to China must be understood in this context.”

According to a Bloomberg report, last month, Raimondo said the U.S. will "do whatever it takes" to curb China’s tech when asked if the U.S. is planning to add new restrictions on the sale of semiconductors to the country.

“When China was producing low value-added goods like toasters and toys, the U.S. didn't care about ‘excess production’. Now that China can compete with U.S. Big Tech monopolies in cutting-edge sectors, Washington (and the billionaire oligarchs who control it) need excuses for tariffs,” he said.

French entrepreneur Arnaud Bertrand holds similar views. On Saturday he published an article on X, in which he analyzed China’s capacity utilization rates, inventory levels, and profit margins, concluding that “there is just no sign of industrial overcapacity in China.”

According to his analysis, China's capacity utilization rates have remained steady at around 76 percent for the past decade, comparable to America's rates at about 78 percent, suggesting no issues. As of early 2024, China's finished goods inventory PMI index stood at 49, below the threshold of 50 indicating increasing stock levels, suggesting no concerns with inventory levels. Additionally, China's industrial profits have increased by 10.2 percent in the first two months of the year, continuing a positive trend since August last year, indicating no issues in this regard either.

Bertrand pointed out “The real issue here is not one of industrial capacity but one of competitiveness. What is crystal clear is that the competitiveness of Chinese companies is overwhelming.”

“It’s understandable that when you see a competitor continuously gaining in strength, you grow quite anxious as to your own future and that of your people. But it needs to be framed the right way: framing it as if China was doing something malign with deliberate 'overcapacity' is just a very unfair characterization,” he said.

“Demonizing this is just not right, and it’s certainly not the right way to ask China for what’s an incredibly big favor: running less fast so the West can keep up… Especially when the West running slow is the result of catastrophic leadership for the past few decades: first and foremost choosing to waste trillions of dollars in killing people abroad instead of investing in its own progress,” he added.

“I’m afraid this ‘overcapacity’ framing is just another illustration of this poor leadership: when you prefer to blame others for your own failures rather than face reality,” he concluded.

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