China overcapacity claims: Western protectionism masked as trade concern
Data shows double standards in overcapacity accusations against China
Zhou Xiaoming, former deputy representative of China’s Permanent Mission to the UN in Geneva and now a senior fellow at the Centre for China and Globalisation, contends that the 'overcapacity' label applied by Washington and Brussels to Chinese steel, EVs, and green tech is a smokescreen for protectionism. He cites data: China’s ferrous metals sector ran at 78.1% capacity utilisation in 2024 and 79.7% last year — squarely within the EU’s healthy range. In contrast, the EU’s crude steel output fell to ~126 million tonnes, implying utilisation in the mid-60s. Yet the EU plans to slash duty-free quotas by 47% and double tariffs to 50% from July 1. The US uses an arbitrary metric: any output exceeding domestic consumption equals overcapacity.
Zhou points out that by that logic, Germany, which exported 76% of its 4.15 million cars (3.17 million), would be guilty of overcapacity. Similarly, 42.2% of cosmetics imported into China originate in the EU. He argues that when the West produces at scale for the world, it’s called comparative advantage; when China does it, it’s dumping. He calls for the proper forum — the WTO — to address trade disputes, rather than bypassing multilateral processes with claims of economic security and 'de-risking'. The piece concludes that protectionism will slow the green energy transition and make future technologies unaffordable for those who need them most.
- China’s steel capacity utilisation was 78.1% in 2024, within the EU’s healthy range, while the EU’s own utilisation is in the mid-60s.
- Germany exported 76% of its cars (3.17M of 4.15M) — double standard when West calls China’s exports overcapacity.
- West bypasses WTO, using arbitrary 'output exceeding domestic consumption' metric and ad hoc security claims instead.
Why It Matters
Protectionist overcapacity claims will slow green transition and raise costs for developing nations.