China must find supply and demand balance amid US, EU overcapacity concerns, ex-Beijing adviser says
- Former government adviser Jia Kang says officials must ‘have the foresight to make good predictions’ amid China’s new quality productive forces strategy shift
- European Union and United States have accused China of exporting overcapacity, particularly with electric vehicles
China should be mindful of risks from overcapacity and prudently formulate industrial policies to guide enterprises amid Beijing’s hi-tech push in order to reorient economic growth and nurture new industries, a former government adviser said on Tuesday.
Beijing’s bid to upgrade the world’s second-largest economy by tapping so-called new quality productive forces has led to the rapid expansions of China’s electric vehicle industry and other green sectors.
The market can drive out excess capacity through competition
“Policymakers should, in their push for new quality productive forces, have the foresight to make good predictions for supply and demand,” said Jia Kang, a former director of the Chinese Academy of Fiscal Sciences.
“If they don’t have such ability, they should refrain from making interventions off the top of their heads to favour a specific industry or project.
“The market can drive out excess capacity through competition.”
He added that Beijing must not resort to excessive interventions when formulating industrial policies, while saying that Washington’s allegations of overcapacity are invalid.
