Experts: Issue exaggerated, should not be politicized

China should not be blamed for offering cost-effective new energy technologies and products to the world amid rising accusations of so-called overcapacity concerns, industry experts said on Wednesday.

They made the comments as United States Treasury Secretary Janet Yellen reportedly cautioned that China's overcapacity in electric vehicles, lithium-ion batteries and solar products will distort global prices.

"In conflating overcapacity and the broader issues of the EV market, Washington's narrative is way off the mark. It is the U.S. market's high prices, not Chinese overcapacity, that hinder widespread EV adoption, given that Chinese EVs are completely excluded from the U.S. currently," said Wang Xin, associate professor of China Studies and director of Asian Studies in the department of languages and cultures at Baylor University in the U.S..

Wang said that last year, the EV share of the total U.S. vehicle market was only 7.6 percent, and while U.S. consumers have limited choices with new EVs averaging around $50,000, China's largest EV maker, BYD, offers a subcompact, Seagull, for less than $10,000.

"In contrast, the U.S. is lagging in realizing even its EV infrastructure ambitions. China has nothing to do with this slow rollout. Unlike the protectionist stance adopted by the U.S., China's approach prioritizes industry-wide growth rather than narrow corporate and political interests," he added.

Zhang Xiang, an auto sector researcher at North China University of Technology, said that the rise of China's new energy industry is fundamentally a result of its ultra-large-scale market, complete industrial system and abundant human resources.

"It is not reasonable to leverage political power to hinder the public's access to China's cost-effective new energy technologies and affect the prospects of global green transformation," he said.

Zhang added that China's overcapacity problem has been "exaggerated", as industrial overcapacity could happen in any sector in any country, and should not be politicized.

"Whether there is overcapacity should be based on global market demand and future development potential, and the market adjusts itself according to the law of value," he added.

Bloomberg also said in a recent report that from the rest of the world's perspective, overcapacity can be felt through lower prices, and China's automobile exports, which surged last year as the country overtook Japan as the world's top car exporter, actually became more expensive, which suggested their rising attractiveness isn't due to price cuts.

Lu Yan, an industry veteran and independent analyst, pointed out that China is indeed in the process of gradually optimizing the structure of the production capacity of traditional fuel vehicles and increasing the production capacity of new energy vehicles.

"Some regions are doing well and some are not doing well enough. But it is a structural and cyclical excess and that is where strategies will need to be adjusted in some regions in the future," Lu said.

On the contrary, rising protectionism from Western economies like the U.S. and Europe will not offer a fair competition market for green energy, and may lead to the penetration of NEVs not occurring in an expected way, he added.

The EU Commission also announced earlier this week that it will launch an inquiry into alleged Chinese subsidies for suppliers of wind turbines.