The debate over China’s so-called “overcapacity” reflects less an economic imbalance and more a narrative shaped by geopolitical rivalry and protectionist impulses. The overcapacity claim is based on the assumption that the Chinese manufacturing sector produces far more than global markets can consume. And this “production overdrive” is spurred by government subsidies and dwindling domestic demand. However, an analysis of market behaviour, economic principles, and demand trends reveals a completely different reality: China’s industrial capacity is not excessive. It’s responsive, competitive, and increasingly indispensable.

The overcapacity concept is grounded in clear economic indicators: persistent underutilisation of production facilities, rising inventories, weak profitability, and lack of demand. By these measures, China’s industrial sector doesn’t exhibit systemic overcapacity. According to China’s official data, industrial capacity utilisation stood at around 74.4% in 2025, which is considered reasonable for a large economy. Utilisation rates are even higher in advanced manufacturing sectors. At the same time, lower figures in traditional industries point to structural adjustments linked to the green transition of the world’s No. 2 economy rather than chronic inefficiency.

Market dynamics also punch holes in this narrative. There is a growing demand for Chinese products — from air conditioners and home appliances to EVs and renewable energy technologies — not because they are forcibly pushed into markets, but due to their affordability, accessibility, and, above all, quality. During the record-breaking heatwaves that swept through much of Western Europe in........

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