The Chinese government has announced plans to take the necessary measures to address the overcapacity issue in its electric vehicle industry amid concerns over the strong presence of China-made models in the West.
Chinese government’s solution
According to Reuters, China conceded that its electric vehicle push has “gone too far.” In that sense, the Ministry of Industry and Information Technology’s (MIIT) Vice Minister reportedly announced that they will actively work to alleviate the electric automakers’ overcapacity by imposing “forceful measures.”
By doing so, Vice Minister Xin Guobin expects to avoid unnecessary projects by some local authorities and companies that can further increase the current capacity of its EV industry.
For context, consultancy firm Automobility indicated that excess capacity ranges from 5 to 10 million units annually.
Trade war
Vice Minister Guobin’s remarks are apparently in response to the ongoing trade war between Beijing and the West.
As EV-a2z previously reported, the European Union initiated an anti-dumping probe into the Chinese EV industry in September. The move is prompted by the growing dominance of cheaper China-made models against local brands. In return, Beijing also launched an investigation into French cognac sales to China.
The MIIT Vice Minister also criticized foreign “protectionist behaviors” and the trade dispute mechanisms’ “abuse.” It aligns with earlier statements from Beijing regarding the EV investigation by Brussels and the stringent restrictions on Made-in-China EVs and batteries in the United States.
Challenge
Despite China’s efforts to uphold its EV industry, it would be challenging for the government to address the prevailing overcapacity issue without adversely affecting the market.
Nonetheless, the officials’ acknowledgment of the issue is indeed remarkable, as it marks the first step toward the discovery of potential strategies and solutions.
China has yet to announce a more specific strategy and measures to address the overcapacity in its electric vehicle industry.
