Rhetoric a smokescreen for industrial decline among nations, experts say

Western accusations of Chinese "overcapacity" are a smokescreen for the West's own relative industrial decline and undermine global stability, said international experts, who argue that embracing Chinese companies, rather than imposing barriers, can help resolve global economic imbalances and secure supply chains.

The so-called overcapacity rhetoric has gained traction recently in Western policy and media circles.

Earlier this month, the United States led trade ministers from a number of G20 countries, along with the European Union, to release a statement calling for action to eliminate the so-called structural excess factory capacity. The EU has also been hyping economic imbalances, while France and Germany have recently advocated the creation of a Europeanversion of the "Section 301" tool, threatening tougher measures against China.

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However, international experts view these claims as a tactic to deflect from internal economic weaknesses, not a true reflection of China's industrial output conditions.

Ryan Perkins, founder of the research platform Global Economic Indicator, argued that such a narrative in the West "serves a very important narrative function, because it's designed to mask the relative decline of European industry".

Citing Germany as an example, Perkins noted that Germany's technological lead in manufacturing has narrowed relative to China — but it arises from German deindustrialization driven by the country's financialization of its economy rather than Chinese "overcapacity".

"German capital now functions very much in a similar way to the US within the dollar system. It's essentially the financial powerhouse of Europe, and with that come certain sacrifices," he said.

Glenn Diesen, a professor of international relations at the University of South-Eastern Norway, said the term "overcapacity" reflects a struggle to compete.

Accusing China of having "overcapacity simply means that the Chinese have been doing better and competing better", Diesen said, drawing a parallel: "One can argue that the French have overcapacity in winemaking and the Italians have overcapacity in fashion (industry)."

He highlighted the "dilemma" posed by China's lead in green technologies. While Western nations want to achieve the widespread adoption of affordable and high-quality green tech, Diesen noted: "The problem is often that states, on the geoeconomic ground, compete for who can control the leading technologies. So I think a lot of the Western countries would like to see themselves produce it."

Former British lawmaker George Galloway further highlighted this Western hypocrisy. The West "quite liked China when it made T-shirts and teddy bears", he said.

But now that China is exporting the finest technologies, they consider China a risk that has to be mitigated from, he added.

He pointed out that what is now labeled "overproduction" was simply what the Western nations used to do and export. Now, "they raise these barriers on automobiles, which belies centuries of protestation of belief in free trade, the belief that the market is king, that the consumer is king. All of these things are abandoned in the interests of protectionism", he said.

Radhika Desai, a professor of political studies at the University of Manitoba in Canada, linked this hostile stance of the West directly to China's rise as a competitor.

She said the West's determination to paint China as an "aggressor" with "overproduction" intensified precisely as China's competitive edge grew. "The more China became a competitor, the more hostile the West became."

Risk to growth

Such hostility, she warned, risks undermining global economic growth. "The way forward is for them to learn from China. They can see that China has always made sure it is able to produce certain goods competitively, and they need to learn to do the same," she said.

Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics, echoed this view, describing Western accusations of China disrupting the global economic system as a reflection of Chinese manufacturers' rapid technological advancements, which have effectively broken the long-standing technological monopoly of Western firms.

Western countries should open their arms to Chinese companies going global, Tu urged, noting that this is a key step toward resolving global imbalances and maintaining stable industrial and supply chains.

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Tu said that China opened its doors to Western capital and enterprises during its development phase, and this openness allowed Chinese firms to integrate into global supply chains and learn from leading Western companies, fostering their own production and innovation capabilities.

The Ministry of Commerce data reveal that China's foreign direct investment equity stock reached 26.8 trillion yuan (about $4 trillion) in 2025, ranking second globally.

With the old era of one-sided Western technology and capital flow to China now passed, Tu argued that neither side holds an overwhelming advantage.

Instead, a "roughly balanced technological and industrial competitive landscape" has emerged. In this environment, both sides should shed "excessive vigilance" and engage in "more open and equal supply chain cooperation", he said.

Contact the writers at yangran1@chinadaily.com.cn