China is facing a broad industrial overcapacity issue that extends beyond specific sectors, as seen in past episodes. While the current situation is not as severe as in 2016, it could worsen if domestic demand fails to absorb the new capacity being added.
Overcapacity is now widespread across both traditional industries (e.g., cement, glass) and emerging sectors (e.g., new energy vehicles, lithium batteries). Idle capacity is particularly noticeable in consumer goods, construction materials, and machinery. Estimates suggest that China has enough excess capacity to double exports in sectors like new energy vehicles. Additionally, global protectionist measures are exacerbating the situation, leading to trade disputes and retaliatory actions, especially around green technologies.
Four potential solutions exist to address this overcapacity issue. Read about them here: https://www.coface.com/news-economy-and-insights/made-in-china.-how-china-can-deal-with-its-industrial-overcapacity
