STORY: Evidence of overcapacity claim weak: UK economic historian
SHOOTING TIME: June 25, 2024
DATELINE: June 27, 2024
LENGTH: 00:02:14
LOCATION: DALIAN, China
CATEGORY: ECONOMY

SHOTLIST:

Renowned UK economic historian Adam Tooze argues that evidence of "overcapacity" in China's electric vehicle (EV) industry is weak.

He made the remarks in an interview with Xinhua at the 2024 Summer Davos in the northeastern Chinese city of Dalian.

Tooze, director of the European Institute at Columbia University, says Europe and the U.S. are lagging behind China in developing the EV industry.

During its process of accelerating the green energy transition, China witnessed the emergence of world-beating firms that are low-cost, high-quality with extraordinary supply chains.

"It's hard to see that as evidence of 'overcapacity'," says Tooze.

SOUNDBITE (English): ADAM TOOZE, Director of the European Institute at Columbia University
"If you look at the areas which are most political, I think the evidence (of 'overcapacity') is much, much weaker. I mean, one thing you'd expect to see in 'overcapacity' situations is aggressive dumping. So companies will be trying to offload goods on foreign markets at lower-than-cost or even just slightly above-cost prices, and that's clearly not what's happening, right? You have highly competitive EV producers and they can charge way more than they can in China in Europe for the same vehicle. So they'll sell it to Europe at a premium, right? Why not? And why can they sell it at a premium? Because the European producers are competitive, because their cost base is so high, and they haven't gone very hard on battery-electric, and they're competing at higher segments of the market. And if you speak to honest European industrialists, they'll tell you straight out that's the issue. And when they operate in China, they receive the same subsidies as the Chinese do. But if what China is doing is what everyone else is doing, which is trying to accelerate the green energy transition, and in the process of doing that, you end up with world-beating firms that are low-cost, high-quality and have built these extraordinary supply chains, it's hard to see that as evidence of 'overcapacity.' We don't have a surplus of green energy vehicles. We do have a surplus of steel, right? Objectively speaking, if we stand back and just ask ourselves, do we want more green energy vehicles or less, the answer is we want more and we want them cheaper and we want them better."

Xinhua News Agency correspondents reporting from Dalian, China.
(XHTV)