Behind China’s new-energy overcapacity as it changes the face of manufacturing and raises the stakes of competitiveness
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Chinese manufacturers are expanding their businesses in the new-energy sector, despite concerns of overcapacity and trade restrictions imposed by the West. The growth in the new-energy sector, which includes electric vehicles (EVs), lithium-ion batteries, and solar panels, is seen as crucial for China's national security. However, overcapacity has become a challenge as domestic demand remains weak. Chinese companies are looking to explore overseas markets to survive and expand. The US and the European Union have raised concerns about unfair competition from low-priced Chinese products. China has been producing and installing the most new-energy generators globally, but the numbers have exceeded domestic demand. The upcoming US presidential election and the EU's anti-subsidy probe into China's exports of electric vehicles have resulted in trade tensions. China may face intensified pushback from emerging markets if the overcapacity issue continues. Chinese companies are embracing an industrial reshuffle and downstream participants are expected to benefit from bigger profit margins. China's new-energy industry aims to establish absolute advantages by utilizing a higher proportion of renewable energy in its overall energy consumption. Chinese companies and investors are scaling up production capacity to take advantage of falling prices in the new-energy sector.
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