Chinese Envoy Criticises 'Overcapacity' Label, Accuses West Of Targeting Developing Nations

Chinese Ambassador to India, Xu Feihong, criticised Western nations for labeling Chinese goods as "overcapacity," expressing China's increasing concern over accusations of unfair trade practices and industrial overcapacity.

Chinese Ambassador to India, Xu Feihong, has criticised Western countries for their labelling of Chinese goods as "overcapacity". Xu's remarks on Tuesday, highlight a growing tension between China and the West over industrial capacity and trade practices.

Xu Feihong, who officially took charge as China's envoy to New Delhi on May 31, took to social media to express his concerns. "Talked about 'overcapacity' recently, not just for China. Today China is targeted, tomorrow some other developing country may be a victim. Today the label is 'overcapacity', tomorrow may be whatever excuses. Certain developed countries cannot tolerate developing countries' technological strength and competition. We the #GlobalSouth will definitely say NO!" he posted.

Previously, the Ambassador on June 6 questioned the inconsistency in the application of the "overcapacity" label. "So many Japanese, Korean, American and German cars on #Delhi streets! Can't help but think: should all major car exporting countries be blamed for 'overcapacity'? If not, why is China's export of new energy vehicles labelled 'overcapacity'? America is a big exporter of soybeans, chips, and Boeing planes. Why is it not 'overcapacity'? Isn't that naked double standards?" Xu wrote.

US, France Corner China Over Industrial 'Overcapacity'

Xu's comments come in response to U.S. Treasury Secretary Janet Yellen's remarks in May, where she called for a "strategic and united" response from the United States and Europe to China's industrial overcapacity. Yellen, during a visit to Frankfurt, emphasised that the G7 finance ministers shared concerns about China's efforts to dominate clean energy industries, though she stated that detailed coordination on trade actions was not necessary, as per news agency Reuters.

"But I do think that the concerns about China's strategy are shared, and all I'm suggesting is that given that many countries share this concern, it's more forceful to communicate to China as a group," Yellen said, as quoted by Reuters. She added that China's excess industrial capacity posed a threat to firms in both the U.S. and Europe, as well as to the industrial development of emerging markets.

In a series of recent actions, the Biden administration announced new tariffs on Chinese electric vehicles, solar products, semiconductors, battery parts, steel, and other strategic industries. Yellen had earlier warned Chinese officials in Guangzhou and Beijing that the U.S. would not tolerate an excess production of goods that would flood global markets with cheap exports.

French Finance Minister Bruno Le Maire echoed Yellen's sentiments, stating that the G7 and Europe need to stand united against China's overcapacity in key industries. "In the face of this overcapacity, it is vital that the G7 and Europe stand united. Europe must affirm its economic power," Le Maire told journalists ahead of a G7 meeting in Italy in May, as per Reuters.

Germany, however, appears to take a more cautious stance, wary of upsetting trade relations with China, a major export market for German firms.