The United States is using production overcapacity as an excuse to impose trade protectionism against other countries including China, according to Michele Geraci, former Undersecretary of State of the Italian Ministry of Economic Development, who has questioned America's use of overcapacity as an economic concept.
China has in recent years taken an increasing share of the global market in the green industries including the electric vehicle (EV) sector. The United States and some European countries, however, have accused China of flooding the global market with cheap products and distorting market rules, threatening to impose tariffs on Chinese imports. China has denounced the move as seeking to stifle competition through protectionist trade policies.
Geraci said the expansion of China's EV export to overseas market is a result of its increasing global competitiveness in the green industries and falls within the definition of normal global trade practice. He believes that the "overcapacity" rhetoric used by the U.S. against China runs counter to globalization and free trade.
"You produce 100 cars, the domestic demand absorbs less than that - 80 - and then you have this extra 20, and what do you do with those extra 20? You export them to other parts of the world. So, in a way, the world trade is based on the fact that, let's say, on overcapacity and the fact that producers produce more than the domestic demand is, so that they can sell the same products to other countries. So, it's a very weak economic concept," he said in a recent interview with China Global Television Network (CGTN).
Geraci said with the November election on its way, some U.S. politicians are keen on seeking trade barriers against not only Chinese products, but also products from other countries, just to show they care about domestic manufacturers.
"It is a narrative that on which politician can build, which is trying to impose importer duties on those products that they perceive as damaging to their own domestic economy. And since we are a few months away from U.S. election, it is expected that candidates do raise voices against not just against China, but against any country, because they need to be perceived as those that protect the domestic industry from competition from foreigners," he said.
Geraci believes that instead of trying to contain China's advance in the green industries, seeking cooperation is a better solution for sustained world economic growth.
US uses overcapacity as excuse to impose trade protectionism: former Italian official
