Amid recent assertions by the U.S. and Europe that China faces overcapacity in its new energy industries, data from CGTN provides a compelling counter-narrative, particularly within the electric vehicle (EV) manufacturing sector.
Capacity utilization, a key indicator of industrial efficiency, measures the extent to which a company or nation uses its installed productive capacity. A lower capacity utilization rate can signal excess production capabilities and potential inefficiencies. In 2023, China’s overall industrial capacity utilization stood at 75.1 percent, slightly below the globally recognized threshold of around 80 percent, as reported by the National Bureau of Statistics.
Despite this figure, Bloomberg highlighted that the utilization rate has seen an uptick in recent quarters, surpassing levels observed in 2016. Economist Fan Lei from Guolian Securities emphasized, \"Under these circumstances, it is hard to believe that China has a serious structural overcapacity.\"
The apparent low overall capacity utilization masks significant disparities across different sectors. The Atlantic Council points out that while low-tech industries such as cement and glass struggle with underutilization, the EV sector thrives. Major EV manufacturers like BYD, SAIC, and Li Auto have achieved capacity utilization rates exceeding 80 percent, starkly contrasting with the below 50 percent rates seen in producers of internal combustion engine (ICE) vehicles.
This shift underscores a broader transition in consumer preferences from traditional ICE vehicles to more sustainable EV options, bolstering the resilience and growth potential of China’s EV industry amidst global economic fluctuations.
Reference(s):
Capacity utilization data shows no overcapacity in China's EV sector
cgtn.com
