Recently, some western countries have repeatedly accused China of "overcapacity", saying that China's new energy product exports hit the international market.
When asked how to view the so-called "overcapacity", He Yadong, a spokesman for the Ministry of Commerce, said that the so-called "overcapacity theory" is contrary to common sense and common sense, unreasonable and totally untenable. We should respect the laws and facts of production capacity and take an objective, comprehensive and long-term view.
In fact, overcapacity was originally an economic concept, which meant that the industrial production capacity exceeded the market demand, leading to obvious oversupply of products and a sharp drop in prices.
"Overcapacity" is not new. As early as ten years ago, many places in China introduced relevant measures to resolve overcapacity in some industries, including Shaanxi, Shanxi and other energy cities.
In the past ten years, many places have accelerated the elimination of outdated production capacity, cleared out old and abandoned production capacity, and optimized and adjusted new production capacity. New changes have taken place in the industrial structure and capacity utilization in many industries.
Data shows that in the first quarter of 2024, the utilization rate of industrial capacity above designated size in China will be 73.6%. In 2023, the utilization rate of industrial capacity will be 75.1%.
Many interviewed experts told the 21st Century Economic Reporters that overcapacity needs to be viewed dialectically. It is only a common market economy phenomenon in itself. In the real market, it is difficult to maintain an absolute balance between supply and demand. With the growth of the development cycle, the market tends to adjust the capacity utilization rate by itself to achieve the coordination of supply and demand fundamentals. For emerging industries, it is a normal behavior for enterprises to arrange capacity moderately in advance. As long as the capacity utilization and market demand data are within a reasonable range, the industry can achieve sustainable development.
Exploration and experience of capacity upgrading
As early as October 2013, the State Council issued the Guiding Opinions on Resolving the Serious Overcapacity Conflict (GF [2013] No. 41) (hereinafter referred to as the Guiding Opinions). The Guiding Opinions made requirements on the industrial scale, development quality and establishment of long-term mechanism of steel, cement and other industries.
Subsequently, Shanxi, Shaanxi, Jiangxi, Shandong and other places successively issued documents to further clarify the measures to resolve overcapacity in some industries and promote the transformation and upgrading of traditional industries.
For example, in 2014, Shaanxi Province's Opinions on the Implementation of Resolving the Serious Overcapacity Conflict proposed that "the number of coal mines should be controlled at about 500, and the degree of coal mining mechanization should reach more than 95%. Yulin, Guanzhong, Yan'an, and Southern Shaanxi should eliminate coal mines below 300000 tons/year, 150000 tons/year, and 90000 tons/year respectively."
In 2016, Jiangxi Province issued the Implementation Plan for Solving Excess Capacity in the Iron and Steel Industry and Realizing the Development of Difficulties, specifying that during the "13th Five Year Plan" period, the province will reduce crude steel production capacity by 4.33 million tons. By the end of 2016, the task of reducing production capacity will be fully completed, and the capacity utilization rate will be increased to more than 85% by 2020; A long-term mechanism for resolving overcapacity was initially established, and an early warning system and supervision mechanism for overcapacity in industries were basically established. At the same time, the plan also announced the list of enterprise level withdrawal capacity.
To curb the blind expansion of production capacity, clean up and rectify the illegal production capacity, eliminate and exit the backward production capacity, and adjust and optimize the industrial structure have become important directions to resolve the excess and backward production capacity in the past decade.
A Shaanxi provincial government official told the 21st Century Economic Herald reporter: "In the early years, Shaanxi took the opportunity of implementing the action plan of 'pollution control and haze reduction and blue sky protection' to impose strict requirements on the construction projects of thermal power, steel, cement, coking, non-ferrous smelting, traditional coal chemical industry and other industries in large and medium-sized cities."
The above people further pointed out that the policy is specifically reflected in the prohibition of planning and layout of cement, conventional coal-fired power plants, steel, chemicals, building materials and other projects in large and medium-sized cities. The existing projects will be technically upgraded within a time limit, and some highly polluting enterprises will be relocated. New industrial projects shall be planned and approved according to the principle of equal or reduced replacement, and a number of existing industrial enterprises shall be promoted to return to the city and enter the park.
Liu Chunsheng, an associate professor of the Central University of Finance and Economics, told the 21st Century Business Herald that provinces with strong traditional energy development may face multiple pressures such as resource depletion, environmental pollution and economic downturn in the process of converting new and old production capacity. It is a general trend for these provinces to speed up industrial restructuring.
In the iron and steel industry where the contradiction of overcapacity was prominent before, Jiangxi Province and other places released the relevant measures of the Action Plan for Upgrading the Manufacturing of Iron and Steel Products (2016-2020). While curbing the blind expansion of capacity, they further required iron and steel enterprises to be demand oriented, improve the stability of product quality, accelerate the upgrading of traditional products, and promote high-tech products to gradually become high-end High quality and brand oriented development.
Zheng Lei, chief economist of Samoye Cloud Technology Group, told reporters of the 21st Century Business Herald that through capacity optimization and adjustment, production efficiency and product quality will be improved, energy consumption and environmental pollution will be reduced, industrial upgrading and transformation will be accelerated, new economic growth points will be cultivated, and the quality and efficiency of economic development will be improved. At the same time, it is also one of the necessary means to cultivate new quality productivity, improve the core competitiveness of enterprises through technological innovation and equipment upgrading, and promote the development of industries in the direction of high-end, intelligent, and green.
Advanced Manufacturing Industry Launches "Breaking the Game"
In addition to resolving the contradiction between traditional stock capacity, the transformation of new and old drivers has also become an important issue for development.
On the data level, with the release of the first quarter economic data of major cities, the latest industrial development of 12 "trillion prefecture level cities" (that is, among the 26 trillion GDP cities in China, the prefecture level cities that do not include municipalities directly under the central government or sub provincial cities) also roughly presented.
In general, the year-on-year growth rate of gross regional product (GDP) of most trillion prefecture level cities (calculated at constant prices, the same below) is higher than that of the whole country.
In terms of individual indicators, industrial production has become the backbone of the development of trillion prefecture level cities. In the first quarter, the year-on-year growth rate of added value of 10 industries above designated size in 12 trillion prefecture level cities exceeded that of the whole country (6.1%), including 15.0% growth in Zhengzhou, 12.0% growth in Hefei, and 10.1% growth in Dongguan, all of which reached double digits.
Compared with the contradiction of overcapacity in some traditional industries ten years ago, the moderate layout and planning of production capacity in strategic emerging industries, including electronic information manufacturing, automobile, aerospace, high-end equipment, new materials and new energy manufacturing, food and biomedicine, have been frequently listed in local government work reports.
"From the perspective of urban economic development, the elimination and clearing of backward production capacity is no longer the core element of industrial development at present. The advance layout and planning of strategic emerging industries will be the key element to release the momentum of urban economy. For example, new energy vehicles have a domestic market of 1.4 billion people and export channels that are expanding year by year. The regional output of new energy vehicles will be directly reflected in the urban GDP growth. Such as this, strategic emerging industries and their major projects are the key link in the current urban competition. " The above Shaanxi Provincial Government said to the 21st Century Economic Reporter.
It is worth mentioning that in the first quarter of 2024, the added value of Zhengzhou's automobile and equipment manufacturing industry increased by 44.8% year on year. The automobile equipment manufacturing industry in Chongqing, Shanghai, Guangzhou and other places also witnessed year-on-year growth in varying degrees.
UBS China found that the overall vehicle capacity utilization rate has risen from 70% to 74% in the past three years after analyzing the listed Chinese auto brands. The obvious change is that the capacity utilization rate of Chinese independent brands will increase from 65% three years ago to 86% in 2023.
Enterprise financial report data is more intuitive for the transformation and upgrading of production capacity and the cultivation and growth of emerging industries. For example, in the third quarter of 2023, the capacity utilization rate of advanced production lines of TSMC's 4-5 nm process will exceed 80%. According to the recent survey summary of Huahong Company, the capacity utilization rate of the company rebounded significantly in the first quarter, and 8 inch and 12 inch products were close to full load.
"Although the short-term capacity expansion in the industry has led to the imbalance between supply and demand, the long-term trend of the photovoltaic industry has not changed. Capacity release needs a cycle. The enterprise's moderate layout of capacity in advance is based on long-term industry research and market observation and other comprehensive factors, rather than short-term fluctuations in the current market. For example, Longji Lvneng, the leading enterprise, signed a large order for silicon materials, which must be based on the long-term optimistic judgment of the industry. " An upstream supplier of the photovoltaic industry chain told the 21st Century Business Herald.
Bai Wenxi, vice president of China Enterprise Capital Alliance, told the 21st Century Economic Reporter that the downward pressure on the macro-economy still exists, and the optimization and adjustment of production capacity promotes the adjustment and upgrading of industrial structure, so as to further cultivate and develop new pillar industries in various regions. These pillar industries are characterized by high added value, high technology content and high growth, which can drive regional economic transformation and upgrading and sustainable development.
Liu Chunsheng further pointed out that with the increasing challenges of global climate change, the "dual carbon" goal has become the consensus of the international community. Accelerating the conversion of new and old production capacity is conducive to promoting green, low-carbon and circular development, cultivating new quality productivity, and improving industrial competitiveness and sustainable development capacity. At the same time, in the context of actively building a modern industrial system in various regions, the cultivation of pillar industries in the future will pay more attention to technological innovation, green environmental protection and sustainable development. These fields have broad market prospects and huge development potential, and will become an important force to promote high-quality economic development.
(Author: Morning Editor: Chen Jie)
