Beyond overcapacity: Chinese-style modernization and the clash of economic models

On Monday, March 31st, 12:00 to 13:00 CET MERICS will host a closed-door presentation and discussion of the latest MERICS report titled "Beyond overcapacity: Chinese-style modernization and the clash of economic models" MERICS Lead Analyst Jacob Gunter will present the research findings. MERICS Senior Fellow Naoko Eto, Head of the China Group at the Institute of Geoeconomics in Tokyo, and Friedolin Strack, Head of International Markets at BDI will provide comments to open the discussion.

President Xi Jinping has remolded China’s economic model in ways which establishes the conditions for overinvestment, overcapacity, and overproduction. China’s economic actors continue to invest heavily into more production with investment in manufacturing showing steady double digit growth year-over-year despite weak consumption growth. The resulting spillover via exports threatens global markets and healthy profitability. Overcapacity risks in China are already apparent in traditional industries like steel and passenger vehicles and increasingly for high-tech technologies like legacy chips and electrolyzers for green hydrogen production (all of which are covered in case studies in the report). The report looks ahead, determining which sectors are most prone to overcapacity emerging in the future based on the common factors found in the case studies. The findings are deeply worrying for European industry, as many of the sectors likely to see overcapacity in the future are Europe’s industrial crown jewels. Finally, the report covers some of the difficult choices policymakers will need to make.

After the presentation and initial comments, participants will be invited to ask questions and engage in the discussion. Please note that the meeting is confidential and by personal invitation only (Chatham House Rules).