May 06, 2024
U.S. and Europe chafe over “overcapacity” — but is it real?
Overcapacity is kind of a fuzzy word, and that’s saying a lot for an economic term.
“At a basic level, overcapacity is too much production and too little demand,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security.
It’s the idea that a country has subsidized or propped up its industries so much that it’s drowning in products.
...
Gertz at CNAS said it’s not just about electric cars. China does pump up its manufacturers with cheap credit and tax benefits, and he said that’s messing with international markets.
“Chinese companies may be operating at a loss for a very long time, but are not necessarily incentivized to exit the market as would otherwise happen,” he said. “You have a continual excess reserve of production, and you’re incentivized to continue producing, even if the market is telling you there’s no need for it.
Listen to the full segment from Marketplace.
More from CNAS
-
BONUS: Comparing China Sanctions Under Trump and Biden
Join Emily Kilcrease and researcher Eleanor Hume to discuss the latest edition of CNAS's Sanctions by the Numbers series, examining how the U.S.'s sanctions policy on China ha...
By Emily Kilcrease & Eleanor Hume
-
Sanctions by the Numbers: Comparing the Trump and Biden Administrations’ Sanctions and Export Controls on China
Executive Summary The Biden administration has exceeded the Trump administration in the number of financial sanctions and entity-based export controls placed on Chinese person...
By Eleanor Hume & Rowan Scarpino
-
A Fight Among China Hawks Could Imperil U.S. AI Dominance
Rolling the dice now on partnerships like the G42 deal could be critical to ensuring U.S. dominance....
By Daniel Silverberg & Elena McGovern
-
U.S. Chip Controls and the Future of AI Compute
That escalated quickly! Emily and Geoff discuss why the U.S. aim to deny China access to the computing power necessary for frontier AI capabilities has led to an ever expandin...
By Emily Kilcrease, Geoffrey Gertz & Pablo Chavez