By focusing on protectionist policies and trade barriers, the G7 risks undermining the very economic stability and growth it professes to protect. Embracing a more cooperative and inclusive approach could yield far greater benefits for the global economy.
by Xinhua writer Zeng Yan
GENEVA, June 17 (Xinhua) -- China's green technologies from solar panels to electric vehicles (EVs) are in the crosshairs again as Group of Seven (G7) leaders gathered for their annual summit in Italy.
In their latest statement, the G7 claimed that China's industrial policies lead to "global market distortions and harmful overcapacity." These allegations are not only unfounded but reflect a reluctance by the rich country club to acknowledge China's legitimate economic progress and contributions to global prosperity.
The world sees no industrial overcapacity from China, but "bias overcapacity" from the G7.
Start with EVs. More than 14 million EVs were sold worldwide in 2023, with China exporting 1.2 million, or 8.5 percent of the global sales. Such a proportion hardly justifies overcapacity, said Tang Jin, a senior researcher at Japan's Mizuho Bank. The International Energy Agency predicted that global EV sales will reach 45 million in 2030. This is three times that of last year and five times China's production capacity. China, the largest auto exporter, even needs to ramp up its production to meet such huge demand.
In essence, the real issue for the G7 is less about Chinese companies' excess capacity and more about their high efficiency. Instead of acknowledging the fundamental economic principle of comparative advantage, which advocates for mutual trade based on relative strengths, the G7 is opting for protectionist measures like raising tariffs. This move not only contradicts economic theory but also undermines the benefits of trade for all involved, ultimately serving no one's long-term interests.
Speaking of concerns about EV imports from China flooding Western markets and wiping out jobs, Chinese companies never dump EVs on global markets at a lower cost. Leading Chinese EVs cost roughly double on average in Europe than at home.
If the world is eager to reach net-zero emissions for a livable climate, the global supply of solar panels needs to catch up, too. The global cumulative installed capacity of photovoltaics needs to exceed 5,400 GW by 2030 to meet the climate goals of the Paris Agreement, according to calculations by the International Renewable Energy Agency. This figure is four times the global cumulative installed capacity and nine times China's cumulative capacity in 2023.
Subsidies are no stranger to the West, either. The U.S. Inflation Reduction Act provided about 369 billion U.S. dollars in incentives for energy and climate-related programs, including tax credits, research loans, and grants to increase capacity for wind turbines, solar panels, batteries, EVs and other eco-friendly products.
A number of European countries have also offered subsidies for the EV industry in general, ranging from corporate taxes to individual purchases. How can the West blame China's "non-market policies and practices" while ignoring their own similar ones?
Contrary to the G7's narrative, China has been a key driver of global economic growth. China's demand for international goods and services has stimulated economies worldwide, creating jobs and boosting incomes far beyond its borders.
Instead of recognizing and leveraging this economic interdependence, the U.S.-led G7 often portrays China as a threat rather than a partner. This myopic view disregards the broader benefits of global trade and cooperation.
By focusing on protectionist policies and trade barriers, the G7 risks undermining the very economic stability and growth it professes to protect. Embracing a more cooperative and inclusive approach could yield far greater benefits for the global economy. ■