For years, the West has been trumpeting concerns about China’s growing industrial overcapacity and the disruption that was causing within their economies. Now, it seems, China is admitting that it may have a problem.

Last week, China’s state media published reports of a meeting of China’s state council, saying that authorities had promised to rein in “irrational competition” in the country’s electric vehicles sector, increasing monitoring of prices, costs and product quality and ensuring car companies pay their suppliers on time.

Xi Jinping and his senior ministers are worried about imbalances in supply and demand and overcapacity in some industries.Credit: Getty

Even Xi Jinping this month criticised companies and local governments for excessive price competition, driven by overproduction, in EVs, solar panels, batteries and data centres for artificial intelligence, among other sectors.

Xi and his senior ministers are now referring to “disorderly competition”, imbalances in supply and demand and overcapacity in some industries, when last year they were adamant that there was no overcapacity problem in China.

Not all Xi’s senior people are on the same page. Vice Finance Minister Liao Min told Bloomberg last week that most of China’s production was intended to meet domestic demand, which generates 86.4 per cent of China’s growth over the past four years.

But the facts speak for themselves. China has been producing record trade surpluses and flooding other countries with its exports even as factory-gate prices within China have been falling for the best part of three years.

Despite factory utilisation rates falling, capital expenditures on manufacturing have been growing at 9 per cent a year. Data published last week showed industrial output was running 6.8 per cent higher last month than in June last year.

Take EVs. While the number of EV manufacturers has fallen from about 500 five years........

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