The Western “Chinese overcapacity” narrative is a politically convenient fiction that externalizes blame for domestic industrial decline rather than addressing structural weaknesses at home.

China’s manufacturing scale is the natural outcome of historical shifts in global industrial centres and comparative advantage; its capacity utilisation rates and trade surpluses are normal by historical and international standards.

Restricting Chinese production would raise energy costs, slow the green transition, inflate consumer prices in the West, and hinder industrial development in poorer countries — making decoupling far more damaging than the supposed problem it claims to solve.

For the better part of the current decade, Western trade discourse has been anchored to a singular, convenient fiction. Across policy circles in Washington and European capitals, the narrative of a Chinese overcapacity crisis has been elevated to an article of faith. Policymakers and protectionist lobbies frame Beijing’s massive industrial footprint not as a triumph of economic efficiency, but as an existential menace to global market equilibrium. Trade investigations, tariff escalations, and breathless warnings of an impending industrial flood dominate international forums. Yet, beneath the diplomatic posturing and the hurried policy memos, this narrative crumbles under rigorous examination. It relies on a malleable and politically motivated definition of industrial capacity, a profound amnesia regarding economic history, and a willful disregard for the disastrous consequences that an artificial decoupling from Chinese manufacturing would inflict upon the global economy.

To comprehend the contemporary panic, one must first recognize its geopolitical utility. The overcapacity thesis serves as a rhetorical shield for industrial sectors in the West that have lost their competitive edge through decades of underinvestment, short-termism, and financialization. Rather than confronting structural deficiencies at home, Western policymakers find it politically expedient to externalize the blame, casting Chinese manufacturing prowess as an anomaly rather than the logical result of systemic discipline, continuous technological upgrading, and deep-going market reform.

The foundational flaw in the Western argument is its historical illiteracy. Since the dawn of the Industrial Revolution, global manufacturing centers have never remained static fixtures on a map. Industrial dominance has always migrated in response........

© Eurasia Review