BETTER LATE THAN NEVER?
But those seeking immediate results may be disappointed.
China’s approach appears to favour gradual consolidation and regulatory discipline over dramatic market interventions. This methodical approach reflects the political complexity of dismantling entrenched local interests.
For global markets, China’s acknowledgment of its overcapacity problem should be welcomed, albeit cautiously.
If Beijing can successfully curb destructive price competition, it could lead to more stable global commodity prices and reduced trade tensions. Sectors like solar panels, steel and electric vehicles might see healthier profit margins as Chinese producers focus on sustainable competition.
The shift also signals China’s evolution toward a more mature economic model – one that prioritises long-term industrial health over short-term market share gains. Whether this transformation succeeds will depend on Beijing’s ability to overcome local resistance and implement the structural reforms necessary to address decades of misaligned incentives.
China’s messaging U-turn on overcapacity may have come late, but it represents a crucial first step toward addressing one of the global economy’s most persistent distortions. The real test now is whether shifting rhetoric will translate into meaningful action.
Diana Choyleva is the founder and chief economist of Enodo Economics and a senior fellow at the Asia Society Policy Institute’s Center for China Analysis.
