To the unmistakable pattern of escalating City of London/Wall Street attacks on the world’s physical economy, many of which are focused on using classic geopolitical choke-points to achieve that goal (Strait of Hormuz, Bab-al-Mandab, Sea of Azov, Caspian Sea, Strait of Malacca, Nord Stream, etc.), we must now add the campaign to impose tariffs and other sanctions on nations guilty of so-called “structural excess capacity,” or “over-capacity.”
In a sane world, a country’s ability to produce more than it needs for its immediate domestic consumption, and therefore export to help the rest of the world, would be considered a positive sign of productivity and growth. Not to London and Washington. The Financial Times Editorial Board published an article on July 28 headlined “Donald Trump rebuilds his tariff wall. The US president is moving his signature trade policy into a new phase.” In it they report that the Supreme Court decisions against Trump’s first round of tariffs are not stopping him: “New duties of between 10 and 12.5 per cent on 60 trading partners announced last Thursday demonstrate that the president is not done with his policy, but is moving it into a new phase.” One approach is to target countries with the argument that they are not tough enough on forced labor.
“The next step is expected to be further country-specific duties against 16 of the largest US trading partners after a US probe into ‘structural excess capacity’—also under Section 301.”
China is the main target of this lunatic accusation. In fact, the Chinese Ministry of Commerce has just issued a lengthy position paper on July 28, Global Times reports, “addressing the so-called ‘overcapacity’ issue… Chinese experts view the document as a response from China in the face of some Western countries politicizing economic and trade matters—driven by concerns over their own industrial competitiveness and market position—while hyping up the narrative of ‘overcapacity’ and even ‘China Shock 2.0.’”
The paper consists of four chapters, and emphasizes that “there is no inevitable link between industrial subsidies and overcapacity; larger exports and surpluses do not equate to overcapacity.” The document also reiterates “China’s commitment to building a modern industrial system through opening up… [and] proposes jointly building an open, inclusive global industrial and supply chain cooperation framework.” China also advocates “mutual benefit and win-win outcomes, respect[ing] market rules, strengthen[ing] coordination of industrial policies.”
Global Times further quotes Cui Fan, a professor at the University of International Business and Economics, who explained: “By issuing this position paper at a critical juncture, China aims to set the record straight, present its own practices, and chart a course toward open cooperation. This paper clarifies misconceptions and helps the international community understand that the decline in some countries’ industrial competitiveness is not due to Chinese ‘overcapacity’ or industrial subsidies.”
