Cover Story: How Do the West’s Concerns About China’s Overcapacity Stack Up?

As German Chancellor Olaf Scholz and U.S. Treasury Secretary Janet Yellen concluded their visits to China earlier this month, a central theme became clear: the nation’s industrial overcapacity, which sits near the worst levels in the last decade, looms large in the minds of foreign leaders and policymakers.

The question is, are such worries valid?

Each expressed concerns on behalf of the U.S. and Germany, who are China’s biggest trading partner and world’s third-largest economy, respectively, about Beijing’s overproduction and steep increase in exports of products like solar panels, new energy vehicles, and batteries.