China's development of new energy industries benefits the world

China's development of new energy industries benefits the world

www.toutiao.com 2024-06-05 10:24

Macroeconomic Research Institute, National Development and Reform Commission

Core Reading

In the context of economic globalization, the principle of market economy and the law of value should be adhered to when looking at the issue of production capacity. Simply equating China's exports of new energy products with "overcapacity" is not in line with economic laws and the principle of comparative advantage, and it is even more undesirable to practice trade protection in the name of "overcapacity".

The issue of production capacity is an inevitable problem in a market economy. In the dynamic equilibrium of supply and demand changes, capacity utilization is constantly changing. Under the conditions of market economy, the moderate increase in supply over demand is the premise for the market competition mechanism to play its role, which is conducive to regulating supply and demand and promoting technological progress and management innovation. In the context of economic globalization, the principle of market economy and the law of value should be adhered to when looking at the issue of production capacity.

China's development of the new energy industry is in line with the general direction of global green and low-carbon transformation, and China's export of new energy products is the result of open competition in the tide of economic globalization, which has made great contributions to the global response to climate change and green and low-carbon transformation. Simply equating China's exports of new energy products with "overcapacity" is not in line with economic laws and the principle of comparative advantage, and it is even more undesirable to practice trade protection in the name of "overcapacity". With the in-depth development of economic globalization, we should respect the objective law and reality of the international industrial division of labor, strengthen international exchanges and cooperation, promote investment and trade liberalization and facilitation, expand effective global demand, and form an industrial division of labor pattern with complementary advantages and mutual benefit and win-win results, so as to better meet the needs of the international market.

Understand the problem of production capacity from the law of economy and the law of value

Under the conditions of a market economy, producers usually produce according to market demand. The competition law of "fast fish eat slow fish" in the market economy will motivate enterprises to reduce product costs and prices by continuously improving production efficiency, meet potential market demand and obtain higher profits by expanding production scale, and eliminate inefficient production capacity in the process. This is the inevitable process and inevitable result of the economic law and the law of value playing a role.

The supply and demand of the market is a process of dynamic equilibrium. Supply and demand in a market economy generally go through the process of "surplus-balance-re-surplus-rebalancing". Under the condition of full competition in the market, due to the existence of information asymmetry and enterprise development strategy, capacity adjustment and demand change are often not synchronized. The equilibrium between supply and demand is relative, the imbalance is universal, and the local supply and demand problem does not contradict the overall dynamic equilibrium. From the perspective of the law of industrial development, emerging industries with fast development speed and good market expectations will have the phenomenon of investment "surge" and capacity expansion after completing the initial stage of technology accumulation and market cultivation. In this process, there will be a situation where the supply of advanced capacity is insufficient and the backward overcapacity coexists, but this does not mean that the entire industry is overcapacity. In addition, some industries with obvious seasonality, such as some agricultural processing industries, generally do not have too high capacity utilization. In fact, moderate production capacity is greater than demand, which means that there is healthy competition in the market, which will stimulate enterprises to produce marketable goods and continuously enhance their competitive advantages by increasing R&D investment, improving product quality, reducing costs, strengthening management, and improving services, so as to promote industry transformation and upgrading and high-quality development.

In the context of economic globalization, we should look at the issue of production capacity, and we should benchmark the world market demand. Under the conditions of an open market economy, each country participates in the international division of labor according to its comparative advantages, forms its own different industrial structure and production capacity, and shares the benefits of the specialized division of labor through international trade of "buying the world and selling the world". This not only improves the efficiency of global resource allocation, but also enhances the well-being of the people of all countries, and is the result of the deepening of the international division of labor and fair competition in the global market. For example, some countries provide high-end chips, key components and other products to the world, some countries provide raw materials, and some countries provide energy and resources, so that they can communicate with each other and achieve win-win cooperation. In this case, a country's production capacity exceeds the domestic market demand, which is a natural phenomenon of international division of labor according to comparative advantages in economic globalization, and is one of the manifestations of the market mechanism, and is not the so-called "overcapacity". If countries only deploy their production capacity in their own markets, international trade will not be possible. This not only runs counter to the basic logic of economic law and international division of labor, but will also bring huge losses to global economic development and the well-being of the people of all countries.

China's new energy industry represents advanced production capacity

China is a responsible major developing country. In order to effectively respond to the common challenges of climate change, China has actively grasped the general direction of global green and low-carbon transformation, implemented a series of climate change strategies, measures and actions, participated in global climate governance, committed to sustainable development, and allowed people to live in harmony with nature.

The development of China's new energy industry is conducive to promoting the global green and low-carbon transformation. After years of development, China has become the world's largest country in terms of new energy equipment and new energy utilization. According to data released by the International Energy Agency, in 2023, 510 million kilowatts of new renewable energy capacity will be installed globally, with China contributing more than half. At present, China's photovoltaic and wind power products have been exported to more than 200 countries and regions in the world, providing high-quality green products for people from all over the world. In 2022, China's renewable energy generation and exported wind and photovoltaic products contributed more than 2.8 billion tonnes of carbon dioxide equivalent to emission reductions, accounting for about 41% of the world's renewable energy carbon emission reductions in the same period. From the perspective of development prospects, green and low-carbon is the general trend of world development. According to the International Energy Agency, to achieve the goal of carbon neutrality, the global demand for new energy vehicles will reach 45 million in 2030, which is about three times the global sales in 2023 and about five times the production in China. In 2030, the global demand for power batteries will reach 3,500 gigawatt hours (GWh), more than four times the global shipments in 2023 and more than five times the production in China. China's green technologies and green products have obvious positive externalities, and are the advanced production capacity needed for global energy transition and green development, which will make greater contributions to the global response to climate change and the realization of sustainable development goals.

The competitive advantage of China's new energy industry is the result of market-oriented competition. The competitiveness of China's new energy products in the international market is mainly due to the complete industrial chain and supply chain, continuous R&D investment, optimized process management, significant scale effect and full market competition, which is the embodiment of the theory of comparative advantage in economics and the result of global division of labor and market competition. Since 2000, China's R&D investment has increased by an average of 14.2% per year, promoting the continuous development of the industry in the direction of high-end, intelligent and green. In 2023, China's mass production of advanced photovoltaic cells will reach a conversion efficiency of 25.5%. The megawatt wind turbine has formed a number of mature technical routes that have reached the international advanced level. The power battery for new energy vehicles ranks among the top in the world in terms of battery energy density, life and safety and other technical indicators. In particular, China has effectively exerted the advantages of the domestic super-large-scale market, so that China's new energy industry has greatly improved its technical and economic level and product cost performance after experiencing full competition in the domestic market, and finally formed an obvious competitive advantage in the international market, and has won wide praise and recognition from consumers in different countries and at different levels.

There is no so-called "dumping" in China's exports of new energy products. Dumping refers to the practice of exporting products abroad at a price lower than cost, but there is no "dumping" at a low price in China's new energy product exports. From the price point of view, China's new energy products are cost-effective, the comparative advantage is obvious, the export of new energy vehicles is lower than the local similar models, but still higher than their domestic price, the overall is profitable. In terms of proportion, in 2023, the number of new energy vehicles exported by China will only account for 12.5% of production, which is significantly lower than that of countries such as Germany, Japan and South Korea.

On the whole, China's new energy industry has cultivated real skills in open competition, representing advanced production capacity, which not only enriches global supply, alleviates global inflationary pressure, but also makes great contributions to the global response to climate change and green transformation. Whether from the perspective of comparative advantage or global market demand, there is no so-called "overcapacity" problem.

Promoting the development of the world economy requires global cooperation

The essence of hyping "overcapacity" is that a few countries represented by the United States are practicing trade protection in the name of "overcapacity", seeking a more favorable competitive position and market advantage for their own country, and curbing and suppressing the development momentum of other countries' emerging industries.

Today's world is a community with a shared future in which both prosperity and loss are lost, and openness, inclusiveness, and win-win cooperation are the only correct choices. At present, the main problem facing the world is not "overcapacity", but insufficient effective demand and slowing growth. The World Bank's latest Global Economic Prospects predicts a further slowdown in global economic growth in 2024. The International Monetary Fund (IMF) forecasts that the world economy will grow by 3.2% this year, significantly lower than the average of 3.8% from 2000 to 2019. Anti-globalization and trade protectionism have brought obstructions and obstacles to the world economic cycle, resulting in shrinking of the demand side, redundant construction on the supply side and a decline in capacity utilization, affecting the operational efficiency and sustainable and healthy development of the global economy.

At present, the global industrial system and industrial chain and supply chain are showing a trend of diversified layout, regional cooperation, green transformation, and accelerated digitalization, which is determined by the law of economic development and is a historical trend, which is not subject to human will. Only by participating more actively in the international division of labor, more effectively integrating into the global industrial chain, supply chain and value chain, and more actively expanding foreign exchanges and cooperation, can we share the dividends of economic globalization.

Looking to the future, the general trend of economic globalization will not change, and the world's people's yearning for a better life and their demand for high-quality and low-cost products will not change. Only free trade and full competition can form the optimal solution for the global production capacity pattern. Countries should strengthen communication and dialogue, deepen cooperation, and establish mechanisms for strategic alignment, policy coordination, and information sharing. It is necessary to adhere to the correct direction of economic globalization, unswervingly promote trade and investment liberalization and facilitation, fully respect the economic laws and the objective laws of the international division of industrial labor, give full play to the comparative advantages of all countries, promote in-depth cooperation in industrial and supply chains, expand the "cake" of common interests, and inject stabilizing force into the recovery of world economic growth and the response to climate change.

(Writers: Huang Hanquan, Sheng Chaoxun, Rong Chen, Wu Di)

Source: People's Daily Online-People's Daily