New energy 'overcapacity' an unfounded narrative

China's green and low-carbon transformation serves as both a vital cornerstone for its high-quality development and a landmark contribution to global sustainability, said officials and experts, rejecting Western accusations of "overcapacity" in the nation's booming new energy sector.

According to a document titled "China's Position on the So-called Excess Capacity Issue" by the Ministry of Commerce on Tuesday, high-quality Chinese new energy products have significantly enriched global supply and accelerated the world's low-carbon transition in recent years, with export growth propelled by economies of scale, enhanced innovation capabilities and surging global demand for industrial greening.

"China's export growth in solar photovoltaics, new energy vehicles, lithium batteries and chemical products to Europe reflects a structural surge in demand brought by the green transition, as well as higher production costs in traditional European manufacturing sectors," the ministry stated, noting that Western attempts to label these competitive sectors as suffering from "overcapacity" merely serve as a pretext to impose trade restrictions.

According to the International Renewable Energy Agency, over the past decade, the global average levelized cost of electricity for wind and solar PV projects fell by more than 60 percent and 80 percent, respectively — an achievement largely attributable to Chinese technological innovation, manufacturing scale and supply chain efficiency.

Recognizing this contribution, the influential US journal Science named "China leading the rapid global development of renewable energy" as the top scientific breakthrough of 2025.

As global energy tensions persist and artificial intelligence drives power consumption to new heights, green solutions are becoming increasingly critical. The International Energy Agency projects that global data center electricity consumption will approach 1 trillion kilowatt-hours by 2030, with 40 percent of new demand relying on renewables.

With its scale and technological edge across solar, energy storage and electrification, China is uniquely positioned to supply competitive green energy equipment and infrastructure solutions, said the document.

Domestically, China has cultivated over 8,000 national-level green factories and more than 600 green industrial parks. Among 246 national green data centers, over half of their electricity consumption now comes from green power, it said.

According to the ministry, technological breakthroughs in new materials, power batteries and communications have fueled the rapid rise of China's smart connected vehicles.

Experts emphasized that claims of overall Chinese "overcapacity" represent a one-sided and spurious proposition.

"Supply and demand dynamics are an inherently fluid market process that cannot be judged solely by short-term capacity utilization rates," said Ye Xiaoning, a senior engineer at the State Grid Energy Research Institute. "China's overall industrial capacity utilization remains within a reasonable range, with the new energy sector standing out as a model of healthy development."

"Short-term industry adjustments are simply the market's natural mechanism for survival of the fittest — a normal structural shakeout. Countries should abandon double standards and embrace open cooperation to share the dividends of green industrial development," Ye said.

Echoing his view, Ma Qinglang, an associate professor at the Beijing Institute of Technology, noted that the "overcapacity" claim is an unfounded narrative that serves to hinder industrial modernization and limit technological advancement.

"The drive to unleash this demand is precisely what compels us to deepen reforms and transform our relations of production," Ma said. "To stimulate demand, China has rolled out proactive structural reforms in recent years, such as building a unified national market and streamlining public services, all of which have effectively reduced institutional friction and activated domestic market vitality."