China Rejects Excess Capacity Claims Amid Looming U.S. Tariffs

The Ministry of Commerce of the People's Republic of China released a document on July 28, 2026, titled "China's Position on the So-called Excess Capacity Issue," to refute claims that its industrial production disrupts global markets. The ministry asserted that China's industrial growth is driven by innovation and reform rather than unfair subsidies, arguing that trade surpluses do not equate to excess capacity.

Chinese officials, including Premier Li Qiang, dismissed the narrative of a "China Shock 2.0," instead characterizing current trends as a "China Opportunity 2.0." The government warned that protectionist measures disrupt the global economic order and undermine supply chain stability. Lin Weilong, director of the ministry's policy research office, argued that the United States lacks the authority to unilaterally label production capacity as excess.

This pushback occurs as the United States prepares to announce findings from an investigation into 16 economies, including China, which is expected to result in new tariffs. The tension follows recent U.S. tariffs on 60 economies over forced labor concerns and European Union measures to protect its steel industry and restrict e-commerce imports. While China calls for multilateralism and mutual benefit, Western analysts suggest that rising Chinese imports in high-value sectors make trade restrictions politically inevitable.