Is there a reason why countries in the Global South don't complain about Chinese overcapacity?

Question

China said on Thursday that U.S. and European assertions of excess capacity were "naked trade protectionism" and that efforts to constrain new energy exports from the World's No.2 economy would frustrate global efforts to tackle climate change.

Growing alarm over Chinese industrial overcapacity flooding the European Union with cheap products is opening a new front in the West's trade war with Beijing, which kicked off with Washington's import tariffs in 2018.

https://www.reuters.com/business/chinese-overcapacity-claims-by-us-europe-are-trade-protectionism-ministry-says-2024-05-16/

Is there a reason why countries in the Global South don't complain about Chinese overcapacity? There has been growing assertions and accusations in the West that China has excess capacity and they need to address this overcapacity issue, but I don't see the same things being said in the Global South countries. What are the reasons for this discrepancy?

Answer 1

The question is flawed because its premise is outright wrong.

Many countries of the "Global South" do complain about Chinese overcapacity, and they've been retaliating with anti-dumping investigations and protectionist trade restrictions—usually on raw materials such as steel.

• China's exports to Mexico are getting heavier tariffs—is it a sign of more to come?
• Brazil joins protectionist wave in face of cheap steel imports
• Chile's tariffs on Chinese steel products boost local steelmaker CAP's stock
• Colombian steelmakers join Latin American pushback against long steel imports
• Indian steel mills fear surge in Chinese imports after U.S. tariffs
• Vietnam imposes anti-dumping tax on Chinese cold-rolled steel
• Thailand considers new anti-dumping measures against Chinese steel
• Turkey imposes 40% tariff on vehicle imports from China

Answer 2

Countries in the Global South usually have very little industrial capacity, by definition. They don't make cars of their own, instead they use these 30 years old Toyotas if they have a car at all.

So they don't care about overcapacity and indeed are happy to get Chinese stuff at a discount.

First World countries still have significant industrial capacity and their own car makers who they feel the Chinese are trying to outsell. Hence the protectionist measures.

Answer 3

"Over Capacity" is a Play at Future Monopoly

The main accusation here is that China is providing large state subsidies to EV and other Green industries in order to capture the market.

The Chinese government is taking a loss by using large amounts of tax dollars to support these industries. But if Green companies abroad are unable to compete with Chinese companies and go out of business, then the PRC government can recoup the losses later when the Chinese companies have a global monopoly, jack up prices, and generate huge profits.

This is more of an issue for US and Europe than the Global South for two reasons:

1. Existing Manufacturers: The West has an existing manufacturing base that is being undercut by these practices. Right now most of the best-selling cars in the world are from Industrialized nations, and comparatively few major car companies are headquartered in the Global South.
2. Planning Ahead: China's ambition to gain a Monopoly in Green Tech is a years long gamble. China has been providing these subsidies for years, and must continue to provide them into the future to get the payout it wants. The Global South could take action to prevent this outcome, but putting taxes on Chinese companies raises prices at home when the domestic market desperately needs cheap goods. Not to mention the risk of PRC retaliation raising prices in other sectors of the economy. So it may be in the Global South's long term interest to prevent a PRC Monopoly, but taking action to prevent it could cause a lot of pain in the short term.

This is specifically targeted at markets that are rapidly changing (Solar, EVs, etc) because the incumbent advantage is lower. Many Western brands have long histories producing high quality ICE cars, but an EV is so different that much of that institutional knowledge is worthless. This provides an opportunity for the PRC to re-align the industry in ways that benefits China at the rest of the world's expense.

Answer 4

Disclaimer: not an economist.

See Why is it a problem if China is exporting "too many clean-energy goods"?

If you believe the answer to that question, in mainstream economics Chinese overcapacity it is not a problem, in fact it is actively desirable, and the reasons for the Western complaints stem from politics. In particular, if Chinese overcapacity leads to them exporting cheap goods, then people in the US (and presumably Europe also) lose jobs to their Chinese competitors. Unemployment is bad, and furthermore, these disaffected people can vote you out.

Presumably countries in the Global South don't complain because they aren't producing a lot of these goods in the first place, hence they lose fewer jobs, hence they have no reason to quarrel with mainstream economics.

Answer 5

It is a little rich that the West is crying foul at China for over producing since the main economic mantra in the West is capitalism and making their economies competitive. To rephrase, Chinese industries are outcompeting the West. Whilst Western citizens would be no doubt happier to get cheaper goods this is not good news for their own industries. This is why they use tariffs to protect their industries and why this is called protectionism.

The global south are much poorer than the rich West and this also means they don't have much industry to speak of. So there is no need to protect by raising tariffs. Thus they're happy to get cheaper goods from China than they would from the West. From their view it's a win-win strategy: China gets to offload its excess capacity and they get cheaper goods.