Illustration: Tang Tengfei/GT

Editor's Note:

Currently, China's economy is steadily advancing along the path of high-quality development, even as domestic and international circumstances become increasingly complex. Some Western media, due to misunderstanding or bias, have repeatedly questioned or even distorted China's economic development. Accordingly, the Global Times launches the "Q&A on China's Economy" column to publish opinion pieces to present facts and clarify perceptions.


In recent years, certain US and European politicians and media outlets have fabricated a rather misleading new narrative using the economic term "overcapacity" - claiming that China's products represented by the "new trio" products, namely electric vehicles, solar batteries, and lithium-ion batteries, will constitute "dumping" and "disrupt global supply chains and market order." In response to this narrative, it is necessary to clarify: What exactly is fair competition, and what is dumping?

At present, China has long eliminated so-called export subsidies for green-power products such as the "new trio," with the remaining export tax rebates being phased out or eliminated. Export tax rebates are a tax-neutral policy implemented universally across the world. Their purpose is to refund taxes paid during the domestic production and distribution of goods, so as to prevent exported products from being taxed twice. This is standard international trade practice, fully compliant with WTO rules, and without exception, adopted by developed countries, including the US, Japan, and European countries. China has been proactively tightening and gradually phasing out even these compliant export tax rebates.

China has previously implemented multiple significant reductions in its export tax rebate policies. Under the latest policy, starting April 1, 2026, the export tax rebates for the value-added tax of photovoltaic products will be reduced from 9 percent to 0; the export tax rebate rate for the value-added tax of battery products will simultaneously be lowered from 9 percent to 6 percent, with a clear commitment to full elimination by 2027. China has proactively ceded market share, yet the "new trio" continues to post high-speed growth, which confirms that its competitiveness is real. If there were a genuine dependence on subsidies, such a large-scale withdrawal of rebates would make it impossible for enterprises to sustain their export competitiveness. This precisely demonstrates that China's "new trio" goes global without relying on fiscal subsidies.

Looking further at the market prices of the relevant export products, the so-called claim of "dumping" is even less tenable. Chinese green-power products are not being sold cheaply abroad - on the contrary, terminal prices in overseas markets are generally higher than at home. Take new-energy vehicles as an example. Overseas prices are roughly double their domestic equivalents. The same applies to photovoltaic and battery products, where pricing for products exported to Europe, the US, and Southeast Asia is higher than in the Chinese market. This demonstrates that the core competitiveness of China's green-power products lies not in "low prices," but in high cost-effectiveness and technological innovation, confirming the demand for such products in overseas markets.

By the logic of some Western opinions: Because you sell more and sell cheaper than our products, you must be dumping. This logic ignores the most fundamental principle in economics - comparative advantage. Terry Woychowski, President of the American automotive benchmarking analysis firm Caresoft Global, has noted that compared with other competitors, Chinese automakers enjoy a cost advantage of 30 percent to 40 percent, attributable to their higher degree of vertical integration - for instance, the ability to produce most components in-house. Additionally, Chinese automakers' use of common parts across many models significantly reduces production costs.

It is undeniable that the initial development of China's green-power industries was inseparable from the guidance and support from national industrial policy. However, it is the forward-looking deployment, long-term commitment, and stable, sustained, and systematic cultivation that are truly decisive for the rise of an industry. Looking back at the development trajectory of the green industry, China's strategic positioning came far earlier than the world imagined. Drawing on its globally unmatched and complete manufacturing system, China has formed a distinctive model of industrial cultivation: the state provides top-level design, anchoring long-term goals of green transition and manufacturing power; local governments enhance industrial chain support systems, build industrial clusters, and lower overall enterprise costs; and enterprises compete on technology, efficiency, and management in a fully competitive market. Through the Chinese people's hard work, diligence, and pursuit of excellence, a cohort of global leading enterprises - BYD, CATL, LONGi, among others - have emerged, building a full-industry-chain advantage spanning upstream raw materials and core components through to end products.

Industrial policy is not China's exclusive domain. China's industrial policy simply differs from developed Western nations in approach and emphasis. The US has long supported its high-tech sectors, including semiconductors, artificial intelligence, and biopharmaceuticals, through early-stage seed funding from the Department of Defense, tax credits, and government procurement orders, playing a significant role in establishing its globally leading position in innovative science and technology. The European Union has likewise launched a series of green industrial subsidy programs to champion the development of its own new-energy sector.

The difference is that Western industrial policies tend to be highly inconsistent - party rotation leads to industrial policies that change overnight. The greatest strength of China's industrial policy, by contrast, lies in its stability, continuity, and sustained long-term effort. Once a direction is identified, it is advanced resolutely without wavering or hesitating. This is what has enabled industries to complete their technological accumulation, scale expansion, and cost reduction, ultimately forging globally leading competitiveness. David Kirsch, a professor from the University of Maryland, acknowledged that looking back at development from 1969 to today, the incoherence of US policy is staggering, while China has thoroughly beaten the US through its consistently stable policy.

From an international perspective, green-power capacity is not in surplus - it is severely insufficient. According to calculations by the International Energy Agency, global demand for electric vehicles will reach 45 million units by 2030, more than double the figure for 2025. Climate change is a global challenge. To those with ulterior motives, we want to say this: Rather than fighting a trade war with no winners, it would be far better to join hands with countries around the world and collectively drive technological progress in a market environment of fair competition - so that people in more countries and regions can enjoy the green, convenient, and affordable benefits that new-energy products bring. That is the right path to sustainable development.