At the latest meeting of the Committee on Subsidies and Countervailing Measures, the United States, together with its allies (the European Union, Australia, Canada, Japan and the United Kingdom), accused China of granting disproportionate subsidies in specific sectors, which generates overcapacity that distorts international markets.

The United States is seeking to revive in a more constructive way the debate on industrial overcapacity at the World Trade Organization (WTO), an issue that has strained its relationship with China and caused several delegations to lose interest.

China, for its part, defended its economic policies, saying they comply with WTO rules and respond to market demands. A U.S. representative stressed the need to make the discussion more productive and urged other members to collaborate on constructive approaches for the upcoming meetings.

Despite the fact that the issue has been on the agenda for years, the US continues to maintain that overcapacity is a negative effect of non-market-oriented policies that China implements through subsidies. China, in response, argued that the concept of “overcapacity” is not well defined and defended its supply in sectors such as energy, pointing out that it does not exceed demand. In addition, it accused certain countries of adopting protectionist policies that aggravate the problem, citing the US Inflation Reduction Act as an example of discriminatory measures.

The US pointed to sectors such as semiconductors and the solar industry as examples of excessive subsidies in China, while China countered that its semiconductor production capacity is still not sufficient to meet domestic demand. Despite the exchange of arguments between the two powers, it was acknowledged that many WTO members, unrelated to this confrontation, could disengage from the discussion if a more inclusive approach is not found.

Source: US seeks to 'reset' overcapacity discussion at WTO after sparring with China | InsideTrade.com