China Overcapacity Wreaks Global Harm, EU Group Says

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Unlike a lot of its other counterparts around the world, the European Union Chamber of Commerce isn’t fond of the way the Chinese have seen fit to pull themselves up out of the worldwide economic slump. In fact the group has come out and stated that  Chinese excess industrial capacities in fact are working against  global recovery.

The group says that because the Chinese have spent an excessive amount of money on a stimulus package and have more open credit than some of their competitors, they have been able to foster an environment where trade tensions between countries are rising because of their inflated overcapacity.

The group recommended that the Chinese currency be allowed to deflate on international markets and that subsidies for Chinese manufacturers abroad be dropped. There are some indications that the Chinese are listening.  In September one of their administrative councils decided to start limiting the capacity in various industries including shipbuilding.

The group does go on to say that China’s own economy is the victim of this overcapacity is well.  They mention the fact that research and development is sadly underfunded there.

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