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Does China’s weak domestic demand really lead to excess capacity?: People's Daily_我的网站
A |
But what are the facts on the ground?
China's Ministry of Commerce recently released a document titled China's Position on the So-Called Excess Capacity Issue. Reviewing the evolution of the global capacity landscape from a historical perspective, it offers an objective analysis of how industrial subsidies, trade surpluses, economic imbalances and market competition relate to "overcapacity," sets out China's policy practices and the direction of its efforts, and puts forward China's ideas and proposals - a forceful response to the "China overcapacity" narrative.
Plainly, the argument that "China's inadequate domestic demand gives rise to excess capacity" rests on a logical sleight of hand - it takes a localized phenomenon at the micro level of the market and applies it wholesale to the structure of the macroeconomy, a picture far removed from reality.
China is not only a major manufacturing power but also a major consuming power. Domestic demand has long been the main engine of the Chinese economy.
To see through the logical fallacy of the "overcapacity" narrative, one must first be clear about where the Chinese economy actually sits in the global landscape.
In the course of economic globalization, China has actively integrated itself into the international division of industrial labor and become the "world's factory" in the truest sense. Chinese manufacturing has enriched the global supply of goods, lowered living costs for consumers in countries around the world, and played an important part in easing global inflationary pressure. But to define China simply as a "producer" on that basis, and from there to conclude that it suffers from "inadequate domestic demand and overcapacity," is a proposition that does not hold water.
From 2013 to 2024, domestic demand contributed an average of 93 percent to China's economic growth, with consumption and investment accounting for an average of 55 percent and 38 percent respectively. China's total retail sales of consumer goods rose from 23.8 trillion yuan ($3.53 trillion) in 2013 to 50.1 trillion yuan in 2025, doubling in size.
Measured at the World Bank's purchasing power parity rates, China's total retail sales of consumer goods in 2025 were 1.7 times those of the US, making the country the world's largest market for consumer goods in all but name. China today ranks first globally in the physical volume of goods consumed, and its per capita annual consumption of some industrial products already approaches the levels seen in developed economies.
China keeps expanding its domestic demand and is working toward a higher-level balance between supply and demand.
Growth in China's total retail sales of consumer goods has slowed somewhat in recent years, and some have taken this as proof of weak domestic demand. That reading is neither objective nor complete.
A strong domestic market provides strategic support for Chinese modernization. The outline of China's 15th Five-Year Plan (2026-30) period devotes a dedicated part to building such a market, stressing the need to adhere to the strategic focus of expanding domestic demand, to expand effective investment, to further implement special actions to boost consumption, to promote the expansion and upgrading of commodity consumption, to unleashing the potential of service consumption, to strengthening the foundation of residents' consumption and to continuously improve the consumption environment - using new demand to guide new supply, and using new supply to create new demand, so as to promote a virtuous cycle between consumption and investment, and between supply and demand, achieve a higher level of dynamic balance between supply and demand.
The slowdown in retail sales growth is consistent with China's shift from high-speed growth to high-quality development, and it also reflects the upgrading of the country's consumption structure. China's consumer market is moving faster from one dominated by goods toward one in which goods and services carry equal weight. Spending on services is growing rapidly and is expected to account for more than half of the total by 2030.
China's super-sized market is not only the bedrock of its own development but also a broad platform on which countries around the world can share in the dividends of that growth.
China has ranked as the world's second-largest importer for 17 consecutive years and is a major export destination for nearly 80 countries and regions. It has granted zero-tariff treatment to 63 countries and regions, becoming the first major economy in the world to extend full zero-tariff coverage to every African country and every least developed country that has diplomatic relations with it. It is also the only country to host an international import expo, having staged eight editions of the China International Import Expo with cumulative intended deals worth more than $580 billion. Over the 14th Five-Year Plan period (2021-25) period, China's cumulative imports topped 90 trillion yuan. These facts and figures show clearly that China is not just the "world's factory" but, still more, the "world's market."
Looking ahead, China's middle-income group is set to exceed 800 million people within little more than a decade, and per capita GDP is expected to reach the level of a moderately developed country. With vast room for consumption and ample potential and vitality, domestic demand will remain the main engine of China's economic development and will keep injecting strong momentum into world economic growth.
This was compiled and translated by the Global Times English edition based on an article published in the "Chisu Jinsheng" economic commentary column of the People's Daily on August 6, 2026.
。 DECATUR, Ga. -- A suburban Atlanta woman has been sentenced to 30 years in prison for the 2021 murder of a 4-month-old who died after she placed him to sleep on his abdomen in the child care center she operated out of her basement.A judge sentenced Amanda Hickey, 48, on Friday after families of children she was accused of abusing gave emotional testimony against her.”I know that there is nothing I can say in words to take away their pain, except take responsibility and express extreme sorrow for what I’ve done,” Hickey told DeKalb County Superior Court Chief Judge LaTisha Dear Jackson, according to The Atlanta Journal-Constitution. “This is my legacy now.”Charlie Cronmiller was being cared for in Hickey's Little Lovey child care center when he died on Feb. 3, 2021. Hickey didn't check on him for more than two hours before finding him covered in vomit and not breathing. The infant was pronounced dead at a hospital.Hickey operated the child care center from the basement of her Dunwoody home. She initially told investigators that she put the baby down on his back, in line with state regulations, but that the child rolled over onto his abdomen. Security video, however, showed Hickey actually placed the infant facedown.Video showed her swinging other babies by their feet, slamming them into the ground, pulling their hair, pushing and tripping toddlers, and placing others in unsafe positions for sleep, prosecutors said. The victims ranged in age from 6 to 18 months.Hickey was licensed to care for six children, but prosecutors said 10 were inside her home the day Charlie died.She pleaded guilty Sept. 22 to seven counts of first-degree child cruelty, seven counts of reckless conduct, one count of second-degree child cruelty and three counts of battery. Hickey entered an Alford plea, which allows a person to maintain her innocence while acknowledging that it is in her best interest to plead guilty to charges of second-degree murder and second-degree child cruelty related to Cronmiller's death. “There is no remorse,” the baby's mother, Stephanie Cronmiller, told the court Friday. “The only thing she’s sorry about is that she got caught. I focus on forgiving myself because I chose her. How could I not think this was my fault?”Hickey was taken into custody immediately after the hearing. Jackson ordered that once Hickey is released from prison, she can’t have contact with the victims or any children younger than 13, and can’t gain financially from the case.。
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