Made in China 2025 sped up industrial transformation and structural adjustment as a solution to overcapacity in traditional industries, but the policy may have overshot its mark, reports China Economic Net, noting overgenerous policy support and poorly designed industrial layout.
Ministry of Industry and IT (MIIT) promotes rational planning, specialised production, quality improvement and differentiated provincial layout among Made in China 2025 policies and projects, explains Li Beiguang 李北光 MIIT Planning Department deputy director. But this may not be enough, according to the report. While traditional industries are at pains to meet de-capacity quotas, emerging industries and smart manufacturing are already starting to show signs of overcapacity, according to separate reports in China Business Daily and Neng App. These signs include
- new energy vehicle (NEV) subsidies creating lithium-ion battery overproduction, argues Liu Yanlong 刘彦龙 China Chemical and Physical Battery Industrial Association president at 2017 Global Fuel Cell Summit
- from Q1-3 2017 the industry produced 31,500 MWh in batteries, whereas the NEV industry only installed around 14,700 MWh, meaning many batteries remain unused, says Liu
- production capacity is expected to grow 125 percent y-o-y in 2017, reaching 228,000 MWh by year end
- subsidies were adjusted in early 2017 to mitigate low-end NEV oversupply, and a similar adjustment for low-end batteries is to be expected next year, reports CCStock
- Liu argues against adjusting subsidies so often, advocating market self-regulation and consumer choices over direct administrative measures
- the smart air conditioner industry is at risk of oversupply, said Liang Zhenpeng 梁振鹏 household appliance market analyst to China Business Daily
- inappropriate production planning is likely due to manufacturers' and markets' lack of preparedness for the recent smart manufacturing stimulus, agreed Zheng Jianjiang 郑坚江 Aux Group president at the 2017 Artificial Intelligence Industry Development Summit