"The future is bright, but the path is destined to be tortuous."
From October 13 to 15, the Second World China Studies Conference with the theme "Historical China and Contemporary China in a Global Perspective" was held at the Shanghai International Convention Center. Chen Bo, senior researcher at the Institute of East Asian Studies, National University of Singapore, and head of economic research, delivered a special speech on the development and challenges of China's new energy vehicle industry as a guest speaker.
In his speech, Chen Bo systematically analyzed the limitations and contextual deviations of concepts such as "overcapacity" in international public opinion, and pointed out that "China Studies" should shoulder the mission of bidirectional communication. He emphasized that although globalization faces many challenges in the short term, its direction is irreversible in the long run. As an academic, he believes that the Chinese narrative based on empirical research and international norms will help the international community better understand China's development path and practical logic.
Regarding the definition standards of "overcapacity", the practical significance of "China Studies" in the contemporary era, and how to respond to external disputes about China's development and tell the "Chinese story", Observers Network conducted an in-depth dialogue with Chen Bo at the conference.
The following is the transcript of the conversation.
[Dialogue/Observer's Network, Zheng Lehuan]
"China Studies" is actually a "mutual journey"
Observer's Network: Over the past few decades, China has undergone tremendous changes. As someone who has experienced and witnessed China's comprehensive opening up and remarkable achievements, could you share your personal feelings? Why did you choose this research direction?
Chen Bo: From my personal experience, when I first chose my doctoral research direction, I spent a long time thinking. That was during my overseas studies - in 2002, shortly after China joined the WTO. It can be said that I was a witness to the new era of China's comprehensive opening up after joining the WTO.
At the beginning of my study abroad, there was a real dilemma: at that time, the international academic community began to pay attention to China, but there were generally concerns about empirical research on specific issues in China. There were two main reasons: one was the lack of data support - in the early 2000s, the data available for large-scale empirical research on China was very limited; the second was the issue of credibility - at that time, our country had not yet fully aligned with international methods in terms of data collection and release processes, leading to doubts about the credibility of the data.
These two points posed great challenges for studying China, especially in economics. Either turn to other countries or other directions, but if you persist in studying China, you must cooperate with top Chinese experts who have already established an international reputation - because their results are usually considered credible. However, in the early 2000s, such experts, especially in economics, were very few.
For me at that time, there was another choice, which was international trade. Because international trade data is symmetric - China's exports to a certain country are the imports of that country from China, and this data can be cross-verified. Moreover, trade data is detailed and, after China joined the WTO, statistical standards were further unified.
On December 11, 2001, China officially became a member of the World Trade Organization, marking a new chapter in China's reform and opening up.
Therefore, international trade became the first field of China studies, even China economics, to achieve internationalization and reach the level of international excellence. This was inevitable - this is why I chose international trade as the starting point of my research on China.
By the time I graduated, from an economics perspective, China studies had become a mainstream discipline. A large number of studies on China began to emerge - the driving force behind this was not simply to promote China's development, but the economic development of China itself pushed domestic and international research on China's economy. This is the most direct feeling I have as a scholar: China's development has brought direct and profound impacts on ordinary people.
The second feeling comes from my perspective as an international trade researcher. For a long time, China's international trade data has shown considerable resilience. Although after I started working, we experienced the 2008 global financial crisis, later Sino-US trade friction, and even unprecedented pandemic shocks, until today, trade remains an indispensable engine for China's economic growth. This is actually a mutually beneficial relationship: China's development benefits from its own openness, and China's openness has also provided important assistance to global development - this is another deep experience of mine.
The third feeling is that I have gradually shifted from data and theoretical research to a balanced approach combining policy research. Through these studies, I further saw that China has transformed from a beneficiary and follower of globalization into a promoter and leader of globalization. This major shift not only has significant implications for China's sustainable development, but also has a profound impact on the sustainable development of the global economy.
Observer's Network: As a witness to China's economic leap, what do you think is the fundamental significance of "China Studies" today?
Chen Bo: I think the significance of "China Studies" can be understood from two aspects. The most direct point is that it can tell the story of China in a more systematic, comprehensive, and profound way, allowing the world to understand this ancient country with a five-thousand-year civilization, now showing a huge vitality, the background, origin, and continuous power, as well as the positive impact this development can bring to the world. This is my most direct and relatively superficial understanding of "China Studies".
Additionally, from my own perspective, I would like to add one more point: "China Studies" is actually a "mutual journey". China, by continuously optimizing this discipline system and presenting its image systematically, building it into an academic field for global research and development, necessarily needs to follow scientific logic and internationally accepted empirical research paradigms, thus making "China Studies" a discipline that meets international standards.
During the process of the discipline becoming more mature, it is also a process of China learning to use international language to explain its development logic, tell its story, and express its vision. Therefore, "China Studies" has an indirect effect while introducing outwardly - it is a process of China learning from the outside and communicating with the world. So I think that "China Studies" is essentially a mutual journey.
This is precisely why, although I am an economist, I don't plan to give a purely economic lecture - to explain one by one why new energy vehicles do not conform to the Western narrative logic. What I want to focus on today is the "narrative logic" itself, not the economic logic.
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Therefore, in the eight minutes of my speech this afternoon, I hope to highlight a key issue: the United States is currently packaging various industrial issues in China, whether it's steel or new energy vehicles, all into so-called "Chinese shock." However, the nature of these two is completely different. This generalization itself is worth questioning.
This is exactly what we need to clarify and defend to the international community. For some developing countries, we also need to persuade them to rethink. These countries are often rule followers and easily follow others for various reasons. If they can understand the essence of the matter and follow the correct narrative logic, they will realize that excluding Chinese new energy vehicles is harmful rather than beneficial to themselves.
In fact, strong voices of reflection have already emerged within countries such as Canada, arguing that imposing a 100% tariff on Chinese new energy vehicles is completely illogical. This kind of argument does not come directly from us, but it coincides with the narrative we advocate - because it is based on facts, logic, and scientific concepts such as economics.
Only by telling this story well can China's innovative products truly go global, establish a market, and then form a virtuous cycle, promoting more innovation. At the same time, we can also bring benefits to the world through positive spillover effects.
Western says China has "overcapacity," but ignores American chips' global sales
Observer's Network: As China steps onto the world stage, it indeed faces many doubts and challenges, as you mentioned, which is why we need to establish "China Studies" to better tell our own story. In this process, from your more professional perspective, you may find many issues in the empirical or data aspects, which leads us to the next topic of discussion: the issue of "overcapacity." There is a different understanding between the West and China, and it seems there is no unified standard or communication language. How do you view the many controversies surrounding China's "overcapacity" in the international public opinion?
Chen Bo: I think we need to clarify first that "overcapacity" itself is not a standardized economic term. All scientific terms should have strict definitions, and you just pointed out the essence of the problem - "overcapacity" lacks a unified standard. Without a standard, we cannot define it precisely: what exactly counts as overcapacity?
According to an approximate empirical rule in the international context, known as the "thumb rule," it is generally considered that when a country's capacity utilization rate is below 80%, it can be regarded as having overcapacity. In other words, if you have the ability to produce 100 cars, but actually produce only 80, the capacity utilization rate is 80%, which is usually taken as a rough boundary. Above 80%, it is generally considered that there is no serious overcapacity; below it, it is considered to have excess, because the capacity may far exceed actual demand.
But we cannot generalize overcapacity. First, as I said, its definition itself is not clear. This 80% boundary has no scientific basis. No one can strictly prove that above 80% is fine, and below 80% is definitely problematic. It is merely an empirical judgment, lacking a logical foundation.
Second, even if the capacity is clearly exceeding the current market demand, there are many different situations. In most cases, this so-called "overcapacity" is not really a problem.
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For China, there are indeed many industries in manufacturing where the capacity utilization rate is below the 80% threshold. But each industry reflects different problems and meanings. For example, the steel industry may belong to the traditional concept of overcapacity, but new energy vehicles are not like that.
I give an example: in the initial stages of any emerging industry, almost all of them will face overcapacity. The reason is simple: once an emerging industry is confirmed to have a bright future and great potential, a lot of investors will rush in at the beginning, leading to overheated investment. For example, the "Internet bubble" we know of, at that time a lot of Internet websites were built, but the actual application scenarios and markets did not catch up, from the demand side, the service capabilities formed by investments far exceeded actual demand, eventually leading to the burst of the bubble. Now, people are also discussing whether there is overheated investment in the AI field, excessive investment naturally brings overcapacity. But would we stop investing in AI because of this? Would we negate the significance of the Internet era? No, because this is a typical phenomenon in the initial stage of the development of an emerging industry.
Only through sufficient competitive investment in the initial stage can the final winners be selected in the market, allowing these winners to gradually form the most competitive market entities through mergers and elimination of weaker competitors - Microsoft is such an example. If this example is not convincing enough, we can look at the automobile industry.
New energy vehicles and fuel vehicles are similar but not entirely the same products. New energy vehicles are not a simple upgrade of fuel vehicles, but more like a "robotic car" or a "car-like robot," as Musk said, they are closer to robots, so they are a disruptive emerging industry, but they are easiest to replace traditional fuel vehicles.
Looking back at history, the initial stage of the development of traditional fuel vehicles in the United States also experienced a similar phase. From 1890 to 1930, it was a period of rapid development of fuel vehicles. Since everyone realized the great potential of this means of transportation, a lot of capital rushed in. In the United States - the former "car kingdom," before the 1930s, the number of car manufacturers reached as high as 1,800, and now we are familiar with only the "Big Three," and even among them, there are foreign investments, which indicates what? It shows that in the United States before the 1930s, fuel vehicles also had overcapacity, but at that time, was there any criticism? Did the United States reflect on it? - No, because that was a common phenomenon in the initial stage of the development of an emerging industry.
Share of China, EU and US in the new energy vehicle sector
What China's new energy vehicles are currently facing is exactly such a typical stage characteristic. This is not worth excessive surprise, blame, nor should it become a reason for sanctions - this is completely not a reasonable basis. In contrast, why can American chips and related products be sold globally without anyone calling it "overcapacity"? Is that not overcapacity?
We should clearly convey the actual benefits brought by new energy vehicles: they are more economical than traditional fuel vehicles - after all, they don't need gasoline, they are more environmentally friendly, and have higher technological content. These advantages should be the focus of our narrative, not be guided to the impact on existing industrial workers.
Those workers who may be affected are producing fuel vehicles that are about to be phased out. If that's the case, why not change the approach? For example, through cooperation in the industrial chain with China, producing electric vehicles locally. This way, workers can get new job opportunities, and existing production capacity and equipment can be continued to be used.
In fact, many new energy vehicle companies in China today are not all from newly built factories. Many of them are originally fuel vehicle manufacturers that have been converted. They retain original production qualifications, body manufacturing capabilities, and safety certification permits, but have changed their technical routes to electrification. Hai Ma Auto, Great Wall, and other brands are examples of this - they are not built from scratch, but have applied new technologies to existing production bases.
This shows that we can through technological cooperation, investment, and industrial chain integration, enable other countries to also enjoy the development opportunities brought by new energy vehicles, while avoiding large-scale industrial shocks and economic depression.
These real stories need to be told clearly, rather than being demonized by the United States. This is the important mission that "China Studies" should bear - it is not a one-way output, not simply letting the world understand China, but also letting China learn to use scientific methods and international acceptable logic to express itself and communicate with the world.
We cannot stay in the old mindset of "this is how we are, whether you believe it or not." To truly move towards internationalization, even to lead globalization, we must use languages that people can understand, acceptable logic, and factual argumentation - especially in key areas such as trade and commerce.
Current Western narratives often emphasize the so-called "subsidy issue"片面, which is largely due to their lack of understanding of us, and unwillingness to actively understand. But if "China Studies" becomes a rigorous discipline, through it to build narrative systems in economic, political, cultural and other fields, the general public in the international community can more easily understand China's choices and path.
Moreover, in today's new media era, a few traditional media can no longer monopolize the discourse. Through more open and direct ways of dissemination, we can effectively convey the Chinese perspective, while highlighting the unreasonable aspects of certain Western narratives. I believe this is the major significance and mission of "China Studies" in today's era.
Observer's Network: I very much agree with your views. You also mentioned earlier that many countries, including Canada, have begun to reflect internally, realizing that some practices may ultimately harm their own interests. However, despite this, many Western countries continue to criticize and accuse. From China's standpoint, what do you think should be the response strategies to deal with this issue?
Chen Bo: I think we first need to understand the reasons behind their actions. The first is protectionism. This is a form of self-protection, although not entirely reasonable, but from the perspective of their own laws or certain levels, perhaps some justification can be found. For such situations, we need to negotiate and argue our case.
The second situation stems from information asymmetry. They may just be following the mainstream Western narrative, and this narrative has prevailed largely because our voice is still too weak, and our narrative capability is insufficient. We have not sufficiently and powerfully conveyed the essence of new energy vehicles, the actual benefits they bring to foreign consumers, and their positive contributions to environmental protection, etc., which has led to unfavorable international public opinion. Therefore, we need to greatly strengthen the Chinese narrative - this is a very important mission of "China Studies."
What are the specific benefits of strengthening the narrative? Take new energy vehicles as an example:
First, it can save a lot of energy and is green energy.
Second, it helps the environment, especially improving urban air quality and overall ecological environment.
Third, its level of intelligence far exceeds traditional fuel vehicles, it is a product of the times, and the replacement of fuel vehicles is an inevitable trend.
Fourth, regarding the concerns that it may cause local manufacturers to collapse and large-scale unemployment, we can use China's actual experience to illustrate: many excellent new energy vehicle manufacturers in China were originally traditional fuel vehicle manufacturers, and they successfully transitioned by changing their technology. This means that we can use technology cooperation, investment, and other ways to transform existing production capacity abroad, thereby avoiding significant impact on the local production system.
Plus what I mentioned earlier, this is an irreversible trend. Facing this trend, instead of taking self-protection measures, we should actively think about how to adapt, improve and utilize it as soon as possible, which is the correct way to respond.
If we can clearly explain these ideas through solid evidence, logical and easily acceptable expressions, I believe the international road of Chinese new energy vehicles will be much smoother than now.
Over the next five years, trade may continue to follow the trend of liberalization or suddenly regress
Observer's Network: Since May of this year, there have been four rounds of negotiations between China and the US, but recently the US-China relationship has again fallen into a tariff dispute. Could you talk about your views on "Trump 2.0" and Sino-US relations from an economic perspective?
Chen Bo: In my view, President Trump still understands global trade with a traditional mindset - perhaps even an inaccurate one. He said it clearly: a trade deficit is a loss in business. As a businessman, he cannot accept losses; as a president, he cannot accept national trade deficits. Therefore, he advocates so-called "trade balance," but this view obviously does not align with economic logic.
A trade deficit is not a loss, it can actually be seen as a loan, even a low-interest loan. The fundamental reason for the US's global trade deficit is that the dollar is the global payment currency. If it is not through a trade deficit, the dollar cannot be supplied globally. We can imagine the US as the central bank of the world, and the central bank must issue money by taking on debt, otherwise where would the dollars come from globally?
Therefore, it is impossible to maintain the dominance of the dollar and require the US to have no trade deficit. It is a case of wanting both fish and bear. From an economic perspective, either weaken the dollar's position and reduce the global dependence on the dollar, thus the US doesn't have to take on the role of the world's central bank, and its trade imbalance problem will naturally ease; or, the US needs to tolerate trade imbalances and continue to play the role it has always played.
Additionally, there is another angle that is often overlooked: we usually discuss trade imbalances mainly in terms of goods trade. China is the largest goods trade surplus country, and the US is the largest deficit country, which is well known. However, in the service trade, the roles of the two countries are reversed: China is one of the largest service trade deficit countries, while the US is the largest service trade surplus country.
If we include service trade in the overall consideration, the structure of the US trade deficit will undergo a significant change. According to forecasts from institutions such as the WTO and the World Bank, by 2030 - which is just over five years from now - the scale of service trade may exceed that of goods trade. As the largest service trade surplus country, the US's overall trade deficit problem is actually much less than what they claim or perceive.
The problem lies in the selection of statistical口径: the US deliberately ignores its own surplus parts and only emphasizes the areas where it has a deficit, and uses this to negotiate with the whole world - this is clearly unfair.
Therefore, my understanding is that whether it is "Trump 2.0" or "Trump 1.0", this president is still stuck in a traditional mindset. I can understand why he thinks this way, but regardless of economic theory or practice, I personally do not think his ideas are correct.
US goods and services trade deficit of $873 billion in 2023; EU surplus of $216 billion; China surplus of $652 billion
Observer's Network: We know that ASEAN is of great importance to both China and the US. But since the "Trump 2.0" era, ASEAN has indeed faced many challenges, including political pressure and disruption of transshipment trade. Do you think the role of ASEAN will change?
Chen Bo: Currently, my research focus at the Institute of East Asian Studies, National University of Singapore, is on China issues and China-Southeast Asia relations. Through this platform, we can observe more deeply the overall picture of China's opening-up, as well as the positive spillover effects and leadership role it plays in the development of neighboring regions - including the Belt and Road Initiative, and the evolution of China-ASEAN cooperation from 1.0 to 3.0.
These Chinese practices are widely recognized in Southeast Asia and have great research value. Especially in this delicate stage of international economic and trade cooperation, we should deepen the industrial chain cooperation with Southeast Asian countries through our own opening-up, achieving win-win outcomes; on the other hand, we should prove to the world that China's rise is a blessing, not a threat.
Regarding the situation you mentioned, I think there indeed is, and ASEAN is indeed under pressure, but its core role has not changed fundamentally. Looking at the big data from 2018 to now, seven years, ASEAN remains the "stabilizer" of Sino-US trade relations. Trade data and trade flows show that ASEAN has taken on part of China's production transfer, and the industrial chain cooperation with China has become even closer. Currently, under the pressure of the "Trump 2.0" policy, there are indeed some voices, such as in transshipment trade and industrial chain cooperation, facing more resistance. However, in general, the role of ASEAN has not undergone a fundamental change, and ASEAN's role in Sino-US trade relations remains stable to this day.
From my perspective as an economist, analyzing from the dimensions of economic cooperation and win-win, China's economic and trade relations with neighboring countries are not only reflected in trade, but also in investment - and investment will eventually be transformed into trade flow through the global value chain and industrial chain cooperation. This cooperation model, when viewed within the framework of Sino-US relations, actually plays a buffering and supporting role in maintaining the stability of Sino-US economic and trade relations - this is why ASEAN is called the "stabilizer" of Sino-US trade relations.
We can observe this mechanism through specific data. Since June 2018, when the Sino-US trade dispute intensified, the US imposed so-called trade sanctions on China. Even by early 2020, when the first phase trade agreement between the US and China was reached, the average tariff on Chinese goods imposed by the US was still around 20%, which was historically high.
During this process, the data showed several significant characteristics. First, Sino-US bilateral trade was indeed severely impacted: the proportion and absolute amount of China's trade deficit with the US decreased. On the surface, the US seemed to achieve its so-called "balance of Sino-US trade" through unfair trade measures.
However, if we expand our vision to the global trade pattern, we will see a thought-provoking phenomenon: China's trade volume with regions other than the US increased, and the trade volume of other regions with the US also increased, resulting in the US's overall global trade deficit not decreasing but increasing, even reaching a historical high, far exceeding the level before the Sino-US trade war.
What does this phenomenon reveal? It shows that the industrial chain is being extended and restructured, and the Sino-US trade relationship has shifted from direct to indirect, but has not broken down. Then, is this good or bad for the US? From the perspective of economic efficiency, it is clearly not beneficial - trade that could have been done directly now has to go through detours, leading to increased costs. This also explains why the US's global trade imbalance problem worsened after the trade war. If we consider trade imbalance as a global issue, the data shows that the problem has actually become more severe after the trade war.
We can also observe this from a more detailed dimension. For example, China's exports to ASEAN have continued to grow significantly, and remain strong. Currently, China is the largest trading partner of ASEAN, and ASEAN is also an important export market for China. At the same time, ASEAN's exports to the US are also increasing - these data clearly reveal the path of industrial chain restructuring.
In other words, the US's policies have only distorted the flow of trade, but have not truly cut off the flow of trade. From ASEAN's perspective, it actually plays a role in maintaining and guiding the continuous development of Sino-US trade. This also proves a fact: although countries have different languages and systems, through the industrial chain connections established with China and the US, even if the US imposes trade sanctions or takes other policy distortions, these disturbances have ultimately failed to cut off the complex industrial chains and commodity cooperation ties between countries.
Data source: General Administration of Customs of China
Observer's Network: Since April this year, Trump's tariff policy has triggered widespread discussions. Many people are thinking about what the future international economic new order will be like, will a new order emerge? How do you view this issue?
Chen Bo: This question is still hard to conclude. First, the current global tariff policy implemented by the US is largely accepted by other countries. This means that although everyone does not completely agree with the current international trade order, they are still tolerating and accepting it, this is the first point.
Second, the new order represented by Trump is not yet stable. There are still many disputes in Sino-US, US-Canada, and other economic and trade relations, and we need to observe the subsequent developments of these games.
Third, economies that have benefited from globalization, such as China, still hope that the process of globalization continues, and they are still holding up the banner of WTO win-win cooperation and free trade. From this perspective, the prospects are still full of hope. Of course, this hope needs to be tested over time to become clearer.
We are currently in a big fluctuation and vortex stage of international economic and trade cooperation. In this vortex, the direction can only be estimated, it is difficult to clearly argue, because it may develop in various directions. As scholars, we naturally hope to continue along the previous path of globalization, deepen cooperation in trade, service trade, and promote innovation in digital trade, these areas still have great potential.
However, we cannot ignore the resistance and obstacles facing current global trade cooperation. From the historical data of global trade: first, trade has generally tended toward liberalization over the past 200 years; second, once there is a strike or reversal against free trade, the impact may be particularly significant, even possibly leading to a large-scale regression in trade levels.
Therefore, for the next five years, trade may continue to follow the trend of liberalization, or it may suddenly regress. From my academic perspective, in the long run, trade will certainly continue to move toward globalization, liberalization, and expansion. But for the next few years, there are still many uncertainties - this also confirms the saying: the future is bright, but the path is destined to be tortuous.
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