"China’s advances in manufacturing have caused a series of problems, however — both for its economy and for the rest of the world. Critics say one of the main weaknesses is the propensity to produce market distortions — sometimes on a monumental scale.

Local governments, whose leaders are measured by their ability to deliver economic growth, latch on to new central government policies to attract subsidised industries to their areas.
The result is duplication and state-backed overcapacity supercharged by competition that drives prices down — good for consumers but not for corporate profitability or local government finances.

“We have seen these boom-and-bust cycles,” says the EU Chamber in China’s Eskelund, pointing to the solar and battery industries. “The government actually gives policy guidance and . . . everyone seems to be rushing in the same direction.”
The EV sector was a case in point, he says, where only about three out of 112 manufacturers are making a profit. “We see waste at an absolutely colossal scale,” Eskelund says."

https://www.ft.com/content/724431ad-26db-4f6d-acab-ccb3cad11daa

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