List of figures and tables v

List of abbreviations and acronyms vi

Executive summary ix

1 Introduction 1

2 Definitions and ‘diagnoses’ 2

2.1 Conceptualisation and definition of ‘industrial overcapacity’ 2

2.1.1 Overcapacities in high–growth and state–driven contexts 2

2.1.2 Literature on overcapacities in China 3

2.1.3 Defining industrial overcapacity 4

2.2 Analysis of overcapacities in China 5

2.2.1 Indications of overcapacities in China’s industrial sectors 5

2.2.2 Trade effects of overcapacity risk 9

2.2.3 Non-market elements and overcapacities 10

2.3 Case studies: Currently emerging overcapacities 12

2.3.1 Case study: Semiconductors 12

2.3.2 Case study: Electric vehicles & batteries 18

2.4 Case studies: Potential overcapacities 23

2.4.1 Case study: Hydrogen economy 23

2.4.2 Case study: Robotics 30

2.5 Preliminary conclusions on overcapacities in China 35

3 Solutions to tackle overcapacities 37

3.1 China's internal policies 37

3.1.1 The Chinese debate on overcapacities 37

3.1.2 Domestic policy measures to tackle overcapacities 40

3.1.3 Effects of China's 'anti-involution' measures 43

3.1.4 Implications for international trade and EU negotiations 44

3.2 Unilateral measures by the EU 45

3.2.1 Trade Defence Instruments 46

3.2.2 Application of Trade Defence Instruments to overcapacity 49

3.2.3 Other measures to address overcapacity issues 51

3.3 EU cooperation with third countries in tackling overcapacities 57

3.3.1 Cooperation with China 57

3.3.2 Multilateral cooperation 58

4 Main conclusions 61

4.1 Opportunities and limits of strategic responses 61

4.2 Policy recommendations 64

Bibliography 68

Legal sources 68

Scholarly and other sources 70

ANNEX 1: List of interviews 91