China’s factory overcapacity is the result of Beijing’s long-running industrial policies. Years of state support have built more factory capacity than domestic demand can absorb in the world’s second-largest economy, flooding global markets with low-priced goods, from EVs to TVs.

The end result is a growing risk of hollowing out industrial bases worldwide, and our latest example this week has washed up on Europe’s shores in the form of EVs.

The International Monetary Fund warned this week that Beijing should significantly scale back state support for industry, citing spillover risks that could undermine manufacturing bases abroad. If countries such as those in Europe fail to respond effectively to the flood of cheap Chinese goods, their industrial bases could suffer lasting damage, potentially proving disastrous in wartime.

https://www.zerohedge.com/markets/imf-urges-beijing-curb-industrial-subsidies-flood-chinese-goods-crushes-global-industrial