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Over the past two decades, China's economic growth has and national income has been . This significant growth can be attributed to China's timely . However, expansion cannot last forever. The amount of raw materials being produced in is continuing to increase, but demand for these materials is decreasing. Decreasing demand has contributed to the initial slow-down following China's rapid expansion, but if production itself is not moderated, could suffer greater consequences.
Despite government-ordered shutdowns, China's steel output rose 1.7% to 66.94 million metric tons in September, according to . Overcapacity is not a new concept to China's economy, as they have been dealing with it for decades. Nonetheless, the government continues to funnel capital into exhausted industries such as steel and glass-making. In recent years, steel produced from China has . As a result, several foreign governments have imposed tariffs on some Chinese steel products. European steel workers have voiced their opinions as well, protesting the import of Chinese steel altogether. The president of the European Union Chamber of Commerce in China, Joerg Wuttke, that "without sustained effort to address it now, overcapacity may well seriously impede the effectiveness of China's economic reform agenda." With global frictions growing, both producers and partners stand to suffer the negative consequences of an over-productive economy.
Chinese officials are addressing the concerns, in several over-productive industries. The European Union Chamber of Commerce in China offered suggestions such as cutting capital expenditures in some industries and imposing value-added taxes as alternative sources of revenue for local governments. Moreover, Chinese officials have called on other countries being affected by China's over-production, saying that overcapacity is a global issue.
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