Knowledge Work on Excess Capacity in the People's Republic of China: Consultant’s Report | Asian Development Bank

Knowledge Work on Excess Capacity in the People's Republic of China: Consultant’s Report

Consultants' Reports | July 2015

Although excess capacity usually occurs when an economy faces deteriorating domestic and/or external demand in line with changes over the business cycle, its persistence in many of the People's Republic of China’s manufacturing sectors for longer periods cannot be fully explained by demand side factors. In fact, the most important reason for excess capacity in PRC’s manufacturing seems to be on the supply side, especially the continuously rapid growth in fixed asset investment.