China Angers the World! Its Biggest Anti-Dumping Backlash Ever Leaves 2.7M Cars Unsold

From the air, rows of BYD vehicles stretch as far as the eye can see across an industrial park. Tens of thousands of new cars cover a huge area, forming what looks like a sea of steel and glass. The sheer scale of production is striking and has fuelled debate over the expansion of China's auto manufacturing capacity. I've been to a place like this before. A parking lot is so big. I happened to pass this place today. The parking lot is huge, and it's packed with Li Auto vehicles. They are from all over the country, in every color and model. Just look at this. There must be over 10,000 of them, and they all have license plates. What are they all parked here for? Look, you can't even see the end of them. This entire area is full of cars. What is this place? What's going on? A vlogger filmed the scene on October 30 and questioned why so many registered vehicles were parked together and what they were being prepared for. In China's auto industry, the large-scale practice of registering vehicles for export, selling zero-mileage cars as used vehicles, has become a way to cope with severe excess capacity. When production piles up and cars cannot be sold, they are given a different status and pushed into overseas markets. Video filmed on November 1 showed a road in Haifeng County, Guangdong Province, packed with what appeared to be brand new BYD Fangchengbao vehicles. Close-up footage showed visible dust, watermarks and protective film on the vehicles, while some windshields had temporary labels. The scene again sparked discussion online about zero-mileage used cars. At Qingdao Port, rows of brand new commercial vehicles slowly drive onto roll-on, roll-off ships. The brightly lit terminal is packed with vehicles waiting to be shipped overseas. These vehicles come from factories across Shandong province and are bound for Southeast Asia, the Middle East, Africa and South America. Data released by the China Automobile Dealers Association on October 13 showed that nationwide auto sales fell in September, while inventories rose. Total inventory reached 2.7 million vehicles, tying up nearly 400 billion yuan. or about US$56 billion in dealer capital. Driven by policy subsidies and local investment, Chinese automakers have continued expanding production capacity. But domestic demand is approaching saturation, and overseas markets cannot absorb such enormous output. Companies have fallen into a pattern of producing first and looking for buyers later. More cars are built. Inventories keep rising. Production volume is treated as an achievement while profits are pushed aside. The result is a capacity trap of relentless production and mounting stockpiles. China's auto market is one of the toughest in the world and it has now entered a deep freeze. A recent Wall Street Journal feature titled China's car industry is wowing the world but crashing at home said passenger vehicle sales in China fell 22% year over year in the first nine months. Full-year sales are expected to total 18.5 million, the weakest since 2014. China has 143 electric vehicle brands on sale and annual production capacity of 63 million vehicles, but the domestic market can absorb only about one-third of that. One example is Skyworth Auto in Nanjing. In 2021, the company said its factory had an annual production capacity of 100,000 But in the first nine months of 2024, it sold just 660 vehicles in China. Its dealership has no cars and no customers, yet its website is still recruiting research and development staff. The local government still holds a 5% stake and is reluctant to let the company fail. For more than two decades, the Chinese Communist Party has pushed export-led economic growth at almost any cost, through fiscal subsidies, low-interest loans, discounted land, Tax breaks and other policies, it greatly expands their manufacturing capacity. After China joined the WTO, the country rapidly became the world's factory and relied for years on overseas markets to absorb its enormous output. But as domestic demand remained weak, the drawbacks of this model became increasingly clear. Severe excess capacity left many products with little choice but to be sold abroad at low prices, from 2.7 million cars sitting in inventory to large areas of idle solar panels and low-priced steel and batteries sent overseas. These exports have widened China's trade surplus and, in turn, intensified competitive pressure in global markets. For other countries, this means growing pressure on domestic industries and jobs, fuelling widespread economic concern and prompting trade countermeasures. On November 3, Thailand's cabinet approved higher excise tax on imported electric vehicles. Under the new policy, the excise tax on imported battery electric vehicles will rise from 10% to 35% starting in 2027. The tax rate for extended range electric vehicles will also rise to 35%. The Thai government said the move is intended to encourage companies to build factories in Thailand and support local production and jobs. The decision comes as Chinese electric vehicles rapidly gain market share in Thailand. Nearly all of Thailand's imported electric vehicles come from China. Data from the International Energy Agency and other sources show that Chinese-made electric vehicles accounted for about 75% of Thailand's EV market in 2025. The Rhodium Group said Chinese automakers' share of Thailand's EV markets had reached about 89% by late 2025. China's electric vehicle exports to Thailand gained even more momentum in 2026. Bloomberg reported on October 28 that Thailand's imports of electric passenger vehicles jumped 138% in September from a year earlier to US$421 million, with nearly 99% coming from China. In the first nine months of 2026, Thailand imported US$2.37 billion worth of electric passenger vehicles, Taiwan's economy has grown by more than 1.5 billion dollars. with China accounting for 96%. As Chinese automakers use their price advantage to capture market share on a large scale, Thailand's auto industry has jointly warned the governments. Reuters reported that in May, 10 Thai auto and auto parts industry groups representing over 1,500 member companies submitted policy recommendations to the government. They warned that without urgent changes to electric vehicle policy, Thailand's auto industry could fall into a serious crisis. Local manufacturers are struggling to compete with lower-priced Chinese electric vehicle imports that receive preferential treatments, while parts suppliers are also seeing fewer orders. Even Thailand, which has long welcomed Chinese investment, is beginning to recognise the risk. If its market becomes a warehouse for Chinese companies to unload products, its own industrial supply chain could eventually be hollowed out. In other words, Thailand's real concern is that it could ultimately become little more than a sales market for Chinese cars, while its own manufacturing sector gradually loses room to survive. In fact, China's excess capacity problem has long extended beyond a few sectors such as steel, solar power and new energy vehicles. Similar problems are now appearing across more traditional manufacturing and basic industries. A research report released by the U.S.-based Radium Group on November 2 said China's chemical industry is undergoing another round of large-scale expansion, putting growing pressure on global markets. The report said Chinese companies are putting pressure on foreign competitors from two directions. At home, Chinese chemical producers are replacing imports with domestic production, shrinking foreign companies' sales opportunities in China. Meanwhile, as Chinese firms export more Foreign companies face increasingly intense competition in third country markets. The data show that China's chemical output has increased 18-fold over the past 25 years. China now accounts for over 45% of global production capacity for basic chemicals and plastic resins. But this huge level of capacity now clearly exceeds actual demand in China. Since 2021, China's real estate market has remained in a prolonged slump, leading to a sharp decline in demand for many chemical products closely tied to the construction industry. The industry is facing falling prices, rising inventories, and shrinking profits. Nearly one-third of chemical producers are now operating at a loss. The Rhodium Group reported also said China's expanding chemical production capacity has already begun affecting the U.S. chemical industry. At the same time, U.S. chemical producers are seeking protection under American trade law. On October 20, the U.S. Commerce Department opened an investigation into whether certain amine compounds imported from China were being sold at unfairly low prices or receiving government subsidies. These compounds are widely used in industrial processes and products. Houston-based Westlake Corporation announced in late 2025 that it would shut down four chemical production units in Louisiana and Mississippi. The closures involved polyvinyl chloride, or PVC, and other industrial chemicals, affecting nearly 300 workers. When a country sees its factories close and parts suppliers go out of business while imported goods take over the market, trade is no longer just a trade issue, it becomes a matter of industrial security. As early as 2024, the United States announced that tariffs on Chinese electric vehicle imports would rise from 25% to 100%. Tariffs on batteries, solar panels, critical minerals, and other products were also increased. The US government believes Chinese companies receive extensive government subsidies and gain their advantage not through market competition but by using state power to lower prices and capture global market share. The United States is concerned that if China's new energy industries follow the same path as its steel, aluminum and solar industries, US manufacturing could suffer serious damage. The United States is therefore trying to build a tariff barrier to keep China's excess capacity out of the country. For governments around the world, this points to the same harsh reality. If China continues expanding production capacity and flooding global markets with low-priced surplus goods, businesses and factories in other countries could find themselves pushed out of the markets. Europe's position is also changing. Eurostats reported that the European Union's goods trade deficit with China reached €359.8 billion in 2025. Reuters cited a figure of more than €370 billion on October 23, and said the deficit could far exceed €400 billion in 2026. EU discussions now extend beyond automobiles to chemicals, machinery and pharmaceuticals. The European Union has long emphasised free trade, but as Chinese electric vehicles enter the European market in large numbers, Brussels is changing its position. After an anti-subsidy investigation, the European Union decided to impose additional tariffs on Chinese electric vehicles. The European Commission said state subsidies had given Chinese companies an abnormal competitive advantage and distorted fair competition. For Europe, this is no longer just a trade issue. It has become a question of industrial survival. If European manufacturing is overwhelmed by low-priced Chinese goods, Europe could gradually shift from an industrial power into a consumer market. From October 8 to 9, China's Commerce Minister Wang Wentao and European Commissioner for Trade and Economic Security Maroš Šefčovič held the second meeting of the China-EU Trade and Investment Dialogue Mechanism in Beijing. The two sides discussed trade imbalances, exports controls, intellectual property and World Trade Organization reform. Current affairs commentator Wang He said, China and the European Union are holding ministerial-level talks. The EU has issued an ultimatum, demanding that the CCP make real progress and concessions on issues such as market access and government subsidies. Otherwise, trade tensions between China and the EU will escalate sharply. This shows that Trump's foreign policy has made major progress in building alliances, forming a united front, and coordinating efforts to counter the CCP. Wang has said that despite a worsening export environment, the CCP will find it hard to boost domestic demand. He said China's weak domestic demand is closely tied to the country's wealth gap and unequal income distribution, making it a structural and systematic problem. Under current conditions, The CCP is unlikely to make major or fundamental reforms. As a result, weak domestic demand is likely to persist for a long time. China will find it nearly impossible to expand domestic demand enough to reduce or ease trade conflicts with other countries. Emerging economies are also feeling the pressure, not just the United States and Europe. Brazil has raised import taxes on Chinese electric vehicles and plans to gradually restore higher tariff levels. India has long maintained strict trade restrictions on Chinese steel, chemical and new energy products, while increasing protection for its own manufacturing sector. Turkey announced in 2024 that it would impose additional tariffs on Chinese vehicle imports to protect its domestic auto industry and jobs. The fact that even developing countries are now taking protective measures shows that the issue is no longer simply trade friction between China and the West. It reflects broader global concern over China's model of expanding industrial capacity. At the G20 finance ministers' meeting in September, 19 members supported language calling on countries with trade surpluses to reduce their reliance on exports. China was the only country to object. In October, Thirteen countries involved in G20 trade negotiations joined the United States in issuing a statement calling for action on industrial overcapacity. The European Union also publicly expressed support. The statement specifically highlighted automobiles, electric vehicles, batteries, semiconductors and solar products. The signatories included major economies such as Japan, Germany, France, Canada, Australia, India and Argentina. In a joint statement, the trade ministers said they would work through a newly established industrial platform that said the initial focus would be on addressing excess capacity in automobiles and electric vehicles, batteries, chemicals, basic semiconductors and solar panels. Electric vehicles, solar panels and lithium batteries make up China's so-called new three export industries, whose products have been dumped into overseas markets in recent years. The CCP has poured subsidies and support into these so-called new productive forces because China's traditional economic pillars have collapsed amid the property crisis and mounting local government debts. Unemployment has soared, while consumer confidence remains weak. Sun Guoxiang, an associate professor in the Department of International Affairs and Business at Nanhua University in Taiwan, said global concern about competition from Chinese manufacturing is no longer just about low prices. He said long-term capacity expansion under state subsidies could push down global prices, crowd out market-driven investments, and reshape which countries dominate future industries. Sun said that 15 economies joining forces to address Just excess capacity could create the situation the CCP fears most. With both China's domestic and external economic channels blocked, China's economy could then face pressure from multiple directions. Sun said the impact would come in several forms. First, companies would be forced into price competition, worsening deflationary pressure and squeezing profits. Second, returns on manufacturing investment would fall, making private companies even more reluctant to expand. Third, employment will suffer, especially among young people, with job opportunities shrinking in export-oriented manufacturing and local supply chains. Fourth, local governments would face greater difficulty with a model that depends on industrial projects, development zones, tax revenue, and land sales. Finally, bad bank loans and corporate debt risks would rise. Many people view China's excess capacity as the result of poor business decisions. But today's large-scale overcapacity is, to a great extent, not the result of market choices. It is the result of administrative power directing resources over a long period of time. In a mature market economy, companies in an industry that suffers long-term losses will cut production, lay off workers, or even go bankrupt. Outdated capacity gradually leaves the market, allowing supply and demand to move back toward balance. In China, however, many major industrial investments are not driven by companies responding to market signals. They are pushed by government plans, industrial policies, and administrative directives, from steel and cement to solar power, electric vehicles, new energy batteries, and semiconductors. Whenever the government identifies an industry as strategic, subsidies, preferential loans, tax breaks, and slanted resources quickly pour into that sector. As a result, many local authorities are reluctant to let companies leave the market due to pressure over revenue, jobs and GDP targets. Even when a company is suffering major losses, it may still receive renewed bank loans, government subsidies or other policy support as long as it can drive investments, preserve jobs or generate tax revenue. A more serious problem is that normal market forces often fail to eliminate weak producers. Many companies continue expanding factories and adding capacity, despite thin profits or persistent losses. They are not doing so because demand is strong, but because policy incentives are still in place. The result is an unusual pattern. The less profitable an industry becomes, the more likely it is to receive policy support. This has happened in steel and solar energy, and to some extent, new energy vehicles are now following a similar path. As a result, more countries from the United States and the European Union to India, Brazil and Thailand are raising tariffs, imposing technical barriers and even providing major subsidies to domestic companies that compete with China. This may look like a return of trade protectionism, but at its core, it's a collective defense against China's model of expanding excess capacity. The global battle over China's excess capacity is no longer simply a trade dispute. It has become a fight over future industries, economic survival, and jobs. As more countries raise tariffs and erect industrial barriers, one thing is becoming clear. The world is refusing to serve as a dumping ground for China's excess production.