Kathmandu— For years, China’s commitment to expanding exports and its trade surplus has drawn criticism from advanced economies and developing nations alike. Now, that long-standing issue is escalating into a potentially catastrophic scenario: the global economy may soon be unable to absorb China’s massive overcapacity. This situation, occurring at a time when governments are ill-equipped to manage economic fallout, could trigger a worldwide crisis if left unaddressed.
The Scale of Chinese Overcapacity
Over the past two decades, China has amassed the largest trade surplus in recorded history, reaching nearly $1.2 trillion in 2025 – a growth rate three times that of global goods trade. While this paradigm benefited China and provided short-term disinflationary effects globally, it is increasingly unsustainable and poses an underappreciated risk to the entire…
