Abstract
BackgroundIntuitively speaking, there is an inverse proportional relationship between exports and overcapacity, which means in export’s busy season, enterprises would expand output and improve capacity utilization rate but control yields to avoid dull sale in slack season, causing exacerbated excess capacity. However, this is just the reflections of “sales effect” on overcapacity by export fluctuation. For some enterprises, there is indeed “competition effect” which may alleviate overcapacity because enterprises face even more fierce domestic competition for the sake of weak exports and may increase the utilization load of existing capacity in order to cut costs.MethodsA test is conducted in this paper to verify the relationship between export fluctuation and excess capacity based on data of China’s manufacturing industry from 2001 to 2013.ResultsThe overall results indicate that export fluctuation is not the significant cause for excess capacity. In the small- and medium-sized enterprises or in industries with higher proportion of non-state capital, the negative relationship between exports and excess capacity is more obvious, with sales effect taking a dominant position. On the other hand, under the influence of competition effect, the relationship between the two may be positive.ConclusionsThus, external demand shocks exert different influence on the alleviation of excess capacity of different industries, and extensively driven exports may not have anticipated effect on the dissolution of the excess capacity. To regulate overcapacity with the aid of external market, a fair and orderly competition environment should be provided to the export subjects of different size and ownerships.
Highlights
Speaking, there is an inverse proportional relationship between exports and overcapacity, which means in export’s busy season, enterprises would expand output and improve capacity utilization rate but control yields to avoid dull sale in slack season, causing exacerbated excess capacity
Econometric model According to theoretical analysis, export shocks may function as exacerbation or alleviation on overcapacity, which becomes stronger or weaker as the proportion of small and medium enterprises changes
In order to test whether the scale of all industries and the ownership characteristics influence the overcapacity caused by export fluctuation, this paper will mainly observe the regulated variables of Scalit and Statit and the coefficient signs as well as the significance of the interaction item of core explanatory variables
Summary
Speaking, there is an inverse proportional relationship between exports and overcapacity, which means in export’s busy season, enterprises would expand output and improve capacity utilization rate but control yields to avoid dull sale in slack season, causing exacerbated excess capacity. This is just the reflections of “sales effect” on overcapacity by export fluctuation. If the enterprise can neither foresee falling demand caused by financial shocks and structural adjustment nor collect sunk fixed investment, excess capacity will hardly be avoided Such overcapacity can normally be resolved by market pullback automatically. What influence do factors from demand side exert on current overcapacity?
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