Why Is Overcapacity Bad?
Industrial Overcapacity Has Become a Time Bomb That Threatens the Chinese Economy Because It Has Led Companies to Take on Debt to Repay Loans. the Combination...
Industrial overcapacity has become a time bomb that threatens the Chinese economy because it has led companies to take on debt to repay loans. The combination of economic slowdown, excess production in manufacturing and rising debts at the macroeconomic level may cause a massive wave of firm closures and bad loans.
What is the result of overcapacity?
As noted above, overcapacity in one area can lead to fishing capacity diverting to less exploited areas. While the state of these local economies may be depressed as a result of overcapacity, reducing overcapacity may also have adverse impacts. Reducing boat numbers will reduce the number of fishers employed.
Why is overcapacity a problem?
Overcapacity is a state where a company produces more goods than the market can take. Everything in excess is called excess capacity and it is not good for the industry and the market. It is a huge problem and exists in many industries such as iron and steel, fishing, container shipping, airlines etc.
Alexander Ross has covered the video game industry for a decade, writing deep dives on game design, esports tournaments, VR developments, and gaming culture.
