Overcapacity is a ‘fake concept’, says the international head of a major Chinese carmaker: ‘They don’t know what is happening in my house’

China's EV exports are booming, helping the country overtake Japan as the the world's largest car exporter last year. To officials in the U.S. and Europe, China's affordable EVs are proof of the country's "overcapacity problem," which threatens to undermine Western manufacturing.

But claims that Beijing uses state subsidies to prop up its manufacturing sector, and then dumps the excess surplus overseas, are irking executives in China's car sector.

Overcapacity “is a fake concept,” Parker Shi, the head of Great Wall Motor International, told the Financial Times. Shi expressed frustration that outsiders were commenting without knowing how Chinese manufacturers like Great Wall Motor operate. “They don’t know what is happening in my house,” he said.

Car companies often build factories with production capacities in excess of current demand, in anticipation of "good business," Shi claimed.

Other Chinese car executives say that their success is due to China's highly-competitive EV sector, rather than state support.

China’s EV makers need to design and develop products twice as quickly as established automakers, Zhang Fan, head of design for Guangzhou Automobile Group, a state-owned automaker, said at Fortune’s Brainstorm Design conference last December.

In February, BYD Europe president Michael Shu told the Financial Times that his company’s cars were cheaper due to “management efficiency,” and not state support.

Chinese officials are also pushing back against Western arguments of excess Chinese capacity. President Xi Jinping denied that China had an “overcapacity problem” in a meeting last week with European Commission president Ursula von der Leyen and French President Emmanuel Macron.

Great Wall Motor is one of China’s largest private carmakers, reporting 173 billion Chinese yuan ($23 billion at current exchange rates) in revenue for 2023. The company sold 1.23 million cars last year, 256,400 of which were “new energy vehicles," a category that includes both battery electric vehicles and plug-in hybrids.

That put Great Wall in eighth place in China’s EV market in 2023, according to data from the China Passenger Car Association. EV giant BYD is in first place with 3 million “new energy vehicles” sold last year. Tesla came in second with around 600,000 EVs sold in China.

Going overseas

Sales of Chinese “new energy vehicles” rose 28% last month, even as the overall car market declined by 5.7%, according to the CPCA. The organization noted that internal-combustion cars are struggling as manufacturers can’t keep pace with the EV sector’s fierce price war, due to already-thin margins.

Still, China’s EV manufacturers are worried about slowing growth in China's market, and so are looking overseas for new markets and manufacturing hubs.

Great Wall Motor started EV production in a new Thai factory earlier this year; the company also plans to make batteries in the Southeast Asian country.

The prospect of cheap EVs is triggering a backlash in the U.S. and Europe. The Biden administration is set to announce a significant tariff hike on Chinese EVs, raising taxes from 27.5% to over 100%. The White House previously called Chinese EVs a "national security risk," and has denied tax credits going to EVs that use Chinese components.

Europe could also impose higher tariffs on China-made EVs, due to an in-progress anti-subsidy probe launched by the European Commission last October. Valdis Dombrovskis, European Commissioner for Trade, told Politico that he expects the probe to complete "before the summer break."

This story was originally featured on Fortune.com