By April-May 2024, China's massive investment in electric vehicles, solar panels, and batteries created so much excess capacity (called 'involution') that companies were forced to sell products at prices below their variable costs, something microeconomic theory says cannot happen in equilibrium, because banks would not finance inventory of unsaleable goods.

factualpending

Speaker

Michael Pettis

Evidence Quote

around April or May of this year...involution...they had to sell them at cut-rate prices...below variable prices...something which...can't happen

Source

Michael Pettis: China’s Consumption Crisis Is The World’s CrisisThe Monetary Matters Network
Created: 8/11/2026, 7:43:21 AM

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