China is no stranger to overcapacity in production – but the current oversupply is characterized by the fact that it affects a wide range of products this time. Overcapacity can be countered by increasing domestic consumption or reducing domestic production. However, external demand also plays an important role – through exports or, increasingly, through direct investment abroad. In view of the current geopolitical developments towards more protectionism, however, this could lead to an intensification of tensions in world trade. A recent Coface study looks at ways of reducing China's overcapacity.