The expansion of China's industrial-production capacity, driven by easy lending, could flood markets, depress profit margins worldwide and trigger a backlash against the country, a trade group said. The European Union Chamber of Commerce in China said the country's stimulus has brought a large number of manufacturing facilities into production, a dangerous development at a time of global economic weakness. The group said it is "increasingly unlikely" that the U.S. and the EU will be able to absorb this overcapacity.

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