Misleading Non-Market Discourses in Global Economic Governance: A Re-examination from the Austrian-School Perspective

Abstract

In contemporary global economic and trade debates, the accusation of "overcapacity" against Chinese manufacturing recurs frequently within EU public discourse. Meanwhile, China's economic-governance practice contains another under-recognized non-market qualitative rhetoric: evaluating capital-investment behaviour through the vague binary of "orderly/disordered". Largely confined to China's domestic policy discussions and not widely disseminated internationally, this policy has generated tangible adverse economic consequences in practice. Its theoretical flaws nevertheless render it a useful comparative reference for analysing the "overcapacity" narrative. Neither construct constitutes a rigorous academic concept of market-economy studies; both tend to substitute macro-level subjective qualitative judgements for market assessments grounded in property rights, the rule of law and profit-and-loss mechanisms. Drawing on Austrian-school theories of entrepreneurial freedom, heterogeneous capital and spontaneous market order, this paper demonstrates that so-called "orderly" or "disordered" capital expansion does not exist as long as investment activities comply with the law, and entrepreneurial trial-and-error constitutes the core driving force of market resource allocation. Admittedly, certain industrial-subsidy practices and other market-distorting measures do exist within China. Even when criticising such distortions, however, the EU — as an important birthplace of modern market-economy theory — ought to follow market-economy analytical paradigms and refrain from adopting "overcapacity" as an invalid economic critique. What truly undermines market competition are discriminatory subsidies and various forms of administrative intervention, rather than production scale and export competitiveness derived from corporate efficiency. This paper analyses logical tensions and double standards embedded in EU trade discourse (the EU itself also maintains subsidy programmes, albeit with generally lower intervention intensity), and proposes a market-consistent evaluation framework for industrial governance.