Another approach to demonstrate the meaninglessness of concepts like
"Chinese overcapacity" is the rule of profit maximization.
"The profit maximization rule formula is. MC = MR. Marginal Cost is the
increase in cost by producing one more unit of the good. Marginal
Revenue is the change in total revenue as a result of changing the rate
of sales by one unit. Marginal Revenue is also the slope of Total
Revenue. Profit = Total Revenue - Total Costs."
https://www.intelligenteconomist.com/profit-maximization-rule/
Implication: Any firm, would increase production until MC=MR. And
conversely, decrease production until MC=MR.
Again, the production capacity is not a fixed value. Firm, or firms
collectively, would adjust their capacity and production upward or down
to maximize profit.