The problem of overcapacity has been plaguing China for years. Many economists claim that China’s double-edged economic system of foreign trade and investment has resulted in a lack of consumption.It is estimated that approximately 35%of GDP depends solely on exports,some of which has naturally turned into excessive capacity due to the recent lack of external demand from western markets.Repeated build up in certain industries,which the government has failed to restrain,has resulted in prevailing overcapacity,and has also indirectly triggered the flood of anti-dumping cases against Chinese enterprises in recent years. The problem of overcapacity has been plaguing China for years. Many economists claim that China’s double-edged economic system of foreign trade and investment has resulted in a lack of consumption. It is estimated that approximately 35% of GDP depends solely on on exports, some of which has naturally turned into excessive capacity due to the recent lack of external demand from western markets. Repeated build up in certain industries, which the government has failed to restrain, has resulted in prevailing overcapacity, and has also indirectly triggered the flood of anti- dumping cases against Chinese enterprises in recent years.