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But the nature of the technology makes the overcapacity problem still worse.
The modest cutbacks in production barely put a dent in China's overcapacity problem.
China announced measures to restrain the rapid expansion of its automobile industry, saying the sector could face a serious overcapacity problem if trends continued.
At the very least, their finding helps to allay two specific fears about overinvestment: the fear that China's heavy capital spending is creating excess industrial capacity, and the related fear that China will resolve its overcapacity problem by dumping excess goods on world markets.
That would end the costly overcapacity problem.
The overcapacity problem is far from solved, but a few big mergers have already been completed.
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But it is unlikely that luxury Renaults or Opels will help solve those companies' overcapacity problems.
When General Motors and Chrysler responded to their overcapacity problems in the early 1990's, they were in crisis.
"Leverage in the economy remains high, and many industries continue to face overcapacity problems," Mr. Zhang said.
He warned that some Chinese industries, fed a diet of easy money and loose regulation, had developed serious overcapacity problems.
Mr. Wen also warned that some Chinese industries, fed a diet of easy money and loose regulation, had developed serious overcapacity problems.
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