(Bloomberg) -- China’s factories used less of their potential in the first quarter than at any time since the pandemic, a pullback that comes as US and European leaders scold Beijing for building up excess capacity.

The utilization rate of industrial capacity plunged to 73.6% in the quarter, the National Bureau of Statistics reported Tuesday. That’s the lowest level since the first quarter of 2020, and down from 75.9% in the last three months of 2023.

President Xi Jinping’s government is under growing global pressure to rein in its industrial drive. With Chinese households reluctant to spend amid a prolonged real estate slump, many countries are voicing concern that the buildup in factory capacity will lead to a surge in cheap Chinese imports that could swamp local producers. 

US Treasury Secretary Janet Yellen made the issue the main focus of her four-day visit this month, urging Chinese leaders to change course and adopt policies that will encourage more domestic sales instead of exports. She’s set to make that case at this week’s International Monetary Fund meetings in Washington, too. German Chancellor Olaf Scholz, who’s in China this week, has made similar comments.

Read More: US Set to Ring Alarm Bells Over Chinese Industry on World Stage

Beijing says that Western countries are invoking Chinese overcapacity as a pretext to adopt policies that shield their own less-competitive firms. 

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