China's IT Industry Overcapacity and the Shift from Production to Allocation

China's IT industry is severely overstocked. A simple survey shows that most users cannot identify any function on the second screen of Alipay, illustrating the abundance of unused features that developers produce daily.

The overcapacity extends beyond consumer internet to B2B and government systems, where many large displays show outdated or irrelevant information, and many remain unused except during leadership inspections.

While the early 2000s saw necessary information system construction, today China's IT sector is characterized by absolute excess, even as high‑tech niches remain relatively under‑served—a paradox created by two decades of policy‑driven expansion.

Policy has fostered this surplus in two ways: direct procurement guidance (e.g., the "Two Networks, One Site, Four Repositories, Twelve Golden Projects") and unchecked capital‑driven internet expansion, both of which now yield diminishing returns.

Because production and allocation have become completely decoupled, the industry's central issue is deciding who should receive the excess funds. Traditional labor‑based allocation mechanisms no longer apply, and most participants focus on securing distribution rather than creating useful products.

This allocation pressure manifests as performance behavior: government procurement departments showcase "software improving governance" via large screens; vendors demonstrate "high‑quality, low‑cost" products through glossy materials; developers equate "efficiency" with overtime to please supervisors; and internet firms stage financial and presentation narratives to attract investment.

Consequently, in an industry of double surplus, actions are driven by the need to please those who control resource distribution rather than by genuine production goals. As excess capital recedes after 2018, some workers will recognize the futility of such performances and shift to more sustainable practices, while others will continue the spectacle, adapting it to the new economic reality.