I know this is long but if you're realy interested, the economic point is rubish and debunked, see Michael's writing(China's unfair overcapacity). This author is repeating the same mainstream econ discourse that is just econ 101 which fails when you actualy pay attention to the events so far.

This narrative keeps being repeated only because its mainstream econ discourse. I'll try to give you a brief timeline of what happened.

As we know this "overcapacity" issue began mysteriously in late 2023 when Biden and the EU started turning more aggressive towards China, they got pissed off their industry can't compete with Chinese renewable exports and the only resource left for Biden would be either the Trump trade war and tariffs method or a heavy neoliberal attack. So the US choose the later, primarily with a heavy focus to let China know that their economy is Not Ok if they continue to export this much.

So soon after Blinken and notably Janet Yellen went to China to explain to them China needs to accept this and do something or else there would be more consequences.

What followed in late 2024 was the CPC accepted this demand, they pushed "consumption" incentives. They listened to the same western neoliberal economists and their solution is to reduce these exports as much as possible to save whatever is left of western industry and stop the consistent soft power gains achieved by Chinese dominance in renewable energy.

The evidence for this continued on even despite the Trump tariffs, western media sometimes let the mask fall off, The opportunity in China’s solar ‘overcapacity’. I'll quote from the Financial Times even admitting this.

Last year, the world installed 452 gigawatts’ worth of solar panels, according to the International Renewable Energy Agency — increasing the total installed base by 32 per cent in a single year. But the world’s solar factories — overwhelmingly in China — now have enough capacity to produce 1,200 gigawatts’ worth, most of which is sitting unused, according to BloombergNEF estimates.

Did these companies simply overestimate the pace of solar installation growth? Not necessarily, according to analysts at Wood Mackenzie. Chinese solar producers, they argue, are fighting each other in an exceptionally fierce battle for market share, which is forcing them to make constant heavy investments in new production lines making the latest generation of technology.

Despite the pearl clutching over capitalist profits, they admit exactly what we want to see. Constant heavy investments in new production lines making the latest generation of technology is what actualy grows the economy, according to a Marxist principle.

But rather than view this capacity as a problem, what if China and the world moved to take advantage of it? In a policy paper last year, Richard Black and Muyi Yang of the think-tank Ember argued that the problem was not of “overcapacity” but of “underdeployment”. If China’s “spare” solar capacity were put to use, they argued, it would enable the world to meet the goal — agreed at the COP28 summit — of tripling renewable generation capacity by 2030.

By supporting this industry’s continued growth and subsidising solar deployment in developing nations, they argue, China could achieve multiple goals at once. It would avoid a painful contraction in this labour-intensive, economically significant sector, while burnishing its soft power in the global south — and its claim to be a leader in global climate action.

Beijing’s recent efforts to slow the pace of solar investment suggest that it’s not convinced by this logic. But as Xi Jinping’s government prepares its next five-year plan — due for publication later this year — it has an opportunity to take fuller advantage of China’s dominance in clean tech manufacturing.

I think the emphasis should speak for itself. The takeaway is correct too unforuntately. The CPC isn't "convinced" they must use this advantage in renewable energy production for because they are not Marxists nor follow Marxist economic principles. What they follow is neoliberal economics with government intervention, when conflict appears, they side with the mainstream consensus as shown here.

So what exactly is the solution to this problem anyway?

The Marxist principle here should be the same utilized during the previous initial housing crash when Evergrande failed and the CPC let them go bankrupt. Indeed the first principle is capitalists are not entitled to a profit and in such a hybrid economy the CPC should take control of these failing companies as part of the expansion of the public sector. This is the argument Michael made during the Evergrande crash. China: Xi’s third term – part two: property, debt and common prosperity

So the solution is if these industries are unprofitable you take ownership of them, transform the entire sector into a public sector, shove cheap renewables to the world at cost or low profits. The goal is to move towards socialism isn`t it?

On the topic of your OP title, What is China's mistake in reality?

I think its clear through the past 15 years of CPC messaging and economic strategy that unfortunately Dengism is not a path to socialism but rather the final destination. The CPC repeats the same neoliberal economic consensus theory as the western capitalists in the post cold war era. There is no point fighting "globalization", we must accept peaceful "rules based" relations at all costs. China doesn't recognize nor cares about the global struggle against capitalism, fundamentally there is no such thing anymore.

Now China's mistake is to think they've won even though we're heading towards the climate change abyss.

The second part of this mistake then is China's refusal to understand BRI can't mask the costs of western imperialism. This is the biggest ideological betrayal IMO. The assumption that happy face Chinese investment on one hand can compensate for their incredibly bad FP on the other hand.

To give an closest to me. though I believe you can find many of these elsewhere. The recent news China wants to help invest on some railroad project in Brazil towards Peru. Awesome right? How does one squares this with China's state oil company being just as invested into drilling the Amazon as the western oil companies? In this land grab by China's CNPC, Exxon Mobil and Chevron.

This is the same mistake, long story short, Dengist China does not want to actualy move away from capitalism at this time. They do not care to understand the light at the end of the tunnel is the climate change freight train coming at us. China's ideal of a global economy they can rely on is a costly generational mistake they'll pay for dearly.

I could write more but I hope this is already helpful, though the article you linked is not particularly good so I focus on the point I am know the most.