China emerges as green-tech manufacturing powerhouse

In recent years, China has solidified its manufacturing prowess, extending its dominance into the realm of clean energy industries. This shift has occurred amidst a global push for climate change action. However, the United States, Europe, and other nations have begun to express concerns regarding China’s growing influence in these sectors.

Of particular worry to Washington is the issue of “overcapacity.” Chinese subsidies to industries like solar, electric vehicles, and batteries have raised concerns that they could undercut similar sectors in other countries. US Treasury Secretary Janet Yellen has pledged to address this concern in her discussions with key Chinese officials during her current visit.

China’s strength in green technology sectors is evident, particularly in solar energy. The nation has become the largest emitter of greenhouse gases, but it is also investing heavily in green energy. Wood Mackenzie’s report highlights China’s dominance in the solar supply chain, with investments exceeding $130 billion in 2023. This investment positions China to control over 80 percent of the world’s polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026.

The dominance extends to electric vehicles (EVs) as well. China’s auto exports surged by 57.9 percent in 2023, with a significant portion driven by a 77.6 percent increase in new energy vehicles (NEVs). The nation accounted for over 60 percent of global NEV sales, emphasizing its stronghold in this market.

Furthermore, China’s lithium-ion battery sector experienced substantial growth in 2023. Total output surged by 25 percent, while exports of such batteries increased by 33 percent. Despite these achievements, concerns loom over excess production capacity, prompting worries in Washington and Brussels.

Joerg Wuttke, president emeritus of the European Union Chamber of Commerce in China, emphasized the risk of protectionist measures arising from China’s subsidized production muscle and large inventories. He stressed the importance of Yellen’s visit in conveying this message to Chinese leaders, highlighting the significant disparity between China’s manufacturing output and global consumption.

As China continues to assert its dominance in green-tech manufacturing, concerns over fair competition and overcapacity persist among global players. Yellen’s discussions in China this week are pivotal in addressing these concerns and fostering a level playing field in the clean energy industries.