Saving the planet and China’s grip on green tech
Is Beijing’s ‘overcapacity’ problem the solution to the climate challenge facing the world?
Is China’s “overcapacity” problem a solution to cooling a pressure-cooker planet? Or is Beijing’s heavily-subsidized high-tech industry threatening advanced manufacturing in Europe and the United States?
Subsidies are prevalent in the green production chain. China’s strategy includes cheap loans, low-cost access to land, huge investments in infrastructure, and consumer premiums.
State funding is between three to nine times higher than those of countries in the Organization for Economic Co-operation and Development or OECD. In short, companies in the European Union and the US can not compete.
“The debate over China’s so-called renewable energy ‘overcapacity’ has grown increasingly heated, largely driven by policymakers in the [US] and the [EU],” Erik Solheim, the former head of the United Nations Environment Programme, said.
“This criticism is puzzling. For over a decade, leaders around the world have called for exactly the kind of rapid green expansion China is now delivering,” he wrote in a commentary for Dialogue Earth, a non-profit organization based in London.
By the numbers:
- China dominates the world of renewable energy, such as solar, wind turbines and electric vehicles.
- Its share of the global EV market jumped to 76% in 2024, fueled by a stranglehold on rare earths, which are crucial for the green sectors.
Delve deeper: Still, Solheim stressed that the “solution lies not in protectionism, but in expanding international cooperation.” As the planet grapples with the fallout of climate change, he also warned that it was important to “address legitimate concerns.”
Between the lines: “Leaders in both developing and developed countries have shared apprehensions with me about becoming overly reliant on Chinese clean technology,” the president of the Europe-Asia Center in Brussels said.
Bottom line: “[This] could potentially stifle local manufacturing and create long-term trade imbalances. These are valid points,” Solheim wrote.
Big picture: To solve the problem, he suggested “technology transfers” and “manufacturing partnerships,” as well as “greater global investment from Chinese clean-tech leaders.”
China Factor comment: Beijing’s mercantile policy is at the heart of broader trade tensions, which threaten the battle against climate change. This has to be addressed by the ruling Communist Party of China.