China’s Aggressive Investments in Clean Energy Abroad Surpass $100 Billion

China’s Aggressive Investments in Clean Energy Abroad Surpass $100 Billion

Chinese companies have invested heavily in overseas clean energy technology projects, exceeding $100 billion since the start of 2023. This strategic move aims to avoid trade barriers imposed by the United States and other countries. According to Climate Energy Finance (CEF), an Australian research group, China’s dominance in clean energy production and exports has been a significant contributor to these overseas investments.

China’s Dominance in Clean Energy Production

China’s position as the world’s largest producer and exporter of clean energy technology products, including solar panels, lithium batteries, and electric vehicles, is driven by its significant investments, innovation, and manufacturing capabilities. CEF’s research report highlights that China accounts for 32.5% of global electric vehicle exports, 24.1% of lithium batteries, and 78.1% of solar panels. This dominance has raised concerns among competitors that China may be leveraging its excess capacity to flood markets, lower prices, and potentially undermine their competitiveness.

Trade Barriers and Chinese Response

The United States and Canada have implemented 100% tariffs on Chinese-made electric vehicles, while the European Union is expected to vote on similar measures soon. Additionally, U.S. imports of Chinese solar panels and lithium batteries are subject to tariffs of 50% and 25%, respectively. China has expressed opposition to these tariff increases, arguing that restrictions on affordable Chinese imports hinder efforts to combat climate change. Senior Chinese climate envoy Liu Zhenmin has warned that “decoupling” from Chinese manufacturing could escalate the global energy transition’s financial burden by 20%.

Chinese Companies Circumventing Trade Barriers

Xuyang Dong, a CEF analyst and co-author of the report, explains that Chinese companies are primarily driven by the need to circumvent trade barriers in their overseas investments. Leading electric vehicle manufacturer BYD is constructing a $1 billion plant in Turkey to evade a proposed EU tariff of nearly 40%. Similarly, battery maker CATL plans to establish factories in Germany, Hungary, and other locations.

China’s Projected Cleantech Surplus

A separate study conducted by Britain’s Grantham Institute forecasts that China’s cleantech capacity will exceed domestic demand by two-thirds by 2030, leading to an anticipated search for export markets. The study predicts that China’s total solar production capacity could reach 860 gigawatts by that year.