Chinese corporations have invested over US$100 billion in overseas clean energy initiatives since early 2023, in part to circumvent steep tariffs in markets like the United States, Canada, and potentially the European Union, according to research from Australian firm Climate Energy Finance (CEF) released on Wednesday. The report underscores China’s ambitions to extend its technological reach in the global clean energy sector, especially in solar panels, lithium batteries, and electric vehicles.
With dominant stakes in these markets, China is leading worldwide production of renewable energy infrastructure by a significant margin, the report notes. Currently, Chinese firms account for 32.5% of the world’s electric vehicle exports, 24.1% of lithium battery output, and 78.1% of solar panel production. However, this dominance has raised alarms among Western competitors, who worry that China’s massive production capacity allows it to flood international markets, undercutting prices and sidelining rivals.
Navigating Trade Barriers
Trade tensions have pushed China’s top firms to diversify their manufacturing locations. The United States and Canada recently imposed 100% tariffs on Chinese electric vehicles, while solar panels and lithium batteries from China now face U.S. tariffs of 50% and 25%, respectively. The European Union, for its part, is poised to vote on similar restrictions.
To mitigate these restrictions, major Chinese corporations are relocating production overseas. BYD, China’s largest electric vehicle producer, is currently establishing a US$1 billion manufacturing facility in Türkiye to circumvent a potential 40% EU tariff. Similarly, Contemporary Amperex Technology Co. Ltd. (CATL), a leading battery manufacturer, is planning new plants in Germany, Hungary, and other locations.
Xuyang Dong, a CEF analyst and co-author of the report, attributes much of the recent offshore investment to these trade challenges. “The investments from Chinese private companies are largely driven by the need to circumvent trade barriers,” she stated. BYD and CATL did not immediately respond to requests for comment due to the ongoing Chinese national holiday.
Excess Capacity and the Push for Export Markets
A separate study by the Grantham Institute in the U.K. predicts that, by 2030, two-thirds of China’s cleantech production will exceed domestic demand, necessitating increased exports to foreign markets. China’s solar production capacity alone is expected to reach 860 gigawatts by the decade’s end, a surplus that could significantly affect global prices and market dynamics.
China’s Response to Tariff Restrictions
The Chinese government has criticized these increasing trade barriers, arguing that restrictions on Chinese-made clean energy products could slow the global transition to sustainable energy. In March, Chinese climate envoy Liu Zhenmin cautioned that “decoupling” from China’s manufacturing network could raise the cost of the global energy shift by as much as 20%.
As China continues to extend its influence in clean energy, the ramifications for international trade dynamics, climate policy, and industrial strategy will likely intensify in the coming years.
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