Chinese firms have invested over $100 billion in clean energy technology projects overseas since the beginning of 2023, as they seek to navigate and avoid tariffs imposed by the U.S. and other countries, according to research group Climate Energy Finance (CEF).
The report from CEF said China stands as the world’s largest producer and exporter of key clean energy products, including solar panels, lithium batteries, and electric vehicles.
CEF’s research highlights that China leads global innovation and manufacturing in these sectors by an “astonishing margin,” accounting for 32.5 percent of global electric vehicle exports, 24.1 percent of lithium batteries, and a staggering 78.1 percent of solar panels.
However, China’s dominant position has raised concerns among international competitors, who worry that the country is using its surplus manufacturing capacity to flood global markets, drive down prices, and undermine competition.
In response to this dominance, the U.S. and Canada have imposed 100 percent tariffs on Chinese-made electric vehicles, while the European Union is expected to vote on similar measures this week. U.S. tariffs on Chinese solar panels and lithium batteries stand at 50 percent and 25 percent, respectively.
CEF analyst Xuyang Dong said the surge in investments from Chinese private companies is driven by the need to circumvent these trade barriers. Notably, BYD, China’s leading electric vehicle manufacturer, is constructing a $1 billion plant in Turkey to avoid a proposed EU tariff nearing 40 percent. Battery manufacturer CATL is planning factories in Germany, Hungary, and other locations.
A study from the UK’s Grantham Institute indicates that by 2030, two-thirds of China’s clean technology capacity may be “surplus to domestic requirements,” prompting a search for export markets, with total solar production capacity projected to reach 860 gigawatts.
China has expressed frustration over the tariff increases, asserting that restrictions on affordable Chinese imports will hinder global efforts to combat climate change. Senior Chinese climate envoy Liu Zhenmin warned in March that “decoupling” from Chinese manufacturing could increase the global energy transition costs by 20 percent.