The green economy bears the Made in China brand. The giant has abandoned the production of consumer goods such as clothing, toys, furniture and household appliances to focus on the mother of the lamb: photovoltaic panels, wind turbines, electric vehicles and lithium-ion batteries. There is no country on the planet that can surpass the figures of the Chinese sustainable industry, which emerged in the mid-nineties to meet domestic needs, but quickly became global, driven by massive government investments, cheap labor and low-cost energy. Today it is present and, in many cases, exercises dominant control in each of the links that make up the renewable energy chain: from the extraction of minerals, their processing and refining, to the manufacturing of the final products that it ships around the world.
Over the past four years, lithium-ion batteries have overtaken solar modules to become the green economy’s top overseas item. Contemporary Amperex Technology (CATL) — a company founded in 2011 and listed six years later — has 36.8% of the global market for electric vehicle batteries. It has supply contracts with manufacturers such as BMW, Volkswagen, Daimler and Honda. It has also begun to spread its tentacles in Europe: it has a plant in Germany and is building another in Hungary. “China, recognized as the world’s manufacturing center, has quickly emerged as a significant player in the automotive industry,” warn Le Xia, chief economist for Asia at BBVA Research, and Betty Huang, an economist at the same entity, in a report. The leap in this sector has been gigantic.
Last year, China put more than four million electric units on the market (more than 60% more than the previous year), overtaking Japan (which exported around three million) as the world’s largest car exporter, having previously reached second place in 2022 by overtaking Germany, according to the country’s association of automobile manufacturers. “Chinese manufacturers of new electric vehicles enjoy a cost advantage of around 40% compared to their Western competitors,” says Barclays. The success of the Chinese industry is due, in part, to brands such as Tesla, which have taken advantage of the territory’s lower labor and energy costs. Elon Musk’s firm ranks first in Chinese exports with a 30% share, according to data from the China Association of Automobile Manufacturers (CAAM). And, in fact, foreign brands such as BMW and Renault account for around 20% of the Asian giant’s exports.
BYD ranks second in the EV export chart. It also has a strong global presence, having signed contracts with local distributors and entered markets such as Australia, Colombia, Sweden, India, Japan, Brazil, Thailand, Malaysia, the Netherlands, the United Kingdom, France, Germany, Ireland and Spain.
The Chinese maelstrom has Western governments worried, and they have responded with higher tariffs. The United States has raised import duties on Chinese-made vehicles from 27.5% to 100%, and on solar panels from 25% to 50%, as well as other products.
Europe has also expressed its outrage at the aid that the Beijing government is giving to its companies, while continuing to subsidise the purchase of all types of renewable energy in the country. The European Commission has imposed retroactive provisional anti-dumping duties ranging from 17.4% to 37.6% (in addition to the existing 10%) and which have been in force since 5 July. Europe complains that the price difference has led to a rapid increase in imports of electric vehicles manufactured in China, going from a market share of 4% in 2020 to 25% by the end of 2023.
This is not the only area where China has left its mark. “The European solar revolution is, and will remain, predominantly made in China,” says Ben McWilliams, an expert at the think tank Bruegel. “In 2022, more than 95% of Europe’s solar panels came from the Asian giant, which has established itself as the world’s centre for solar energy manufacturing.” In the future, it will continue to be so. After investing more than 130 billion dollars (around 120 billion euros) in the solar industry in 2023, Beijing will control more than 80% of the world’s manufacturing capacity for polysilicon (a crucial material for the production of solar panel components), wafers (thin layers of polysilicon cut to form solar cells), cells (devices that convert sunlight into electricity) and modules (panels that group these cells together to capture and convert solar energy) between 2023 and 2026, according to Wood Mackenzie. “The country will continue to dominate the global solar supply chain and widen the technological and cost gap with its competitors,” warns Huaiyan Sun, an expert at the consultancy.
50% cheaper
Although government policies in some markets, such as Europe, have increased local production of photovoltaic technologies, their position is still not competitive. For example, a solar module made in China is 50% cheaper than one made in the Old Continent, and 65% cheaper than an American one. The same is true for electric turbines. WindEurope, the industry association, claims that Chinese wind turbines are being offered in Europe at prices up to 50% lower than those produced locally. Bloomberg New Energy Finance (BNEF) says the difference is only 20%. In any case, the Asian giant dominates world production with 60% of the 163 gigawatts (GW) in 2023, according to the Global Wind Energy Council. In comparison, Europe and the US have 19% and 9%, respectively. The eastern nation exported around $1.42 billion (around €1.3 billion) worth of turbines and components to the EU in 2023. The top three Chinese manufacturers, Goldwind, Envision and Mingyang, had combined orders for 55.3 GW in 2022, outpacing Vestas, GE and Siemens Energy’s 26.7 GW.
They dominate not only production but also innovation. In four years, they launched 426 new Chinese turbine models, compared to just 29 outside that country. “2023 was a disappointing year for Western OEMs,” says Wood Mackenzie. Companies in Europe and America suffered financial losses in a stagnant wind market, with installed capacity of 40 GW, down 3% year-on-year, being the worst year since the pandemic. Paradoxically, China, the largest emitter of greenhouse gases, is in control of the new renewable economy.
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