Beijing Backs EV Battery and Solar Giants for Worldwide Expansion

China is looking to expand its lead in clean energy by deepening multilateral cooperation on green technologies and supporting its new energy vehicle (NEV), battery, and photovoltaic companies in expanding their global presence, according to a top government official. The move is intended to accelerate the low-carbon transition of the nation's vast manufacturing sector.

Li Lecheng, minister of industry and information technology, said in a piece for China Daily, that China's determination to pursue a green transition in manufacturing underscores its drive to foster new quality productive forces and pursue high-quality development. He stressed that this commitment persists even as global climate governance encounters setbacks and some nations potentially backtrack on their pledges.

China will "encourage competitive Chinese enterprises in photovoltaics, wind power, lithium batteries and new energy vehicles to expand globally and to invest in and develop green energy projects in countries and regions involved in the Belt and Road Initiative and beyond," Li said.

Global Market Impact and Cost Revolution

China's expanding clean technology manufacturing base, which controls more than 70 percent of global capacity in major clean-tech segments, has reshaped the world's energy transition. The sheer volume of Chinese exports has made renewable energy solutions more affordable and accessible globally, particularly for emerging economies.

Over the past decade, solar panel prices have fallen to record lows, a trend largely attributed to the scale and efficiency of Chinese manufacturing, according to data from energy think tanks. For many developing nations in Asia, Africa, and Latin America, this has facilitated a faster adoption of wind and solar power, enabling a path toward economic growth and emissions reduction.

In the first seven months of 2025, China's exports of the "new three" industries—electric vehicles, solar panels, and batteries—surged to over $120 billion, an increase that reflects the rising volume of exports despite falling unit prices, according to data from the UK-based energy think tank Ember. This surge is driving a global shift, where 92.5 percent of all newly installed power capacity worldwide in 2024 came from renewable sources.

Geopolitical Friction Over Subsidies

The aggressive expansion, however, is being met with protectionist measures in Western markets. The European Union (EU) and the United States (U.S.) have raised concerns over what they describe as massive state subsidies that allow Chinese companies to export goods at prices that undercut local manufacturers.

Analysis by groups such as Bruegel and BloombergNEF indicates that extensive state backing, including direct funding and cheap credit, has created an unrivalled cost advantage for Chinese manufacturers. This competitive edge has led to acute global overcapacity in sectors like solar and batteries.

In response, the European Commission has imposed tariffs on Chinese electric vehicle imports following an investigation into unfair subsidies. Similarly, the U.S. has maintained high tariffs and introduced proposals to prohibit Chinese hardware and software in connected vehicles, citing national security concerns.

Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF, noted that while global clean energy deployment continues to surge, "overcapacity will define clean technology supply chains for years to come," and that "emerging markets will rapidly step up imports of energy transition products as prices fall further."

Ambitious Domestic Targets and Grid Challenge

The export push is underpinned by China's immense domestic climate goals, announced as part of its updated Nationally Determined Contributions (NDCs). China aims to expand the combined installed capacity of wind and solar power to approximately 3,600 gigawatts (GW) by 2035, a goal that is more than six times the 2020 level.

To achieve this goal, China would need to install new wind and solar capacity at a pace of roughly 200 GW per year. While the 3,600 GW target is widely considered ambitious on a global scale—total global capacity was around 1,400 GW at the end of 2024—some analysts argue it is conservative given the country's recent installation pace, which has exceeded 300 GW in some recent years.

The true challenge lies not just in manufacturing the equipment, but in integrating such a massive amount of fluctuating power into the world's largest electricity system. Experts at the University of California San Diego note that this will require major upgrades to grid integration, energy storage, and power market mechanisms to ensure reliability.

China's stated intention is to promote international cooperation in green infrastructure and strategically deploy future-oriented industries, including hydrogen energy, energy storage, and carbon capture, utilization and storage (CCUS), as it seeks to modernize its industrial system and maintain global influence in the clean energy sector.

By Michael Kern for Oilprice.com

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