The influx of affordable Chinese-made green products could squeeze local industries in major economies, especially the United States and Europe, driving down prices and stifling domestic innovation due to competitive disadvantages.
China's unprecedented expansion of green technology exports, including solar photovoltaics (PV), lithium-ion batteries, and electric vehicles (EVs), is dramatically reshaping global markets and prompting strategic shifts in international trade and policy considerations. We are promoting it. In 2023 alone, the value of these exports will surge to an astonishing $150 billion, an increase of 650% from $20 billion in 2017, 68% for electric vehicles, 74% for lithium batteries, and 86% for global production markets. China occupied a large market share, solidifying China's superiority. In solar cell modules, This was revealed in a recent report by the Griffith Asia Institute in Australia.
“China's advantages in these three areas are due to its highly integrated value chain, rapid innovation, industrial synergies, economies of scale, and the ability of Chinese producers to become leaders in both affordability and technology. is unlikely to be challenged, thanks to continued government support that makes it possible to do so,” Jing Zhang and Christoph Nedopil report in their Griffith analysis. But they warn that escalating trade disputes could disrupt these trends and force Chinese manufacturers to set up production facilities overseas. As an example, Chinese manufacturers are poised to establish around 400 GWh of battery production capacity in Europe, accounting for almost a third of Europe's total production capacity.
This surge has had a major impact on major countries, particularly the US and Europe, which are currently grappling with the effects of saturation in the Chinese market. The influx of affordable Chinese-made green products could squeeze local industry, drive down prices, and stifle domestic innovation due to competitive disadvantages.
In response, both the US and European governments are considering tough measures to protect local industries. These include increased tariffs, anti-dumping and anti-subsidy investigations, and strict regulations aimed at curbing the influx of Chinese goods. Europe, which absorbed $66.7 billion worth of these exports in 2023, is at the forefront of this policy shift, driven by the need to balance market protection with green transition goals.
Strategic responses include not only protective tariffs, but also a deeper reassessment of supply chain dependencies and industrial policy. There is a growing consensus in Western countries that building local capacity in green technologies is not only a matter of economic security, but also important for maintaining long-term industrial competitiveness. Geopolitical influences are equally important. The scale of China's exports is seen as not just an economic challenge, but a strategic maneuver within the broader context of global power relations. This led to diplomatic engagement, including discussions between US Treasury Secretary Yellen and German Chancellor Scholz with Chinese officials, which focused on the need to address market overcapacity and ensure fair trade practices. .
For India, this situation is both a challenge and an opportunity. The availability of cheap Chinese green technology could put competitive pressure on Indian manufacturers and weaken the nascent local industry. But it also provides enhanced access to advanced technologies that could accelerate India's renewable energy efforts and the adoption of electric vehicles, in line with ambitious climate change goals.
In the future, the global trade landscape in green technology may take a new direction. With integrated supply chains and government support, China's dominance in these areas appears to be strong, but opposition from major powers could increase and lead to a polarization of global markets. Western countries could accelerate efforts to decouple Chinese supply chains in strategic areas, invest heavily in domestic capabilities, and form new trade alliances that align with their economic and security interests.
This situation is poised to redefine the terms of trade and cooperation in the field of green technology, with significant implications for the future of global economic stability and sustainable development. The consequences of these changes are likely to ripple across global markets, impacting future economic policies, trade relations, and international cooperation in the burgeoning field of green technology.
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