China's new energy industry propels global green development

Under the guiding principles of green development, China's new energy industry has rapidly evolved into a technologically advanced and competitive sector. This transformation has been driven by years of independent technological innovation, supply chain integration, and meticulous cost control, resulting in significant scale, cost, and supply chain advantages. Today, China's new energy products are emerging as highly competitive market hotspots and favored exports, marking a new economic growth point. In a world increasingly embracing low-carbon lifestyles, green industries characterized by high technology, high added value, and environmental sustainability are flourishing.

The success of China's new energy sector stems from the country's proactive adjustments to its economic development model, the implementation of ecological civilization concepts, and the fulfillment of its commitments under the Paris Agreement. However, recent claims by some U.S. politicians regarding "China's new energy overcapacity" are misleading. The true capacity of an industry is determined by global supply-demand dynamics, international development plans, and methods—not the subjective opinions of a single nation. Far from having overcapacity, China's new energy industry boasts extensive application potential and development prospects, capable of meeting global market demands and advancing low-carbon transformation and green development worldwide.

Global Market Demand

China's new energy industry is beneficial globally, addressing the needs of a world still heavily reliant on fossil fuels. Most countries, due to the uneven geographical distribution and reserves of fossil energy, depend on long-term imports.

Developing countries, constrained by industrialization levels, R&D investments, and technical capabilities, lag in energy production, consumption, and structural optimization. China's advanced technology and capacity in the new energy sector can assist these countries in optimizing their industrial and energy structures, reducing environmental damage, lowering production costs, and achieving leapfrogging green and sustainable development.

Developed countries, now focused on upgrading their energy structures and protecting ecological environments, face limitations despite having advanced technological capabilities. They lack significant advantages in raw materials, supply chains, production costs, and profitability. As their demand for new energy solutions surpasses self-sufficiency, China's new energy industry presents substantial application opportunities and market potential.

Green Low-Carbon Trends

Global development strategies are increasingly prioritizing energy transition and green low-carbon growth. The European Union (EU), for instance, has implemented various policies such as the European Energy Supply Security Strategy, Lisbon Strategy, European Energy Policy, and more, forming a comprehensive plan focused on energy supply security, energy conservation, and economic development. The EU's commitment to renewable energy has led to significant milestones, such as the historic contribution of wind and solar energy surpassing fossil fuels in power generation in May last year.

Japan and the U.S. have similarly incorporated new energy development into their national strategies. Japan aims to diversify its energy sources through continuous innovation, while the U.S. emphasizes energy security, economic growth, and climate change mitigation, viewing the new energy industry as a critical component of economic growth and competitiveness.

The 28th United Nations Climate Change Conference in December underscored the urgency for accelerated climate action and full implementation of the Paris Agreement. The consensus highlighted the irreversible trend towards low-carbon transformation and green development, areas where China's new energy industry can significantly contribute by enhancing global energy supply and supporting the achievement of emission reduction commitments.

High-Quality Growth

Most countries are transitioning from high-speed quantitative growth to high-quality development, with low-carbon and green initiatives as essential pathways. For China, and other developing nations in transitional phases, moving away from resource-intensive, high-energy consumption models towards sustainable, high-quality development is crucial. The new energy industry plays a pivotal role in this transition, offering high-quality products that promote global green development and meet market demands.

In summary, from the perspectives of global market demand, national development planning, and economic development logic, the new energy industry, as an emerging and sunrise industry, has broad application space and market potential. Foreign research shows that industrial indicators such as capacity utilization, inventory, and profit rates do not indicate overcapacity in China's new energy sector. China's new energy industry not only offers a good energy substitution scheme for the world, increasing and enriching energy supply but also stimulates new market demand. In the future, China's new energy industry has vast potential for development, capable of boosting the global low-carbon energy transition, promoting green development, and helping achieve the goals of the Paris Agreement.

Embracing Cooperation

Recently, some U.S. politicians have fabricated the so-called "China's new energy overcapacity" theory to discredit and suppress China's new energy industry, distorting public opinion, seeking supply chain decoupling, and attempting to obstruct demand. This fallacy is a protectionist shield against China's strong global competitiveness in new energy under the guise of declining U.S. hegemony, hollowing out of domestic manufacturing, high R&D and production costs, and low profit margins. The argument that "more exports mean overcapacity" violates basic international trade principles. The theories of absolute advantage, comparative advantage, new production factors, and dynamic trade best explain the strong international competitiveness of China's new energy industry.

Furthermore, the arguments that China's new energy products rely on domestic subsidies, overcapacity leads to unfair competition, and they distort the global market, ignore the industry's independent innovation and development efforts, reflecting a double standard and malicious slander. For a long time, the industrial products of the U.S., Europe, and Japan have monopolized the world market, with their exports forming huge trade surpluses. The U.S. Inflation Reduction Act, providing $369 billion in subsidies for electric vehicles, batteries, and renewable energy projects, exemplifies policies that distort global markets through subsidies. This act increases inflation risk, hinders global resource optimization, and interferes with climate change efforts.

In essence, the so-called "China's new energy overcapacity" theory promoted by American politicians is a variant of the "China threat theory," reflecting the declining industrial competitiveness of the U.S. This theory will inevitably fade with global development trends. Industry rise and development are rooted in market supply-demand relationships, national development plans, and fair trade practices. Suppressing a country's industry through political and public opinion tactics will ultimately fail against market economy principles and international trade rules.

Lighting the lamp of cooperation and taking the road of win-win is the right way of development.

Article contributed by Jin Yingji, Special Research Fellow at the Research Center for Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, Chinese Academy of Social Sciences, and Associate Research Fellow at the Institute of Asia-Pacific and Global Strategy, Chinese Academy of Social Sciences

Translated by Wang Xinyuan