Xuyang DongandTim Buckley

Opinion | Why China’s clean tech glut is a net global positive

China’s massive expansion of green technology can help the world decarbonise and decrease prices at a speed and scale required by the climate crisis

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Workers install solar panels at an energy base in Zhongwei, Ningxia Hu autonomous region, on May 9. Photo: AFP

Xuyang DongandTim Buckley

Published: 8:30pm, 22 Sep 2024

With senior American officials meeting their Chinese counterparts last week to discuss the effects of China’s manufacturing “overcapacity” on the US economy, it is worth pausing to consider both the significant benefits and concerns over Beijing’s massive and unprecedented expansion of clean energy technology.

China’s leadership across all facets of decarbonisation, including research and development, investment, manufacturing and deployment, has delivered exceptional economic outcomes at home.

According to analysis published by the Helsinki-based Centre for Research on Energy and Clean Air, 40 per cent of China’s gross domestic product growth was driven by the clean energy industry in 2023, underpinning its continued economic development domestically as the property construction sector slows.

This has global repercussions. For example, in the solar manufacturing supply chain, China accounts for 93 per cent of the global polysilicon production capacity, a key input for solar panels. Its dramatic scaling-up of production to globally dominant levels has drastically reduced polysilicon prices.

Other nations are struggling to compete. While prices for polysilicon produced outside China have remained high – at around US$21 per kg – within China, this has fallen to US$4-US$5 per kg.

Even with the domestic deployment of 123GW of new solar capacity nationwide during the first seven months of this year, China cannot absorb its current levels of production. Its resulting clean tech glut has driven continued export growth on top of astonishing price deflation of Chinese components. This is where the contention with the US lies. The latter accuses China of flooding markets with heavily subsidised products, damaging American jobs and industrial production.