Is China dumping obsolete capacity or contributing to global growth?

Editor's note: Recently, some Westerners have been making noises about China's "overcapacity," accusing the country of "flooding" the global market with cheap products and "distorting" the market rules. Is there overcapacity in China? Is the export of Chinese products an attempt to digest obsolete capacity or to revive the global economy? Will anti-China policies protect or harm Western industries? CGTN has introduced a six-part series "Debunk China's overcapacity fallacy" to analyze these matters. The fourth essay discusses whether China is dumping obsolete capacity to the rest of the world. Alexander Ayertey Odonkor, a special commentator on current affairs for CGTN, is a global economist with a keen interest in the social, environmental and economic landscape of both developing and developed countries, particularly in Asia, Africa and Europe. The article reflects the author's opinions and not necessarily the views of CGTN.

The U.S.-led West has, on several occasions, accused China of dumping "obsolete" capacity, which is "distorting" the global market and "threatening" Western enterprises. Blaming the country for stoking industrial "overcapacity" particularly in the green industry, the European Commission launched an anti-subsidy investigation into imports of battery electric vehicles from China last October.

Western allegations of China's "overcapacity" are groundless. Instead of dumping "obsolete" capacities elsewhere in the world, China's exports of high-quality productive forces have desirably met global demands and contributed to the world's growth.

At least over the last decade, China's clean energy sector has witnessed an enhanced and consistent push to advance research and development (R&D) – the primary driver of technological innovation and productivity. These efforts explain the country's rapidly growing technological progress, enhanced productivity, and increased competitiveness in large-scale deployment of green technologies.

Home to the world's top filer of international patents, China ranks among the top in clean energy R&D. A report from Dutch information and data analytics brand Elsevier, annual patent publications for net-zero clean energy technologies have witnessed exponential growth since 2008, driven mainly by China.

The report further shows that of the top 10 countries globally, China was home to the largest patent portfolio in carbon-free technologies by 2015, after surpassing Japan in 2014 and the United States in 2012. By the end of 2020, nearly 50 percent of all active global patents related to carbon-free technologies originated from China.

By remaining the global leader in green tech R&D and continuously learning and adapting to the constantly evolving demands of domestic competition and international markets, China has enhanced its competitiveness in the global market space – contributing significantly to global climate action. 

Data released by the National Energy Administration (NEA) show that in 2023 China single-handedly contributed more than 50 percent of the total 510 gigawatts of newly-installed renewable energy capacity around the world. Over the last decade, China has exported various green tech products including wind and photovoltaic equipment to over 200 countries and regions worldwide, contributing to strengthening global response to climate change.

A report from BloombergNEF shows that global spending on the clean-energy transitions reached a record $1.8 trillion in 2023, up 17 percent year-on-year, driven largely by China. Global spending on clean-energy transition last year which includes investments to install renewable energy, build hydrogen production systems, buy electric vehicles and deploy other green technologies will not suffice to get on track to net-zero emissions – the world should be investing more than twice as much in clean technology in order to achieve net-zero emissions by mid-century.

In the case of electric vehicle (EV) sales, demand for EV batteries is also set to grow quickly. In its Global EV Outlook 2024, the International Energy Agency (IEA) forecast that by 2030, EV battery demand will grow four-and-a-half times, and nearly seven times by 2035 compared to 2023.

According to the International Energy Agency, China's contribution has been central in reducing costs globally for solar photovoltaics, with multiple benefits for clean energy transitions. China's investment in new photovoltaics supply capacity is 10 times more than Europe’s and has created more than 300,000 manufacturing jobs across the solar panel photovoltaics value chain since 2011.

These reports clearly suggest accusations leveled against China are misguided. China is not dumping obsolete capacity. Rather, the country is striving to meet global needs by investing in high-quality productive forces.

At this critical juncture, where most countries have limited or no green tech production capacities at their disposal to accelerate clean-energy transition yet face increasing intensity and frequency of climate change, one of the world's foremost priorities presently should be to scale up international efforts to ensure green tech products are available and affordable worldwide.

Considering the instrumental role played by China in enhancing global climate action, together with the fact that the current global clean energy supply is still not enough to get on track to net-zero emissions by mid-century, it is imperative for the U.S. and EU to strengthen cooperation with relevant organizations and countries including China, rather than embark on protectionist measures that impede global climate action.

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