The debate surrounding the global new energy sector is intensifying, with the United States’ accusations of “overcapacity” in China clashing with the prevailing reality of significant undercapacity in the industry.
Amidst mounting pressure to address climate change through clean energy solutions, the global landscape paints a picture of urgent need for expanded production capabilities, rather than a surplus.
The characterization of overcapacity appears puzzling when considering the innovative and technology-driven nature of the new energy industry, which embodies the accelerating trend of energy transition. This sector is still in its infancy, experiencing rapid growth, with the demand for new energy products far surpassing current global capacity.
Projections from the International Energy Agency indicate a staggering surge in demand for new energy vehicles, expected to reach 45 million by 2030, a 4.5-fold increase from 2022. Similarly, exponential growth is anticipated in global demand for new photovoltaic installations. These projections align with the consensus reached at the 28th session of the Conference of the Parties to the UN Framework Convention on Climate Change, highlighting the imperative to triple renewable energy capacity by 2030.
Of particular significance is the Sunnylands Statement on Enhancing Cooperation to Address the Climate Crisis, in which China and the United States reaffirmed their commitment to collaborative efforts in combating climate change, including support for tripling renewable energy capacity globally by 2030.
Despite assertions of overcapacity, there remains a steadfast global demand for Chinese new energy products such as vehicles and batteries, evidenced by numerous countries seeking investments from Chinese enterprises in this sector. Moreover, the robust policy support from the United States, notably through initiatives like the Inflation Reduction Act, underscores this disparity.
The escalating global demand for new energy necessitates sustained endeavors to expand production capacity, with China’s robust development of the new energy industry playing a crucial role in this endeavor. China’s rapid advancement in new energy technology, coupled with its dedication to product quality, has garnered increasing recognition both domestically and internationally.
The resilience and competitiveness of China’s new energy products are attributable to various factors, including early investments in research and development, a comprehensive industrial chain, a vast domestic market, rapidly evolving infrastructure, and robust market competition encompassing state-owned, private, and foreign entities.
Accusations of overcapacity in China’s new energy industry appear to be driven by protectionist motives. Instead of curtailing China’s capacity, the global community should strive for expanded investment and access to Chinese products to accelerate the energy transition.