China to Maintain Dominance in Global Green Tech Industry Despite US and EU Policies
China is expected to continue dominating the global green tech industry well into the 2030s, despite efforts by the US, EU, and other advanced economies to promote their domestic supply chains. According to a study by the Economist Intelligence Unit (EIU), China’s lead in areas such as solar, wind, and battery technology will ensure its position as a key supplier for the technologies driving the green transition for at least the next decade.
The US Congress passed the Inflation Reduction Act last year, which has been hailed as a game-changer in global climate policy. The act provides subsidies for the green industry and incentivizes domestic sourcing of raw materials and equipment to establish the US as a leader in clean energy supply chains. Following suit, various developed countries, including the EU and Australia, have approved similar legislations to enhance their own green tech industries and protect their competitiveness.
While these subsidy programs may catalyze the development of the green tech industry and create domestic jobs, they are unlikely to change the current global supply chain dynamics in which China holds a significant advantage. The relocation of businesses locally will inevitably increase the costs of solar panels and other mass-produced green commodities. Incentivizing firms to buy domestic components to access green subsidies will raise project costs, contributing to producer price inflation and potentially reducing the amount of infrastructure that can be produced with the available funding.
China currently maintains a disproportionate share of green manufacturing, accounting for over 75% of global electric vehicle battery production and dominating the downstream supply chain from mining to manufacturing. Additionally, China accounts for more than 60% of global solar photovoltaic modules manufacturing capacity and is the largest manufacturing hub for wind energy components. Moreover, China’s position as the world’s largest EV market and its ambitious carbon-neutral goal further solidify its lead in the global green tech manufacturing supply chain.
However, as more countries implement policies to protect their domestic industries and as rapid advancements in energy transition technologies reshape the raw materials landscape, other countries may have the opportunity to compete in the global supply chain. With diversification in global wind companies and advancements in battery technologies, countries with strong green industrial policies can potentially play a more dominant role globally, according to experts.
It is important to note that while China’s current dominance in key green tech supply chains is unlikely to be replaced entirely, it is highly probable that its degree of dominance will decrease as other economies increasingly engage in the competition.
In conclusion, China’s stronghold on the global green tech industry is expected to persist for the next decade, despite efforts by the US, EU, and other advanced economies to boost their domestic supply chains. While their subsidy programs may drive industry development and create jobs domestically, they are unlikely to shift the current supply chain dynamics. However, as the global landscape evolves and policies continue to change, there is potential for other countries to compete in the green tech supply chain, although China’s current dominance is expected to endure for the foreseeable future.
