• $100B Investment Surge: Chinese firms have invested over $100 billion in overseas cleantech projects since 2023.
• Tariff Avoidance Strategy: Investments are aimed at bypassing tariffs imposed by the U.S., Canada, and the EU.
• Global Market Dominance: China controls a significant share of global production in electric vehicles, lithium batteries, and solar panels.

Chinese companies have poured over $100 billion into overseas clean energy technology projects since the start of 2023, according to research by Australian group Climate Energy Finance (CEF). The investments aim to avoid heavy tariffs imposed by the U.S., Canada, and the European Union, as Chinese firms continue to dominate global production in key cleantech sectors.

China’s Market Control

China leads global production in electric vehicles, lithium batteries, and solar panels:

• Electric Vehicles: Accounts for 32.5% of global exports.
• Lithium Batteries: Holds a 24.1% share.
• Solar Panels: Controls a staggering 78.1% of the market.

This dominance, however, has raised concerns that Chinese firms are using surplus capacity to flood markets, drive down prices, and undercut competitors.

Avoiding Tariffs

The U.S. and Canada have imposed 100% tariffs on Chinese-made electric vehicles, while U.S. imports of Chinese solar panels and lithium batteries face tariffs of 50% and 25%, respectively. In response, Chinese companies are investing heavily overseas to set up manufacturing facilities and avoid these trade barriers.

“The investments from Chinese private companies are largely driven by the need to circumvent trade barriers,” said Xuyang Dong, CEF analyst and co-author of the report.

Strategic Moves

Leading companies such as BYD and CATL are already taking steps to bypass restrictions:

• BYD: Building a $1 billion plant in Turkey to preempt a potential 40% EU tariff.
• CATL: Expanding with new factories in Germany, Hungary, and other locations.

Long-Term Implications

According to a separate report by the Grantham Institute, two-thirds of China’s cleantech capacity will exceed domestic demand by 2030, pushing the country to seek more export markets. Total solar production capacity is projected to hit 860 gigawatts by that time.

Chinese officials have criticized the tariff hikes, warning they could hinder global efforts to combat climate change.

“Decoupling from Chinese manufacturing could raise the global energy transition bill by 20%,” cautioned senior Chinese climate envoy Liu Zhenmin.

The ongoing trade tensions highlight the complex interplay between global climate goals and competitive market dynamics, as China continues to expand its influence in the cleantech industry.