There is something odd about the debate about China’s “overcapacity.” Europe says that the world needs a cheap and fast supply of clean energy he complains while China produces the solar panels, wind turbines, batteries and electric vehicles that make it possible.
Bruegel, a Brussels-based think tank specializing in economic policy, recently published a working paper, “To what extent could green infrastructure investment reduce China’s ability to use clean energy?” It says that China’s industrial policies made it so international leader in renewable technologies but at the cost of overcapacity, price fluctuations and weak profits.
China has huge production capacity, but it has also taken renewable energy home at an incredible pace, and exports have increased because prices are attractive. The question is not just whether China is producing too much. That is why the same level can be seen as a threat to some economies, an opportunity of the climate by others, and both at once by some.
A recent South China Morning Post opinion piece made a related point: China may be a perceived pressure, but not necessarily a real problem for Europe. Europe’s deep difficulties stem from competition, investment, energy costs, technology gaps and the inability to turn protectionist measures into industrial renewal.
The survey applies beyond Europe. China’s cleantech expansion has been remarkable. His companies have cut costs in solar, wind, batteries and electric vehicles. Cheap solar panels it’s not a weather problem; they are part of the climate solution. Many developing countries may find decarbonisation more difficult at Western production costs.
However, China’s success is causing discomfort. Other economies are seeing producers squeezed, worried that strategic industries will disappear, and fearing a single country’s dependence on future technologies. These fears are understandable. But it is not proof that China has violated any settled international norm.
