By Ambassador Yin Chengwu
Recently, some people claims that China has used government subsidies to create overcapacity in electric vehicles and other new energy sources. In order to absorb the overcapacity, China has dumped its products overseas at so-called low prices, distorting market prices and harming the economies of other countries. None of this could be further from the truth.
- No overcapacity in China’s new energy production
‘Overcapacity’ is an economic concept that means the production capacity of a particular industry exceeds the market demand, resulting in an imbalance of demand exceeding supply as a performance of the market mechanism.
The global new energy products are not a serious surplus, but far from enough. At present, the United States new energy vehicle penetration rate is only 9.3% and Europe’s penetration rate has long hovered around 20%, while China’s new energy vehicle penetration rate in 2023 has reached 31.6%. According to the International Energy Agency’s calculations, if all countries that have announced the ‘Net-Zero Emissions’ commitment to fulfill their commitments on time, the global demand for new energy vehicles in 2030 will be 45 million, 4.5 times the 2022. The global demand for new photovoltaic installations will reach 820 gigawatts, about 4 times the 2022. According to the growth rate of the current global new energy capacity development, it is very far from meeting the future market demand.
Demand for home-grown new energy vehicles continues to grow in the Chinese market. By 2023, China has 435 million vehicles, of which new energy vehicles and pure electric vehicles account for just 20.41 million and 15.52 million respectively. That’s just a relatively small share. Therefore, the global new energy production is not overcapacity, and China’s new energy production is also unlikely to be overcapacity.
- China’s new energy products do not rely on subsidies
China is an early mover in the new energy industry, with strong industrial support covering all aspects, from the supply of raw materials, manufacturing of components, assembly of complete machines, to after-sales service. With a population of more than 1.4 billion and 240 million college-educated people, China offers an extremely large and high-quality labor market for the new energy industry.
In recent years, China’s new energy vehicles, lithium batteries and photovoltaic products exports exceeded one trillion yuan. As of 2023, China’s new energy vehicle production and sales for nine consecutive years the world’s first, more than half of the world’s lithium battery exports from China and China’s new installed capacity of photovoltaic power generation of 2023, equivalent to the world’s 2022 annual capacity. Such remarkable industrial advantages are shaped by long-term investment in scientific research and appropriate market competition. It is the result of the international division of labor and market demand, and cannot be created by government subsidies.
- China is not disrupting international markets
China’s new energy products are primarily supplied to the domestic market and are not exported on a large scale. In 2023, China’s new energy vehicles accounted for 87.3% of the domestic sales volume and only 12.7% of the export volume. The three Chinese vehicle companies involved in the EU’s anti-subsidy investigation accounted for only 1.1% of the European market. And the average price of Chinese electric vehicles in Europe is more than 31,000 euros, which is double the domestic price of China’s, so there is no so-called ‘low price dumping’.
- The propaganda about China’s ‘overcapacity’ is malicious
Some countries distort the meaning of ‘overcapacity’ and generalize the concept of ‘national security’, which essentially targets China’s advantageous industries and curbs China’s development. In the eyes of some people, China’s cranes, smart cars are ‘spy weapons’. Steel, aluminum, ceramics, ships, new energy and other industries all have ‘overcapacity’. China has posed a security threat to them in key core and advanced technologies such as semiconductors, artificial intelligence, supercomputing and biomedicine.
Promoting the green and low-carbon transformation of the global supply chain has become a global consensus. While some countries cannot ask China to shoulder emission reduction responsibilities that are incompatible with its developing country status, and are ‘selectively blind’ to the contribution of China’s new energy products to global emission reduction. This essentially disregards the rights of the vast number of developing countries to enjoy the fruits of green technological innovation and catch up with the trend of green transformation.
- Promoting new energy cooperation between China and Liberia
Today, one of the world’s greatest challenges is to ensure energy security and combat global climate change. Liberia is highly dependent on fossil fuels to supply energy, but it is rich in solar energy resources and has great potential to develop clean energy industry. China is willing to work with Liberia to carry out practical cooperation in relevant fields, share China’s high-quality new energy production capacity with Liberia and promote the photovoltaic industry in Liberia, so as to jointly respond to the challenges of global climate change, contribute to the sustainable development goals and the ARREST agenda put forward by President Boakai for the welfare of Liberian people.
As President Xi Jinping said, ‘Inclusiveness, shared benefits and win-win outcomes are what we should pursue.’ China will only open its door wider to the outside world, and the pace of development of the new energy industry will not stop. We also hope that all countries will make the right choice and not step back into the river of protectionism again.
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