Tongwei now has even grander ambitions: It is rapidly expanding and upgrading six production facilities and, by the end of this year, aims to churn out 130 gigawatts’ worth of cells annually — four times the total solar capacity installed in the United States in 2023.
China — through solar companies like this — will be without doubt the “main force leading the global energy transition,” said Liu Hanyuan, Tongwei’s founder and chairman.
Tongwei encapsulates how China has come to dominate global clean technology markets. China produces 80 percent of the world’s solar panels — compared with the United States’ 2 percent — and makes about two-thirds of the world’s electric vehicles, wind turbines and lithium-ion batteries.
That may be good for the Earth, which desperately needs to move away from fossil fuels to slow global warming.
Climate activists hope that China’s surging investments in clean technology will soon tip the balance and stop the country’s emissions of carbon dioxide — which are nearly double those of the United States — from rising any further. Last year, China installed more solar panels than the rest of the world combined.
But China’s overwhelming dominance has alarmed officials in the United States and in Europe, who say they are worried that a flood of cheap Chinese products will undercut their efforts to grow their own renewable energy industries — especially if the Chinese companies have what they consider an unfair advantage.
Treasury Secretary Janet L. Yellen, who is expected to soon make her second visit to Beijing in less than a year, said in a speech Wednesday that she will press China to address “excess capacity” — including in solar, electric cars and batteries — that “distorts global prices” and “hurts American firms and workers.”
Combined, this raises the specter of another trade war, one that activists say could pit protectionism against planet.
Green tech grows as economy slows
China’s metamorphosis into clean tech giant was ordered from the very top. Leader Xi Jinping made supporting “essentially green” industries a priority last month as he tries to stop the world’s second-largest economy from slowing.
Clean energy is a bright spot in an otherwise gloomy economic outlook: China’s exports of electric vehicles, lithium-ion batteries and solar products soared 30 percent to $146 billion last year. BYD overtook Tesla in 2023 to become the world’s top-selling electric-car maker.
This helped make the renewable energy industry the biggest contributor to the country’s economy, ahead of every other sector, according to the Center for Research on Energy and Clean Air, a think tank.
That shift has come about thanks in no small part to state support. For over a decade, Beijing has used measures including subsidies and tax breaks to create dozens of huge conglomerates that dominate sustainable energy industries.
The Tongwei facility, toured by The Washington Post, is 15 percent owned by two of Chengdu city’s state-run investment companies. In the first nine months of last year, the company reported being subsidized with $125 million by the state, a 240 percent rise from 2022.
This has led to saturation in the domestic market — a good thing, climate activists say, as the world’s largest polluter transitions to renewable energy — after manufacturers churned out electric cars, batteries, solar panels and wind turbines faster than China needs.
That has forced them to search for profits overseas, where there are more buyers willing to pay higher prices.
This, critics say, could push American and European competitors out of the global market.
Western governments have expanded investigations into unfair Chinese trade practices like subsidies and dumping.
Yellen will hammer home this message in her upcoming visit. This month, the European Commission said it found sufficient evidence of subsidies boosting Chinese electric-vehicle exports and warned it will probably raise tariffs later this year. This came after Ursula von der Leyen, the European Commission president, warned of a “race to the bottom” in clean tech amid alleged unfair competition by Chinese firms.
With the trade temperature mounting, Beijing has begun accusing Western governments of trying to hobble its most advanced companies — part of what it sees as a broader campaign to keep China down.
Concerns about Chinese exports are “nothing more than an effort to hold back China’s industrial upgrade and to use unfair means to protect the vested interests of certain Western countries,” the official Xinhua News Agency stated in a recent article.
Liu, the Tongwei chairman, also urged an end to “protectionist measures.”
China’s solar industry has “comprehensively overtaken” Europe and the United States, he said in written answers to questions from The Post after declining an interview. It is “not really realistic” for the world to reach net zero carbon emissions by the middle of the century without embracing Chinese manufacturing, he wrote.
China’s defensiveness is spurred by a sense that its big bet on low-carbon technologies was just starting to pay off.
“From a Chinese perspective, their industrial policy really worked,” said Nis Grünberg, a researcher at the Mercator Institute of China Studies, a Berlin-based think tank. “Now they are starting to hit walls.”
Beijing could revert to economic retaliation
This could mean China will now turn to its “well-rehearsed playbook of pressure and evasion,” said Yanmei Xie, an analyst at Gavekal, a research firm.
It turned to that playbook in the 2010s during solar panel trade disputes to keep trade barriers low, and it has threatened more recently to restrict critical minerals like graphite, a metal needed to power electric vehicles.
These worries are most acute for solar energy, which scientists predict will be the world’s leading source of energy by the middle of the century. China controls over 80 percent of manufacturing and makes over 95 percent of the world’s silicon wafers, a key component.
But breaking China’s near monopoly on parts of the renewable energy supply chain won’t be easy or cheap.
Rich nations will need to spend about $6 trillion between 2023 and 2050 to create viable alternatives to Chinese clean tech products, according to Wood Mackenzie, a global energy consultancy.
That’s because Chinese companies already have such a big head start in creating well-integrated supply chains and have gained a significant foothold in international markets.
While the United States has been able to maintain its global lead in critical technologies like semiconductors by focusing on advanced research, this approach doesn’t apply to renewable energy, said Ilaria Mazzocco, an expert on Chinese industrial policy at the Center for Strategic and International Studies, a think tank.
The main way to gain an advantage in clean energy is to scale up and cut costs, which “really plays to China’s advantage,” she said.
There are, however, some signs of bloat in the sector. Longi, another of China’s largest solar companies, is reportedly planning to slash its workforce by 30 percent. The company told The Post prices are falling because of “excessive competition” and “huge new investments and rapid increases in production capacity.”
But Beijing appears unlikely to take its foot off the renewable gas any time soon, Mazzocco said. “China is going to fight to maintain its dominance by lowering the cost and expand manufacturing capacity within China.”
Vic Chiang and Pei-Lin Wu in Taipei, Taiwan, contributed to this report.
