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‘Overcapacity’ claim masks anxiety over China’s green edge

2026-08-24 16:48   China Daily

  Much of China's manufacturing strength has been built through years of intense domestic competition, investment and technological upgrading. This is particularly evident in EVs, lithium batteries and photovoltaic equipment, where companies compete fiercely on price, technology, quality and speed of commercialization.

  China's EV industry, for example, rests on an extensive industrial ecosystem covering critical mineral processing, batteries, motors, electronic control systems, vehicle manufacturing and charging infrastructure. Close links between suppliers and manufacturers have shortened development cycles, lowered costs and enabled companies to respond quickly to changes in demand.

  Technological progress has reinforced these advantages. Chinese battery producers have made advances in lithium iron phosphate batteries, battery integration and safety, and solar manufacturers have continuously improved photovoltaic technology and production efficiency. Large-scale manufacturing has further reduced unit costs and made new technologies more affordable.

  These are characteristics of industrial competitiveness, and don't necessarily point to examples of market distortion.

  Government policy has undoubtedly played a role in China's industrial development. But industrial policy is hardly unique to China. The US has committed hundreds of billions of dollars in incentives for clean energy, EVs, batteries and other strategic industries, including measures favoring production in the US or North America. European governments and institutions have similarly provided extensive support for renewable energy, batteries and advanced manufacturing.

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