How China Became the World’s Clean Tech Giant

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How China Became the World’s Clean Tech Giant

Analyzing China’s dominance in the wind, solar, and electric vehicle sectors.

How China Became the World’s Clean Tech Giant

In this file photo taken Saturday, Oct. 10, 2015, a bus moves past solar power and wind power farms in northwestern China’s Ningxia Hui autonomous region.

Credit: AP Photo/Ng Han Guan, File

China’s clean energy sector was the biggest driver of its GDP growth in 2023, contributing 40 percent (around $1.6 trillion) of its economic expansion. The country’s commitment to renewable energy is underscored by its substantial investments in the industry.

Take the solar sector as an example. Chinese investments in new photovoltaic (PV) supply capacity over the last 10 years exceeded $50 billion – ten times more than all of Europe. This investment surge has strengthened China’s energy independence and promoted substantial job creation, with over 300,000 manufacturing jobs across the solar PV value chain added since 2011. China now commands over 80 percent share in all manufacturing stages of solar panels, from polysilicon to modules, solidifying its global leadership in solar energy.

Moreover, China’s wind power sector continues to expand, evidenced by the addition of 37 gigawatts (GW) in wind capacity in 2022, including significant growth in offshore farms.

Notably, China’s dominance also extends to the electric vehicle (EV) market. China accounted for nearly 60 percent of global new electric car registrations in 2022. China’s electric cars comprise 29 percent of total domestic car sales, surpassing the 2025 national target well ahead of schedule. The country’s ambitious renewable energy targets outlined in the 14th Five-Year Plan further signal a sustained drive toward cleaner energy solutions.

This piece delves into China’s dominance in three domains: wind power, solar PV technology, and electric and hybrid electric vehicles (EVs and HEVs). It explains how China’s blend of policy initiatives, targeted investments, technological collaborations, and robust in-house research and development (R&D) efforts has propelled the country to the forefront of global renewable energy production and sustainable transportation innovation.

Wind Power

China’s wind power sector has seen remarkable growth since its inception in the mid-1980s when it began importing turbines from Europe. Over time, China has emerged as the world’s largest wind power market, with the country’s manufacturers supplying nearly 60 percent of installed capacity worldwide in 2022, achieved in part due to its more than 40 domestic wind turbine manufacturers.

Particularly notable is the rapid rise of Chinese companies such as Sinovel, Goldwind, and Dongfang, which transitioned from not being in the global top 10 in 2006 to becoming key players by 2009. This transformation was facilitated by strategic partnerships with foreign technology firms, initially through licensing agreements that evolved into co-design relationships as Chinese companies developed their in-house design capabilities.

This unconventional strategy succeeded because foreign technology partners were not manufacturing competitors but specialized technology design houses achieving new business ventures through co-design relationships. By leveraging unconventional transfer strategies and engaging in co-design processes with foreign partners, Chinese firms were able to produce turbines comparable in size and sophistication to global competitors’ offerings. Additionally, strategic acquisitions such as Goldwind’s purchase of German Vensys contributed to building strong overseas R&D capabilities.

Furthermore, government support in the form of R&D grants has enabled Chinese manufacturers to invest significantly in in-house research and development, leading to innovations such as Sinovel’s 5 MW offshore turbine and the establishment of specialized R&D centers like Sinovel’s National Offshore Wind Power Technology and Equipment R&D Center. While local technology agreements with local centers of excellence have not played a significant role for national champions, other Chinese companies have benefitted from such partnerships, contributing to the overall advancement and competitiveness of China’s wind power sector on the global stage.

As a result, according to the Global Wind Report 2023 China accounted for 60 percent of global wind turbine manufacturing capacity in 2023, with Europe in a distant second at 19 percent and the U.S. trailing even farther behind at 9 percent.

Solar PV Sector

China’s solar photovoltaic sector has likewise undergone a significant evolution, transitioning from component supply to production of complete panels and becoming the world’s largest producer of solar PV cells.

Made with Flourish

This transformation has been driven by a strategic focus on export-oriented technological upgrading, with Chinese companies capturing a more than 80 percent share of the global PV export market in 2023. While initially reliant on foreign markets, the domestic market has also grown due to substantial subsidies, accounting for 50–70 percent of total solar PV investments.

By 2009, three Chinese national champions, including Suntech Power, had secured positions in the global top 10 for PV sales through a combination of local and international technology integration. Suntech Power, for instance, leveraged a mix of local and international technology transfers. The company developed world-class technological expertise by combining in-house R&D with various mechanisms – licensing, a joint venture, overseas FDI and acquisitions, collaboration with the University of New South Wales, and partnerships with research institutions such as Sun Yat-sen University and Shanghai University of Technology.

Similarly, Trina Solar and Yingli Solar have adopted comprehensive R&D strategies supported by government initiatives like establishing state key laboratories and collaborating with key suppliers, local universities, and renowned international research institutions like MIT in the United States and Australia National University. These companies have expanded their global footprint through acquisitions and overseas R&D centers, enhancing their technological capability and competitiveness in the global solar PV market.

Electric and Hybrid Electric Vehicles Sector

China has implemented favorable policies to position itself as a leading plug-in hybrid and electric passenger vehicle producer. From 2009-2022, China’s government devoted more than 200 billion yuan ($28 billion) to subsidies and tax breaks for the EV industry. China already holds a prominent position as the top producer of rechargeable batteries, a crucial technology within the electric vehicle supply chain.

China’s electric and hybrid electric vehicle sector has seen notable instances of conventional technology transfers, particularly evident in the establishment of joint ventures. These ventures were primarily driven by a market pull due to stringent emissions standards, surpassing those of the United States, and government regulations mandating Chinese majority share joint ventures for foreign auto companies. SAIC Motor, China’s largest auto manufacturer, has forged joint ventures with a U.S. lithium-ion battery company and Volkswagen, along with setting up collaborative facilities for developing hybrid and all-electric vehicle technologies with General Motors. SAIC has also expanded its international presence through overseas R&D efforts, such as acquiring a U.K.-based company. Similarly, other companies like Chery Auto have focused on in-house R&D efforts to develop electric and hybrid vehicles, especially in the small-car segment.

Build Your Dreams (BYD), a Chinese electric vehicle manufacturer, has taken a distinct approach by acquiring a local car manufacturer and heavily investing in in-house R&D to integrate its lithium-ion battery technology with car manufacturing. BYD’s strategy of localized innovation led to the introduction of the first plug-in hybrid electric vehicle in 2008. Building upon its in-house innovation platform, BYD has now established a joint venture for R&D, combining Daimler’s car platform with BYD’s battery and electric motor technology to co-design electric vehicles under a joint brand.

This blend of policy support, strategic partnerships, and in-house innovation has positioned China as a major player in the global EV and HEV market. The same model made China into the global champion of wind and solar supply chains.