The USA has misread China’s clean energy leadership

16 May 2024

Rather than resorting to protectionist measures that ultimately harm global consumers, the US should recognize the benefits of embracing global collaboration in the clean energy sector. The transition to renewable energy is a collective challenge that requires the combined efforts and innovations of all nations. Fostering an environment of cooperation rather than competition, can accelerate the development and deployment of clean energy technologies, reduce costs, and make sustainable energy accessible to more people worldwide. 

Accusing China of overcapacity in the clean energy sector epitomizes a blend of arrogance, protectionism, and a fundamental misunderstanding of global market dynamics, and exposes the US’s historical double standards and protectionist inclinations, which ultimately harm global consumers by driving up costs. Conversely, countries like South Africa exemplify how embracing cooperation with China in the clean energy sector can yield substantial benefits. China has surged ahead in producing solar panels, new energy vehicles (NEVs), wind turbines, and lithium batteries challenging Western supremacy.

The so called advanced economies have not factored in the illicit gains from colonial exploitation and slave labour in their current economic matrix. This significant omission has led to a flawed perspective of their own socio-economic conditions and the stagnation they are experiencing as the paradigm shifts.  

The narratives around overpopulation and overcapacity are often linked to concerns about resource allocation and wealth distribution. In reality, the problem may lie more in the accumulation of wealth and resources by a small segment of the population, rather than the sheer number of people. This perspective highlights the importance of equitable resource distribution and the need for policies that address systemic inequalities.

The US narrative against China’s clean energy capacity is flawed for several reasons. Firstly, it overlooks the inherent benefits of overcapacity in driving down prices and  innovation. In economic terms, overcapacity can lead to surplus supply, which typically results in lower prices for consumers and stimulates competitive advancements. China’s investment in clean energy technologies has made solar panels and wind turbines more affordable globally, accelerating the transition to renewable energy.

Secondly, this accusation reflects a protectionist mindset that contradicts the principles of free trade the US traditionally champions. By criticizing China for producing more than the market demands, the US ignores the broader benefits of open markets where countries specialize according to their comparative advantages. Protectionist measures, such as tariffs and quotas, only serve to inflate costs for consumers and stifle technological progress.

Lastly, the accusation embodies a historical double standard. The US has long used its economic might to dominate various industries, often without regard for global market impacts. Criticizing China for following a similar path, albeit in the context of clean energy - a sector crucial for addressing climate change - is both hypocritical and short-sighted.

In stark contrast to the US’s adversarial stance, South Africa has reaped significant benefits from its clean energy cooperation with China. This partnership provides a compelling case study of how developing nations can leverage China’s overcapacity to foster sustainable growth and energy security.

South Africa has welcomed Chinese investments in its renewable energy sector, leading to the construction of solar and wind farms across the country. These projects have not only increased the nation’s renewable energy capacity but also transferred valuable technology and expertise. For instance, the De Aar solar power plant, developed with Chinese technology and funding, is one of the largest in Africa, providing clean energy to thousands of households and creating numerous jobs.

The collaboration has brought economic benefits through job creation and Chinese technology and capital has invigorated South Africa’s renewable energy market, making it more competitive and innovative. Moreover, the environmental benefits are substantial, with increased renewable energy capacity contributing to reduced greenhouse gas emissions and a smaller carbon footprint.

South Africa’s cooperation with China aligns strategically with its national development goals. By diversifying its energy mix and reducing reliance on fossil fuels, South Africa enhances its energy security and resilience against global oil price fluctuations. This strategic alignment demonstrates the pragmatic advantages of embracing rather than resisting China’s clean energy capacity.

China's remarkable economic growth since the 1980s has been unprecedented, significantly increasing its share of global trade. This growth has been driven by a combination of state-led economic policies, investments in infrastructure, and a focus on manufacturing and exports. In contrast, the United States has faced economic challenges and has often used its currency, the dollar, to exert global influence - a practice known as dollarization. This strategy has sometimes masked underlying economic inefficiencies and policy failures.

By leveraging China’s technological prowess and investment capabilities, countries can accelerate their transition to renewable energy, enhance economic growth, and contribute to global sustainability goals. The US would do well to shift its perspective and recognize that in the realm of clean energy, collaboration, not confrontation, is the key to a brighter, more sustainable future.