Despite trade tensions, China holds lead in clean energy manufacturing

China's role as the world's leading clean energy manufacturer remains intact despite rising trade tensions and shifting climate policies, thanks to its broad export base, cost competitiveness and technological edge, according to the latest analysis from Moody's Ratings.

While new US tariffs could push companies to diversify their supply chains, China's entrenched position in the market "limits the pace at which companies can shift away", Moody's Ratings said in an infographic released on Tuesday.

Moody's highlighted China's ability to serve more than 200 countries and regions as a critical advantage in navigating trade barriers.

Its export destinations are geographically diverse, spanning across continents, including key partners such as Germany, Brazil, Australia and Saudi Arabia, minimizing exposure to any single market's restrictions.

The country holds substantial shares across several key clean energy sectors: 91 percent of global solar panels and cells, 82 percent of lithium-ion batteries, 59 percent of wind turbines, and 58 percent of new energy vehicles, which include battery-electric, plug-in hybrid, and fuel-cell models.

While China's clean energy reach spans multiple sectors, lithium-ion batteries seem to have emerged as the most strategically sensitive link in US-China trade.

About a quarter of all Chinese lithium-ion battery exports are to the United States, according to the Moody's analysis.

Ilaria Mazzocco, a senior fellow at the Center for Strategic and International Studies, cautioned that while the US is building its own battery value chain under the Inflation Reduction Act, capacity lags demand — especially for stationary energy storage, where most Chinese battery imports are used. 

"A lot of the production is not online yet … not enough to actually supply all the demand in the United States, especially for storage," Mazzocco said at a briefing on Tuesday.

The Moody's report also noted that Chinese authorities are taking steps to prevent excessive price competition among domestic firms, a move Moody's said will support more stable sector margins going forward.

Over the past decade, Chinese manufacturers have not only expanded their global reach in clean energy exports but also have significantly improved the performance and affordability of their products, according to Moody's Ratings.

It cited solar panels, whose efficiency has improved from around 15 percent in 2014 to 23 percent in 2024.

That allows panels to generate more electricity from the same amount of sunlight.

Meanwhile, the average price of solar cells has dropped sharply, from $0.40 to about $0.10 per watt over the same period, a three-quarters decline that has made solar power far more affordable worldwide.

Those improvements are driven by China's industrial advantages, including economies of scale, vertical integration and sustained investment in clean tech innovation.

China's investment in clean energy reached an estimated $940 billion in 2024, up 7 percent year-on-year, according to an analysis by experts at the Centre for Research on Energy and Clean Air, published on Carbon Brief, a United Kingdom-based climate website, in February.

That outlay was close to the global total put into fossil fuels in 2024 and was of a similar scale to the overall size of Saudi Arabia's economy, they said.

The official data released on Wednesday by China's National Bureau of Statistics further reinforces the clean energy sector's momentum.

The bureau reported that clean energy industries — represented by new energy vehicles, lithium-ion batteries and photovoltaics — continued to grow at a high rate in the first quarter, when the country posted 5.4 percent growth year-on-year.

Meanwhile, the share of non-fossil energy in total energy consumption rose by 1.5 percentage points compared with the same period last year, underscoring China's internal shift toward greener development alongside its export strength, according to a release from the bureau.

Looking ahead, China's position could strengthen further as global demand rises.

According to Moody's, the world will need to invest up to $3.9 trillion annually in clean energy technologies by 2035, based on current climate pledges.

huanxinzhao@chinadailyusa.com