Electrification isn’t a target or a trend in China – it is already the daily reality for millions of individuals and businesses. Graeme Baker and Yunli Liu share insights into the supply, demand and policy drivers of China’s globally leading clean-tech industries, which are showing clear signs of dealing with excess capacity and competition. They also identify today’s investment sweet spots within China’s electrification value chains.
Six key takeaways:
- China has already achieved its 2030 emissions and renewable-energy capacity targets – underscoring the country’s accelerating leadership in clean-tech.
- Government-led ‘anti-involution’ reforms to tackle excess capacity in clean-tech sectors (especially solar) are showing signs of working, including via audits of production costs and anti-dumping measures. This is reducing extreme price competition, supporting margin recovery across the likes of solar and EV industries.
- Energy storage demand is significantly stronger than expected, driven by both China’s shift from cost-based to quality-based battery procurement and global power demand rises, especially due to AI. Chinese battery leaders are gaining share globally.
- China’s structural power advantage is widening. The country is adding more renewable electricity annually than its total power-demand growth, enabling abundant, cheap clean-energy for AI data centres and other users (in the US by contrast, power availability is becoming a major bottleneck for the data centres needed to deliver AI services). For China, building renewable-energy capacity is closely linked to its AI ambitions.
- High-voltage electrification is creating interesting new investment opportunities, for example in component suppliers serving both EVs and next-generation high-voltage data centers.
- China’s clean-tech exports remain extremely strong, with Chinese exports of batteries and related technologies into Southeast Asia and the Middle East growing around 75% year on year, reinforcing China’s influence on global decarbonisation pathways.
