Secrets behind global success of Chinese EVs
Editor's note: The world has undergone many changes and shocks in recent years. Enhanced dialogue between scholars from China and overseas is needed to build mutual understanding on many problems the world faces. For this purpose, the China Watch Institute of China Daily and the National Institute for Global Strategy, Chinese Academy of Social Sciences, jointly present this special column: The Global Strategy Dialogue, in which experts from China and abroad will offer insightful views, analysis and fresh perspectives on long-term strategic issues of global importance.
The European Union has imposed additional tariffs of up to 37.6 percent on imports of electric vehicles manufactured in China. This announcement made on July 4, despite Beijing warning about its potential to trigger a trade war, could have significant implications for the global trade landscape. The European Commission cited "unfair" government subsidies as the reason for implementing the tariffs, which took effect on July 5. However, the tariffs will only be preliminary for four months, and negotiations between the two sides are expected to continue during the period.
The imposition of sanctions is a clear admission of failure and a lack of competitiveness. Latest news reports show that at least the German automakers are unwilling to admit defeat and are going to compete fairly. Their influential car association VDA has urged the European Commission to reduce proposed tariffs on Chinese-made electric cars. In a separate statement, BMW's CEO referred to the tariffs as a "dead end".
China's remarkable strides in developing and implementing clean technology are a source of national pride and a global game-changer. To supply both domestic and international markets with advanced products to combat climate change, China's clean energy investment surged by an astonishing 40 percent last year, reaching 6.3 trillion yuan ($870 billion). This growth constituted the entire increase in investment in the Chinese economy last year and is comparable to the global investment in fossil fuels. In 2023, clean manufacturing was crucial to the country's environmental and economic objectives. It accounted for 40 percent of the country's economic growth, contributing 11.4 trillion yuan to China's GDP, marking a 30 percent increase from the year before.
This significant investment has boosted China's economy and reshaped the global market, setting a new standard for clean energy investment and influencing the global economic landscape. Additionally, several Chinese technology giants, such as Xiaomi and Huawei, recently entered the EV market, introducing more competition and innovation into the auto industry.
The fierce competition among domestic manufacturers is the key factor driving the affordability of the latest clean energy devices and technologies. This competition has sharply reduced prices, making clean energy products more affordable. For instance, in the past year alone, the cost of solar panels dropped by 42 percent, far exceeding the historical average of about 17 percent per year. As a result, the prices for the latest products are almost two-thirds lower than those manufactured by their counterparts in the United States. Battery prices also fell by a record 50 percent last year.
It is this competition that has allowed China to account for more than 60 percent of global EV production and more than 80 percent of solar panel production. Last year, 97 percent of solar panels installed in Europe were manufactured in China. Significant price reductions from Chinese manufacturers of eco-friendly products will enable more consumers worldwide to afford such items, helping to decrease their carbon footprint and address global warming.
The remarkable history of the development of EVs in China deserves to be thoroughly documented. Some attribute China's achievements in this sector to Wan Gang, who is president of the China Association for Science and Technology and often called domestically and internationally the "father of the EV movement". Beginning his engineering career in the 1980s, Wan rose to the rank of Minister of Science and Technology, where he served from 2007 to 2018. In 2000, Wan submitted a strategic proposal to the Chinese State Council entitled "On the Development of Automotive New Clean Energy as the Starting Point for the Leap Forward of China's Automotive Industry".The government supported this idea, and China's electric vehicle industry developed rapidly. The development of the EV industry in China has become a national priority, and thousands of managers, scientists and engineers have worked tirelessly to achieve success.
The secret to Chinese success in these breakthrough technologies lies in supporting bright talents and innovative ideas, long-term forecasting and planning, swift implementation of plans, and national unity in supporting new ideas and achieving strategic goals. Thousands of managers, scientists and engineers have worked tirelessly to achieve success. When discussing the accomplishments of the green manufacturing revolution in China, the rapid progress of EVs is rightfully highlighted as one of the standout achievements.
Between 2009 and 2017, the Chinese government invested over $60 billion to boost the production of EVs. In 2011, only about 1,000 battery-powered and hybrid cars were sold in the country. In 2023, this number reached 9.49 million.
Proponents of the term "overcapacity" fail to understand that this concept does not apply to the EV business. Unlike traditional manufacturing, where products are made in anticipation of demand, EV manufacturing in China only starts after receiving orders. This approach ensures that the current capacity utilization of Chinese automobile factories is about 70 percent, directly contradicting the idea of overcapacity. Modern manufacturing enterprises, especially in the clean energy sector, cannot afford to accumulate inventories.
China's leading position in cutting-edge technologies is not just a result of its long-term strategic planning, ambitious action plans and the selection of highly skilled professionals. It is also a testament to the power of public support. This model of success, driven by government assistance for research and development, has enabled scientists and engineers to make discoveries and inventions and integrate these latest technologies into production processes. This remarkable story is a beacon of hope for other nations and a call for action for the global community.
The author is former prime minister of the Kyrgyz Republic and a distinguished professor at the Belt and Road School at Beijing Normal University. The author contributed this article to China Watch, a think tank powered by China Daily.
Contact the editor at editor@chinawatch.cn.
