8 10 2024
Under President Xi Jinping, China has given priority on the development of advanced technologies such as electrical vehicles and renewable energy.
This has in a way boomeranged on the Chinese economy. On the one hand overcapacity in areas like solar panels has squeezed out some manufacturers.
On the other hand, Western nations which are the main markets for the electrical vehicles have imposed import duties on EVs to protect their own manufacturers and to prevent subsidised Chinese manufacturers from flooding their markets with subsidized EVs.
According to reports, so many solar panels have been installed in China that they generate more power than what the storage and transmission infrastructure in China can handle.
This has prompted the Chinese authorities to withdraw some price support for the sector; directly affecting Chinese manufacturers.
Last March, Longi Green Energy Technology, the largest solar cell manufacturer in the world, announced the lay-off of 4,000 of its workers.
U.S. President Joe Biden has said the Chinese government subsidizes EVs and other consumer goods to ensure that Chinese companies do not have to turn a profit; giving them an unfair advantage in global trade.
The China Photovoltaic Industry Association has called for more mergers and acquisitions and restrictions on domestic competition to control capacity.
Meanwhile, countries like the U.S. and Canada have geared up to meet the challenge from Chinese electrical vehicles.
In September last, the Joe Biden administration in the U.S. announced the awarding of over $3 billion to U.S. companies to boost domestic production of advanced batteries and other materials used in EVs.
The grant will fund a total of 25 projects in 14 states. Under an earlier round of EV battery funding ongoing since 2021, $1.8 billion have been awarded to 14 companies.
White House Economic Advisor Lael Brainard has said that this award is important for building an end-to-end supply chain for batteries and critical minerals in America; something vital to reduce the dominance of China in this critical sector.
The Canadian government last August imposed a 100 percent tariff on the import of Chinese-made electrical vehicles following similar moves by the U.S. and the European Union.
“Actors like China have chosen to give themselves an unfair advantage in the global marketplace,” Prime Minister of Canada Justin Trudeau has said.
U.S. President Joe Biden has said the Chinese government subsidizes EVs and other consumer goods to ensure that Chinese companies do not have to turn a profit; giving them an unfair advantage in global trade.
The EU has imposed a provisional tariff of up to 37.6 percent on EVs made in China, saying they benefit unfairly from government subsidies.
In the U.S., the tax rate on imported Chinese EVs rose to 102.5 percent in 2024, up from the total levels of 27.5 percent.
