For a greener world

If the US sees climate change as an urgent task rather than a tool for containing China, it could prioritize cooperation in green industry

Manufacturing equipment that promotes the use of clean energy, or the clean energy industry, such as electric vehicles, solar photovoltaic and wind turbine manufacturing, has become a top priority in the policies of the world's major economies to advance economic transformation and green growth.

The Joe Biden administration in the United States has been committed to promoting the development of its domestic clean energy industry, so as to enhance the US' competitiveness in the world economy and climate politics. The Biden administration attempts to combine the enhancement of the US' control over global clean energy equipment supply chains with its reinforcement of the so-called competition with China. By doing so, the US aims at carving its advantageous position in the global clean energy industrial landscape while containing China's influence.

The supply chain for the clean energy industry is very long — from mining and processing raw materials to manufacturing equipment and components, and then to the final assembly of power generation equipment. China's clean energy products have a very high market share in many of the US' allied nations. Therefore, the US has to collaborate with its partners and allies to impose constraints on Chinese companies' mineral resource supply chains, overseas investment and overseas sales, etc. To this end, the US government has been deepening bilateral policy coordination with its European allies, Canada and Japan, on the clean energy industry and using the Western multilateral cooperative frameworks to advance its clean energy agendas.

In a nutshell, the Biden administration's clean energy industrial policy is framed in the context of its competition, even confrontational, approach toward China.

For instance, it has politicized the clean energy industry to suppress Chinese companies' overseas market share by imposing sanctions on Chinese solar companies on fabricated "forced labor" accusations in China's Xinjiang Uygur autonomous region. Also, it has made the clean energy industry a "national security" issue — scaling up restrictions on Chinese companies' investment in US industries such as wind farms under the pretext of safeguarding so-called national security.

The Biden administration's clean energy industrial policy and the embedded approach of "competition with China" will have some negative impacts on the global expansion of China's clean energy industry. But in the meantime, they will increase the costs for the US' clean energy industry, harm its allies and partners' interests, and hold back progress in global climate action.

Undoubtedly, the restrictions and sanctions imposed by the US on Chinese companies will have a pass-on and radiation effect along the industry chain, thus dealing a blow to other countries' businesses in the upstream and downstream and worsening the supply chain's lack of resilience.

For instance, the US' sanctions against Chinese solar companies based on the so-called Uygur Forced Labor Prevention Act will damage the interests of many upstream and downstream companies and global end-users and make the global solar photovoltaic industry chain less resilient. Hence, the US move will not only destroy the international trade order, but also harm the interests of companies and consumers worldwide and impede global cooperation in tackling the economic recession.

The US can hardly build a clean energy industry chain dominated by itself, despite its efforts to relocate the clean energy industry domestically or to its allied nations and substantially reduce its clean energy industry's reliance on Chinese raw material processing and component manufacturing companies through increased restrictions and crackdown on those companies. That's because building such industry chains requires a hefty amount of investment and a large number of technicians and operators, which is bound to be a protracted process.

For instance, in the solar PV supply chain, the refinery and processing of silicon materials make enormous demands on a company's technological strength and capital investment. Furthermore, the project life cycle is very long, the production has to meet energy consumption requirements and environmental protection standards, and the company has to cope with market and policy changes, etc. Therefore, businesses are usually very cautious about making investments in such projects, which is why the vast majority of US solar PV producers are in the downstream of the supply chain. In contrast, China has considerable advantages of scale, cost and technologies in the raw materials and component manufacturing in such areas as solar PV and electric vehicle batteries, which creates broad room for China-US vertical cooperation in the industry chain.

Against such a backdrop, to cushion the adverse impacts of US policies, China needs to bolster international cooperation on the clean energy industry in the following areas.

First, China should make full use of Chinese companies' advantages of vertical integration in solar PV and EV industry chains by making deployments in key links of the industry chain in China's neighboring countries and the Belt and Road countries with abundant resources, such as Saudi Arabia. This will not only help strengthen the resilience of the global clean energy supply chains, but also lower the adverse impacts of the US and its allies distorting the clean energy industry chains. Moreover, this will help the developing countries accelerate their economic transformation and sustainable growth.

Second, China should seize the opportunity by increasing exports to countries in low-carbon transitions that have a greater demand for clean energy products. In addition, China should act more proactively in the clean energy industry's relevant R&D, technical standards, social responsibilities and compliance system.

Third, China could further cooperate with developed economies, such as the EU, on the clean energy industry, to help them address the energy crisis and advance low-carbon growth following the outbreak of the Russia-Ukraine conflict.

Fourth, the room for China-US cooperation on the clean energy industry and climate change should be further expanded and explored. This requires the US to put aside its Cold War mentality in clean energy technologies, raise the awareness of international responsibilities, and meet China halfway.

The third decade of the 21st century will be a decisive period for addressing climate change and achieving low-carbon growth. If the Biden administration takes addressing climate change as an urgent and serious task in its policy agenda — as they have claimed — rather than a foreign policy for containing other countries' development, it should prioritize pragmatic cooperation with China on the clean energy industry in its political agenda. Furthermore, it should safeguard the stability of the global clean energy industry chain based on market principles, so as to create more favorable conditions for bilateral mutually beneficial cooperation, the advancement of global low-carbon transition and the implementation of global climate action agenda.

The author is a senior fellow with the Institute for Public Policy and Innovation Studies and the Center for American Studies at the Shanghai Institutes for International Studies. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.