Why China is accelerating its investments in renewable energy abroad

Faced with domestic industrial overcapacity, China is stepping up its international renewable energy investments, aiming to dominate global value chains while opening new markets for its companies.

Share:

The rise of Chinese investments in renewable energy abroad is primarily driven by internal economic challenges. For over fifteen years, Beijing has grappled with chronic industrial overcapacity, particularly in manufacturing sectors such as steel and energy equipment. China’s response has been an aggressive export strategy and targeted investments in foreign energy infrastructure. This trend has intensified in recent years with the emergence of industrial sectors focused on clean energy, such as solar photovoltaics and wind power.

An industrial expansion strategy

According to the International Energy Agency (IEA), China currently holds over 80% of global solar panel manufacturing capacity and controls about 60% of the wind component market. This industrial dominance is not coincidental but the result of proactive public policies launched by the Chinese government since the early 2000s. Through incentives such as subsidies, tax credits and feed-in tariffs, China has built an industrial sector capable of offering extremely competitive products on international markets. Chinese companies must now secure new commercial outlets to maintain their activity levels and profitability.

Investing to offload overcapacity

China’s international strategy also helps absorb the financial surpluses accumulated by its economy. These surpluses stem largely from abundant domestic savings within Chinese banks and the excess financial reserves of state-owned enterprises. Through major initiatives like the Belt and Road Initiative (BRI), China recycles its surplus capital and reduces internal economic imbalances by funding major energy infrastructure abroad, primarily in Emerging Markets and Developing Economies (EMDE). The dual objective is to secure long-term markets for its technologies and preserve domestic economic stability.

Strengthening China’s international position

By investing heavily in renewable energy abroad, China also secures a strategic position within global value chains. Beijing’s explicit goal is to dominate high value-added sectors, traditionally controlled by European or American companies. By developing energy infrastructure in foreign markets, China gradually imposes its industrial and technological standards, thereby easing the market entry of its firms into high-potential regions, particularly in Africa, Southeast Asia and Latin America.

This strategy of industrial and commercial expansion is raising significant questions about future global economic balances, particularly in the energy sector, where China appears determined to secure a lasting foothold.

Uganda is relying on a diplomatic presence in Vienna to facilitate technical and commercial cooperation with the International Atomic Energy Agency, supporting its ambitions in the civil nuclear sector.
The governments of Saudi Arabia and Syria conclude an unprecedented partnership covering oil, gas, electricity interconnection and renewable energies, with the aim of boosting their exchanges and investments in the energy sector.
The European commitment to purchase $250bn of American energy annually raises questions about its technical and economic feasibility in light of limited export capacity.
A major customs agreement sealed in Scotland sets a 15% tariff on most European exports to the United States, accompanied by significant energy purchase commitments and cross-investments between the two powers.
Qatar has warned that it could stop its liquefied natural gas deliveries to the European Union in response to the new European directive on due diligence and climate transition.
The Brazilian mining sector is drawing US attention as diplomatic discussions and tariff measures threaten to disrupt the balance of strategic minerals trade.
Donald Trump has raised the prospect of tariffs on countries buying Russian crude, but according to Reuters, enforcement remains unlikely due to economic risks and unfulfilled past threats.
Afghanistan and Turkmenistan reaffirmed their commitment to deepening their bilateral partnership during a meeting between officials from both countries, with a particular focus on major infrastructure projects and energy cooperation.
The European Union lowers the price cap on Russian crude oil and extends sanctions to vessels and entities involved in circumvention, as coordination with the United States remains pending.
Brazil adopts new rules allowing immediate commercial measures to counter the U.S. decision to impose an exceptional 50% customs tariff on all Brazilian exports, threatening stability in bilateral trade valued at billions of dollars.
Several international agencies have echoed warnings by Teresa Ribera, Vice-President of the European Commission, about commercial risks related to Chinese competition, emphasizing the EU's refusal to engage in a price war.
The European Bank for Reconstruction and Development lends €400 million to JSC Energocom to diversify Moldova's gas and electricity supply, historically dependent on Russian imports via Ukraine.
BRICS adopt a joint financial framework aimed at supporting emerging economies while criticizing European carbon border tax mechanisms, deemed discriminatory and risky for their strategic trade relations.
The European Commission is launching an alliance with member states and industrial players to secure the supply of critical chemicals, amid growing competition from the United States and China.
Trade between Russia and Saudi Arabia grew by over 60% in 2024 to surpass USD 3.8 billion, according to Russian Minister of Industry and Trade Anton Alikhanov, who outlined new avenues for industrial cooperation.
Meeting in Rio, BRICS nations urge global energy market stability, openly condemning Western sanctions and tariff mechanisms in a tense economic and geopolitical context.
Despite strong ties, Iran's dependence on oil revenues limits its ability to secure substantial strategic support from Russia and China amid current international and regional crises, according to several experts.
Egypt’s Electricity Minister engages in new talks with Envision Group, Windey, LONGi, China Energy, PowerChina, and ToNGWEI to boost local industry and attract investments in renewable energy.
The potential closure of the Strait of Hormuz places Gulf producers under intense pressure, highlighting their diplomatic and logistical limitations as a blockage threatens 20 million daily barrels of hydrocarbons destined for global markets.
Budapest and Bratislava jointly reject the European Commission's proposal to ban Russian energy supplies, highlighting significant economic risks and a direct threat to their energy security, days ahead of a key meeting.