China’s Green-Tech Lead Puts the West in a Tight Bind Over Climate Goals

China’s dominance in key green technologies is making the global carbon transition cheaper, but Western efforts to reduce reliance on Chinese manufacturing risk slowing it, according to researchers.

China now led the world in electric vehicles (EVs), batteries and solar power – accounting for 70 per cent of global production of EVs, 80 per cent of lithium-ion batteries and 80 per cent of solar photovoltaics, said the report from the University of Manchester, released on Monday.

“China’s dominance of green technology presents a fundamental dilemma for governments,” said James Jackson, lead author of the report and research fellow with the university’s Sustainable Consumption Institute.

“The world needs these technologies to decarbonise, but efforts to compete with China risk making the transition more expensive and more difficult.”

The report comes as Western governments tighten tariffs and impose local-content rules on Chinese clean technologies. For example, the European Union has scrutinised BYD, Geely and SAIC over state support, while US clean-energy subsidies under the Inflation Reduction Act are tied to sourcing of components from outside China under “foreign entity of concern” rules.

The report warned that reducing reliance on China could slow the carbon transition Western governments were trying to accelerate.

The study cited estimates that China’s domestic subsidies for green industries totalled 7.2 trillion yuan (US$1 trillion) in 2025, adding the support had aided not only China’s low-carbon efforts but also global decarbonisation by making green technologies cheaper and more widely available.

According to an International Energy Agency estimate quoted in the study, installing the current solar supply, predominantly produced in China, could cut global emissions by 15 per cent by 2030.

Yet the same supply chains that made decarbonisation more affordable also deepened Western dependence on China, the researchers said.

They pointed to a competitiveness report for the European Commission by former Italian prime minister Mario Draghi, which said greater reliance on China could offer “the cheaper and most efficient” route to meeting the EU’s decarbonisation targets, while warning that it could threaten the bloc’s economy. The study called for cooperation over direct competition, urging the UK to encourage Chinese EV manufacturers to establish production facilities in Britain and use its financial-services expertise to support green investment.

It also suggested that the Bank of England could consider measures used by China’s central bank to support green industries. The People’s Bank of China launched a carbon-reduction lending facility in 2021, providing banks with low-cost funding for clean-energy projects. In January, it expanded the scheme to include energy-saving retrofits and green upgrades in carbon-intensive sectors. Despite mounting trade tensions, calls are growing in Europe for a middle path between decoupling and dependence.

Marc Vanheukelen, a former EU trade envoy now at climate think tank E3G, wrote in June that China remained deeply embedded in supply chains essential to Europe’s green transition, calling for selective cooperation grounded in de-risking and industrial resilience.