Wang Huiyao: Leveraging China’s Green Transition to Mitigate Global Climate Change: Perspectives, Opportunities, and Challenges

The 2025 Global Solutions Summit opened on May 5 in Berlin, Germany. Over two days, policymakers, scholars, and business leaders gathered to discuss the theme “Bridging Divides, Moving Towards a New Path of Global Prosperity.” The official publication of the summit, Global Solutions Journal, featured an article by Wang Huiyao, founder and president of the Center for China and Globalization (CCG), titled “Leveraging China’s Green Transition to Mitigate Global Climate Change: Perspectives, Opportunities, and Challenges.” This article was included in the “Geoeconomics and Trade” section, highlighting that China’s accelerating clean energy initiatives can be effectively utilized to aid the global decarbonization process.

Introduction

The year 2024 was recorded as the hottest year on record, underscoring the urgent need for increased efforts in renewable energy production globally. Despite actions taken by various governments, there remains a significant shortfall in renewable energy capacity and investment. In this context, China has dramatically shifted its climate policies, transitioning from a passive role in global climate governance to becoming a proactive leader in addressing climate change. This green transition is not only critically important for China itself but also presents numerous benefits for the world. To fully harness China’s green transition for global climate mitigation, the international community should seize this opportunity, which aligns with China’s national interests and benefits the entire world.

The Destructive Impact of Climate Change

Global temperatures continue to rise, exacerbating extreme weather events and profoundly affecting global economic and social stability. Climate change has severely disrupted several critical sectors, including agriculture, energy, infrastructure, and global supply chains, with developing countries being the most affected due to their heavy reliance on natural resources. Food security faces dual threats from rising temperatures and extreme weather; frequent supply chain disruptions and damage to infrastructure further exacerbate global economic instability.

Severe Shortages in Renewable Energy Capacity and Investment

Despite governments worldwide taking action, there is still a significant shortage of renewable energy capacity and investment. The International Energy Agency (IEA) has called for $4.5 trillion in annual investment in clean energy, yet actual funding in 2023 was only a fraction of this target, amounting to $1.3 trillion. This wide gap highlights the urgent need to develop cost-effective products, optimize resource allocation to enhance efficiency, and advance technological innovation to accelerate progress.

Solar panels present enormous growth potential and are considered one of the key means to combat global climate change. According to the IEA, global demand for newly installed photovoltaic capacity is expected to reach 820 gigawatts, approximately four times that of 2022. Current production capacity is far from meeting market demand, which is a stark contrast to claims of “overcapacity.” Similarly, the global electric vehicle market experienced explosive growth in 2023, with sales increasing by 35% year-on-year. However, despite projections that global electric vehicle demand will reach 30 million units by 2027, China only exported 1.2 million electric vehicles in 2023, reflecting a serious supply shortage.

This shortage primarily affects developing countries, which urgently require financial and technical support from the international community to transition to low-carbon economies and address climate change challenges. Therefore, countries should commit to promoting the application and circulation of green technologies and products through an open and inclusive international trade system. At the same time, it is essential to avoid politicizing climate issues or using them as economic tools. Any policies that hinder the global transition to a green economy, particularly excessive trade restrictions, will complicate global climate cooperation and weaken the collective action and capability of the international community in addressing climate change.

Progress in China’s Green Transition

In recent years, China’s climate policies have undergone a significant transformation, shifting from passive participation in global climate governance to taking on a responsible leadership role in addressing climate change. Chinese leaders have proposed a global development initiative at the United Nations General Assembly, emphasizing the acceleration of the transition to a green, low-carbon economy, achieving green recovery and development, and improving the global environmental governance system to actively respond to climate change.

China has pledged to peak carbon emissions before 2030 and achieve carbon neutrality before 2060. Through mechanisms such as the Belt and Road Initiative, China promotes international cooperation in green development. By actively participating in international climate agreements and advancing sustainable trade, China is gradually positioning itself at the forefront of global climate governance. At a seminar held at the World Trade Organization (WTO) headquarters, former Vice Minister of Commerce and former WTO Deputy Director-General Yi Xiaozhun pointed out that China’s green policies have profound implications for its domestic economy and provide robust impetus for global green transitions.

Currently, although coal remains China’s primary energy source, the country is significantly reducing its reliance on coal and actively developing renewable energy and nuclear power. According to China’s 14th Five-Year Plan (2021–2025), by 2030, the total installed capacity of wind and solar power will exceed 1.2 billion kilowatts. Clean energy will become a core component of China’s future energy structure.

Furthermore, China is making substantial investments in renewable energy technologies, electric vehicle technologies, smart grids, energy storage systems, and other environmentally friendly technologies. At the same time, China is establishing a national carbon emissions trading market aimed at incentivizing companies to reduce carbon emissions through market mechanisms, accelerating technological upgrades in high-emission industries, and promoting the transition to green development.

Moreover, China is actively advancing the construction of new infrastructure, including 5G, artificial intelligence, and the Internet of Things, to enhance energy efficiency and reduce carbon footprints through the widespread application of these technologies.

China’s Green Transition is Shifting from Government-Led to Market-Driven

As Yi Xiaozhun emphasized, China’s green transition is increasingly driven by market competition and technological innovation rather than relying solely on government subsidies. He noted that the success of China’s renewable energy industry is not based on long-term government subsidies but rather on cultivating market competition, promoting rapid technological innovation, and leveraging China’s vast market size.

In developing its green economy, China has established a national carbon emissions trading market, creating a market-based mechanism for emissions reduction that ensures transparency and fairness in carbon trading. This not only aids China in controlling overall carbon emissions but also ensures fair competition in international trade, creating a more equitable environment for Chinese enterprises to participate in the global market. Through these initiatives, China is advancing its own green economic transition while also maintaining the stability of the multilateral trading system, demonstrating its commitment to international sustainable development.

In the early stages, government subsidies facilitated rapid growth in China’s renewable energy sector. However, in recent years, China has gradually reduced subsidies for solar, wind, and electric vehicle sectors. For instance, the 2018 notice regarding solar power significantly cut photovoltaic subsidies and limited the scale of new photovoltaic projects. As subsidies decrease, Chinese photovoltaic companies have continuously enhanced their competitiveness by improving technology and reducing production costs, resulting in progressively lower electricity prices and a dominant position in the global market.

In the electric vehicle sector, the Chinese government began gradually reducing subsidies for the industry in 2017 and fully eliminated purchase subsidies in 2022. This move accelerated the marketization process, prompting electric vehicle companies to compete through technological innovation and cost control. In 2018, there were as many as 480 Chinese electric vehicle manufacturers, but due to intense market competition, only about 50 companies remain today. This competitive pressure has driven companies to continually improve technological standards and reduce production costs, enabling them to gain a more favorable position in international markets.

Increasing Concerns Regarding Overcapacity and Tariff Issues

Green transitions have yielded numerous benefits both domestically and globally, including lower energy costs, environmental protection, and support for other countries through trade and technology transfer. However, as China advances its green transition, it faces scrutiny over overcapacity and challenges from tariffs and trade protectionism. In recent years, geopolitical tensions, a rise in protectionism, and the impact of the COVID-19 pandemic have led to a reversal of globalization trends and profound changes in global trade patterns. Particularly in the renewable energy and green technology sectors, competition between countries has intensified, further exacerbating the instability and unsustainability of the global trading system.

Global trade growth has long been a key driver of economic development and technological progress. However, with the rise of protectionism, especially as major economies have adopted “local-centered” policies in recent years, the openness and fairness of international trade face unprecedented challenges. To compete in the renewable energy product sector, countries have implemented measures that conflict with free trade policies, such as tariffs and other green trade barriers. These policies have sparked widespread controversy globally and intensified conflicts in the international community regarding climate change and trade policy coordination.

Recommendations for China and the International Community in Global Green Transition

In the context of addressing climate change and achieving sustainable development, international trade policies are gradually shifting towards green and low-carbon models. In light of this trend, all parties should refrain from resorting to protectionism and instead focus on promoting cooperation.

Governments, businesses, and international organizations should collaborate to formulate and implement sustainable trade policies that promote the circulation of green products and technologies globally, thereby achieving a win-win scenario for economic growth and environmental protection. The following are specific recommended measures:

Formulating Sustainable Trade Policies and Optimizing Green Product Structures

Each sovereign nation should develop trade policies from a sustainable development perspective, encouraging the export of sustainable products while restricting the export of high-energy and high-emission raw materials. This will help optimize the structure of global trade in green products and services.

Countries should leverage regional industrial advantages and the potential for green development to accelerate the transition to green energy, promote the application of green technologies, and encourage enterprises to prioritize the use of low-carbon, energy-efficient, and environmentally friendly green materials and technologies in product design and manufacturing, thereby enhancing the competitiveness of green product exports. For example, China and Europe could explore new industrial cooperation models in the automotive sector, such as joint research institutions, co-building talent development projects, and unified technical standards. Chinese manufacturers could establish production bases in Europe, create job opportunities, and foster technological exchange. Currently, BYD is building a battery production facility in Hungary to expand local electric vehicle manufacturing capacity. Additionally, leading battery technology company CATL is developing several major projects in Germany, Hungary, and Spain. These investments indicate that manufacturing synergies can achieve mutual growth by learning from the successful experiences of European automotive companies in China while adapting to the new landscape of the automotive industry.

At the same time, the EU and China should resume negotiations on the Comprehensive Agreement on Investment to provide essential institutional guarantees for enterprises.

Deepening Multilateral, Bilateral, and Regional Cooperation

Countries should jointly uphold the UN-centered international system and comprehensively implement the United Nations Framework Convention on Climate Change and the Paris Agreement. Nations should actively advocate for pushing sustainable investments, production, and consumption under the policy framework of the United Nations Sustainable Development Goals. The World Trade Organization should be fully utilized as a platform to promote global governance consensus, update relevant rules, and facilitate the establishment of new sustainable trade mechanisms. Countries should also push for policies that encourage sustainable trade, reducing or even eliminating tariffs on sustainable products through multilateral negotiations, and providing trade facilitation measures for their customs clearance.

Advancing Low-Carbon Regulatory Frameworks and Strengthening International Cooperation

Countries should enhance international cooperation to establish a more comprehensive low-carbon regulatory framework within major global institutions. As early as 2012, APEC members reached the world’s first substantive agreement on an eco-friendly product list aimed at promoting trade liberalization for such products, covering 54 customs tariff codes. In 2021, the International Monetary Fund (IMF) proposed that major carbon-emitting countries consider their stages of development and historical emission responsibilities to increase carbon pricing and establish a carbon price floor within the G20 framework. The Organization for Economic Cooperation and Development (OECD) has long emphasized the critical role of carbon pricing in addressing climate change, considering it the most important policy tool.

Nations should fully leverage existing multilateral cooperation platforms to promote policy coordination in sustainable trade and green finance, developing unified standards within an inclusive framework. Additionally, efforts should be made to enhance supply chain transparency and promote international cooperation in technological innovation.

Strengthening International Cooperation in Green Industry Chains

China should fully leverage its global leadership role in addressing climate change to promote international low-carbon development in upstream and downstream industries and related fields. Efforts should be made to enhance international cooperation in green manufacturing and establish cooperative systems for low-carbon green industries and supply chains, realizing the efficient integration of high-end resources with the real economy.

Other measures include strengthening international technology exchanges and cooperation to lower the market entry costs of green products and technologies, accelerating their global application and promotion; and improving the top-level design for addressing climate change to enhance the overall coordination and execution of strategic initiatives.

Deepening International Cooperation in Green Finance

To promote international cooperation, global practical collaboration in climate investment and financing should be strengthened, encouraging the development of green credit, green bonds, green insurance, and other financial products to support energy conservation and emissions reduction, environmental protection, clean production, clean energy, ecological environment construction, green infrastructure, green services, and other key areas.

To improve the international cooperation mechanism in green finance, it is essential to strengthen the following aspects: alignment of assessment standards, reporting and disclosure of environmental and governance information. Given China’s leading role in the global green transition, it can play an active role in promoting these initiatives.

In addition, efforts should be made to explore the formulation of international green finance standards and enhance global coordination and cooperation within a unified green finance framework. Multilateral development banks led by China, such as the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), are encouraged to provide credit services, issue sustainable bonds, and invest in decarbonization projects and green economic development in developing countries, while assisting underdeveloped economies in establishing carbon markets.

Promoting South-South Cooperation for Joint Green Transition

There should be an emphasis on strengthening South-South cooperation in the field of green transition. In November 2023, China signed 48 memoranda of understanding on climate change South-South cooperation with countries along the Belt and Road. Currently, it is essential to further design and promote green transition plans within the Belt and Road economic trade cooperation zones, assisting relevant countries in transforming traditional industries and upgrading energy infrastructure to meet their green development needs. China can utilize its experience in green transition to expand the output of green technologies and capacities in cooperation with Belt and Road countries, helping them achieve their sustainable development goals.

In conclusion, addressing climate change is urgent and requires sustained collective action from the global community. The international community must unite to deepen collaboration based on the current momentum of green transition and climate governance. Through collective efforts, we can shape a future where climate action is not only a necessary measure but also a powerful driving force for global progress, innovation, and shared prosperity.