Executive summary
China has emerged as a major global clean tech investor, but the lack of robust data complicates analysis. Rhodium Group’s new China Global Clean Tech Investment Dashboard provides detailed data on both announced and completed foreign direct investment (FDI) by Chinese companies abroad across the electric vehicle (EV), solar photovoltaic (PV), and wind turbine value chains. The highlights are:
- Chinese outbound FDI in clean tech is growing but not as large as the headlines suggest: Loose tallies of deal announcements suggest that Chinese companies have invested close to $400 billion overseas since 2014. We estimate that the value of announced Chinese FDI projects in clean technology sectors is closer to $173 billion. Most importantly, only about half of those commitments ($85 billion) have materialized so far.
- China’s overseas manufacturing footprint is growing but exports remain the dominant mode for serving overseas markets: While localization is progressing, more than 90% of manufacturing investment of Chinese clean tech firms since 2021 took place inside China’s borders. Overseas investment remains tilted toward securing upstream resources and sustaining access to key overseas markets for booming exports.
- Trade barriers are a major driver of Chinese FDI: The rise of tariffs and other trade barriers has been a major factor spurring investment in offshore manufacturing capacity. In solar PV, Chinese companies first invested in Vietnam and Malaysia but have recently shifted to Ethiopia and the Philippines as trade defense measures caught up. In EVs, tariffs have recently pushed Chinese car makers toward local assembly in Europe, Turkey, and Thailand. But if barriers become too intense, they can cause Chinese companies to drop out of markets: In the US, 60% of announced Chinese EV FDI has been canceled.
- The evidence on the local impact of Chinese clean tech investments is mixed: The track record of Chinese clean tech investments abroad is short as most major facilities are either still under construction or in early stages of operation. There are examples of successful investments that have invigorated new industry clusters but also data points that support concerns about weak labor standards, increasing supply chain dependence on inputs from China, and the crowding out of local firms.
- China’s global clean tech FDI will remain volatile: Chinese clean tech firms continue to have strong incentives to expand abroad but face a complex political economy. Beijing is moving to further tighten its grip over outbound investment to limit the leakage of technology and create economic statecraft leverage. Host countries are expanding their defensive toolkits through investment reviews, industrial policies, supply chain security measures and new conditionality rules. China’s FDI expansion will remain piecemeal and gradual rather than a “green-energy tsunami.”
Read the full report from Rhodium Group's China Cross-Border Monitor
Explore the China Global Clean Tech Investment Dashboard