As the climate crisis worsens, capitalists and their political representatives have put forward the “Green Transition” as the solution. The basis of this claim is that the market will find technological solutions for climate change and that capitalism can exist in harmony with the environment.
Certainly the rise of green technology – electric vehicles (EVs), solar panels, wind turbines – has to some extent presented a new area of investment for capital. However, these technologies are still expensive, and Europe and America remain some of the biggest per capita emitters.
Meanwhile China has become a global leader in green technology, producing these same technologies at extremely low prices. Rather than embrace these technologies in order to reduce their emissions, Western governments have responded with tariffs and protectionist policies in order to protect the interests of Western monopolies.
China has been quietly revolutionising the electric car industry. Although it may be hard to believe since we don’t see many Chinese EVs on Irish roads, China has become the world’s largest exporter of cars. Chinese EVs are substantially cheaper than their Western counterparts, and often have far more features – the Yangwang U8 SUV retails for about $150,000 and can sail on water for 30 minutes.
EVs were made a priority for Chinese industry during the premiership of Wen Jiabao’s. His government heavily incentivised EV manufacturing through low-interest loans and the dual-credit system, which stipulates that a certain percentage of cars made by Chinese manufacturers must be electric. Chinese manufacturers have also benefited from requirements that foreign companies doing business in China partner up with local manufacturers (although this was lifted in 2022), allowing them to quickly catch up to, and now surpass, Western manufacturers technologically. These measures have led EVs to dominate the domestic Chinese car market, with EV sales expected to overtake the sales of combustion engine vehicles in China in 2025.
This immense manufacturing capacity has allowed Chinese EVs to dominate not just the Chinese market but also foreign markets, with the China Passenger Car Association reporting that China accounted for 76% of global EV sales in October 2024, including both fully electric and hybrid cars. Tellingly, just a day after Chinese manufacturer BYD announced record sales in 2024, Tesla announced that 2024 had seen a drop in car sales.
Western leaders blame the success of Chinese manufacturers purely on their support from the Chinese state (as if this is a bad thing) but the truth is more complicated than this.
Western manufacturers also receive huge amounts of support from their governments. Almost all EU countries provide various incentives for people purchasing EVs. The US gave out $1.7 billion in grants to manufacturers in 2024 to expand EV production as part of the $400 billion provided for green technology manufacturers by the 2022 Inflation Reduction Act. If state support is solely responsible for the success of Chinese manufacturers then why has it not been replicated in the West?
As economist Michael Roberts points out, this has much to do with the difference between the state support given out by China and state support given out by the West. While Chinese state support often takes the form of low-interest loans to individual manufacturers – allowing Chinese state banks to allocate resources to more efficient manufacturers – Western state support mostly takes the form of blanket tax concessions, leaving manufacturers to do what they want with this money.
It is also important to note that it is not subsidies that are directly the cause of the lower prices of Chinese EVs, but their more advanced technology, more efficient production as well as China’s control of the supply chain. BYD’s cost of production is estimated to be about 50% lower than its European competitors.
These are worrying developments for the west, who have until now taken for granted their dominance in the automotive market. In May 2024, US President Joe Biden announced that he would be introducing a 100% tariff on all EVs made in China. The EU followed suit, announcing in October that it would be introducing tariffs of up to 35.3%, on top of its existing 10% tariffs, against Chinese EVs. The US has also clamped down on the export of equipment used to manufacture semiconductors, which are used in EVs, to China.
However, these measures have actually received a negative response from many Western manufacturers. Oliver Zipse, CEO of BMW, warned “we don’t need protection”, and that European manufacturers “shouldn’t be over-afraid” of China.
Tesla CEO Elon Musk stated that his company “competes quite well in the market in China” with no tariffs and no deferential support. “I’m in favour of no tariffs”, he said. This is a reflection of how intertwined western manufacturers are with China. Both BMW and Tesla have large factories in China, with the cars produced in them now subject to tariffs if they’re imported to the west. Tesla was the 9th biggest seller of cars in China in the first half of 2024, BMW was the 13th. Any retaliatory tariffs by China could seriously dent the profits of these companies.
If these tariffs mostly hurt western manufacturers then why are the US and EU going ahead with them?
This is largely an effort to maintain the west’s declining hegemony by removing China from the western supply chain. China’s rise to become the world’s second largest economy has threatened the hegemony the west has assumed over the world since the fall of the Soviet Union. The same pattern has played out with Chinese solar, hydrogen and wind technology, all being targeted by western governments.
While the ostensible aim of this protectionism is to grow domestic industries, it will probably not be successful in the long run. Past tariffs have successfully blocked Chinese solar panels from the American market but did little to stimulate domestic solar industry. Chinese companies have already begun building factories in Europe and other places to avoid the tariffs.
Furthermore, these tariffs will ultimately make western monopolies even less competitive and less likely to innovate technologically. Donald Trump has also pledged to slash subsidies for EVs, which will severely damage the already low consumer demand for them.
It should be clear by now that any talk of environmental policies and the private market going hand in hand is nonsense. The west has responded to cheap, advanced Chinese green technology by completely shutting it out of their markets.
Rather than a means of transitioning to a more sustainable world, electric cars have become a means for the west to try to reassert its dominance. Climate change is fundamentally a global issue, one that recognises no borders.
However in the age of imperialist competition, where the west bitterly struggles to maintain its declining hegemony, international cooperation on climate change becomes impossible. The only solution is the construction of socialism, a system that would be able to subordinate production to the needs of both people and the environment.