Former White House National Economic Council Director and CGD Board Member Brian Deese has proposed the US launch a Clean Energy Marshall Plan to support zero-carbon infrastructure rollout in developing countries. The idea has attracted significant attention and commentary, some of which has noted that there are proposals for a Chinese version of his idea. Huang Yiping, dean of the National School of Development at Peking University, has called for a “Global South green development plan,” using surplus industrial capacity in China to help developing countries achieve a green transition through commercial and policy tools as well as aid. Given the global scale of the climate challenge, it’s tempting to suggest the more the merrier, and certainly there are reasons to see why China might want to get involved.
In 2022, China’s share in every manufacturing stage of solar panels (including polysilicon, ingots, wafers, cells, and modules) exceeded 80 percent. That’s more than double the country’s share of global demand for solar –despite aggressive rollout efforts in China itself. But North America, Europe, and India are trying to ramp up their domestic industry, and there’s already evidence of glut in the market. China’s exports of solar panels are flattening. The global solar panel manufacturing industry could supply more than 7,000 gigawatts of solar panels between 2024 and 2030, but deployment over that period is currently forecast at about half that amount.
As with solar, China’s electric vehicle (EV) production appears to be by far the most efficient and advanced in the world. China accounts for half of the world’s EV production and, at the moment, about 60 percent of sales, with considerable domestic demand. But capacity is rising while exports face challenges including increasing tariffs in the US and Europe.
One response to this problem would be to help stimulate demand elsewhere. It could build on China’s existing climate finance efforts, focused on energy and transport. Bilaterally, China provided $15.0 billion of climate finance in the five years to 2021 (as compared to the US’s $7.6 billion). Their multilateral support was more limited, and one way to strengthen that performance would be a climate-dedicated capital increase at the World Bank, regional development banks, or the Asian Infrastructure Investment Bank. Given China’s global production lead in a number of zero-carbon technologies, its manufacturers would likely be considerable beneficiaries of the demand that increased multilateral mitigation finance would produce.
There are reasons to think China appears the more likely source for greater international mitigation financing than the US. There is considerable opposition to international climate action in both legislative chambers in Washington and an apparently declining appetite for multilateral funding across the US government. Notably, unlike the last administration, this US administration has not pushed for any type of capital increase at the World Bank. But perhaps greater Chinese engagement on global climate mitigation will encourage the US and its allies to do more as well—and more multilateral development bank finance for mitigation would also be an effective and affordable way for them to considerably scale up support. Done right, and protecting core development finance, that might be a win for everyone.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise.
CGD is a nonpartisan, independent organization and does not take institutional positions.
