Analysis: Chinese Renewables Firms Turn to New Markets, Models as Trade Barriers Rise

Chinese renewables companies are rapidly adapting to trade barriers and geopolitical tensions by diversifying their global business models, as highlighted in a new Wood Mackenzie report. These strategies include direct investments in overseas markets, supplying components to Western manufacturers, and establishing regional supply chains outside China. The consultancy argues that such diversification undermines the intended purpose of trade barriers—namely, to limit Chinese influence—by encouraging more sophisticated supply chain structures that allow China to retain control while appearing to comply with local regulations[para. 1][para. 2].

Trade barriers facing China include high tariffs imposed by U.S. President Donald Trump on Chinese imports and the European Union’s anti-subsidy levy on Chinese-made electric vehicles. These measures have prompted retaliatory actions from China and ongoing negotiations between trade partners. Meanwhile, Chinese companies—such as the battery giant Contemporary Amperex Technology Co. Ltd.—are starting to consider setting up entirely regionalized supply chains outside of China, an approach observed mainly in concept but beginning to materialize in Latin America. In regions like Brazil, Chinese firms are investing locally across the value chain, from mining to electric vehicle assembly, which could transform Brazil into an EV export hub for the region if these ventures become operational[para. 3][para. 4][para. 5][para. 6].

Despite a decline in direct investment interest in Europe, Chinese technology remains pervasive in European renewable projects, as most utilize Chinese-manufactured equipment. The West, particularly the U.S. and Europe, lags at least a decade behind China in renewable manufacturing, especially for battery energy storage. The ability of Chinese companies to bypass trade regulations depends on the nature of the restrictions, with some regulations allowing joint ventures and others requiring complex licensing agreements. The saturation of the Chinese domestic market drives major players to invest significantly in navigating these complex international regulations to maintain access to Western markets[para. 7][para. 8][para. 9][para. 10].

Chinese manufacturers are also turning their attention to new markets such as Saudi Arabia, Oman, and Indonesia. These countries' ambitious 2030 renewable energy targets make them attractive, especially given the nascent state of Saudi Arabia’s renewable sector, which accounts for less than 1% of its electricity but aims to add 130 GW by 2030. Chinese solar manufacturers view these regions as key outlets amid intense home market competition and Western trade protectionism. In Southeast Asia, Chinese firms are shifting production to lower-risk countries like Indonesia after the U.S. imposed high anti-dumping tariffs on solar panels from several Asian countries. Turkey and Spain are also emerging as entry points to Europe due to relatively lower barriers, but progress remains slow[para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18].

A significant shift is underway as Chinese renewables investment increasingly focuses on developing countries, particularly those within China’s Belt and Road Initiative (BRI). As of 2024, Chinese firms have established 114 overseas plants, with 35 added in the past year. By 2030, China is projected to control nearly 80% of utility-scale solar and wind capacity in top BRI markets, potentially forming a “strategic fortress of influence” that bypasses Western restrictions. While the global export volume of Chinese renewables grew 20% year-on-year in 2024, revenue declined by 13%, suggesting surging sales in emerging markets where profit margins are lower. This trend could accelerate global clean energy adoption in the Global South but also places financial pressure on Chinese firms facing intense price wars[para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25].