John Podesta visited Beijing last week on his first trip to China as US climate envoy. Both countries’ new climate action plans, known as Nationally Determined Contributions (NDCs), were high on his agenda, along with talks on methane, the circular economy and sub-national cooperation.    

The discussions on NDCs were relatively low-key, and that appears to be a strategic choice. With constant emphasis that China will take actions “at its own pace”, Beijing is unlikely to play into any “US persuades China” narrative, where China is hit up for political points that land in its competitor’s basket.   

Rather than pressuring, engagement with Beijing should be about building a strong case for China’s growing self-interest in raising climate ambition now, based on robust economic, political and social pillars. 

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Podesta landed in China amid a bit of a climate policy revival. Beijing recently issued measures instructing provinces and industries to use more renewable power and to adopt better carbon accounting and confirmed that China will apply a hard emissions cap by 2030 at the latest. 

It’s good news for an international community that had started to worry whether the climate issue was slipping down China’s political agenda. But it’s not clear whether the recent positive signals from Beijing mean that China will necessarily be bolder in setting its new international commitments.  

Economic boon 

Climate diplomacy is heating up as the deadline for countries to submit 2035 NDCs approaches early next year. American and European climate diplomats are seeking affirmation from China that its new NDC will be ambitious. But China is keeping its cards close to its chest and has so far only confirmed it will deliver its new NDC on time in 2025. In response to its western counterparts, Chinese policymakers still stick to long-standing positions, arguing that they are more focused on implementation than on grand targets that may not be realized in the end.  

The obvious constraints to China’s ambition on its new NDC include the domestic economy, where ensuring steady growth remains the primary concern for governments at all levels. As a consequence, reforms that could cause structural changes in industries and jobs have stagnated.  

Lessons from trade tensions targeting “overcapacity” in China’s cleantech industry

But for China’s domestic economy, stronger climate action—buoyed by ambitious targets—is unmistakably an economic boon. The cleantech industry is becoming a new economic driver in China. And companies, especially in the solar and EV sectors, are rapidly expanding their manufacturing capacity in anticipation of strong future demand.  

While exports of cleantech products keep growing, the size of the domestic market means it will remain the “base” for Chinese companies. Chinese policymakers’ conventional “under-promise, over-deliver” style of target-setting is not enough for the industry. This year, China is already hitting its 2030 target on wind and solar installation. Stronger sectoral targets for the next 5 to 10 years will help expand the domestic market and give the industry and investors the confidence it needs. 

Responsible global power 

Internationally, China should also see the growing self-interest in setting strong targets and leading global climate action. It’s clear that China wants greater recognition as a responsible global power – and its decision to focus on implementation is a way of differentiating itself from Western powers. But this strategy will not succeed if it ends up presenting a weak target that gives no one aspiration or hope. 

By 2035, global emissions need to be reduced by at least 60% from 2019 levels, in order to keep within the 1.5°C warming limit, according to the Intergovernmental Panel on Climate Change. In terms of China’s share, different models suggest a 30%-80% cut of emissions from the peak by 2035 is needed to align with the 1.5C global goal.  

Chinese policy makers may argue that modeling is too far from the economic and social realities. But it is exactly because of this gap that countries need ambitious policy targets to alter the curve of business-as-usual. Readjustments can only move us so far from business as usual. Emissions reductions need a well-defined target to orient themselves towards. 

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The possibility of a Trump 2.0 inevitably constrains the potential for climate ambition in many countries. But China is an exception, thanks to its strong cleantech industry. The clean transition of China’s economy is independent of a Trump or Harris victory, so should be China’s international commitment.  

China should see the coming months as a window of opportunity to demonstrate its unimpeachable role in international climate politics. When the global process is at risk of losing momentum, a robust new NDC from China would be a shot-in-the-arm.   

Fundamentally, tackling climate change is a matter of public health and safety. China has just experienced a summer of historic flooding and weather disruption. In July alone, storms, floods and related disasters affected nearly 23 million people and caused $10 billion in direct economic losses, according to China’s Ministry of Emergency Management.  

Economic and political gains aside, there is no stronger evidence than broken families and communities to demand robust action to mitigate climate impacts.  

The post How to convince Beijing of the case for stronger climate targets appeared first on Climate Home News.

“Overcapacity”, a geeky economic term, has recently become the new buzzword for international discussion around China’s solar and electric vehicle industries. It is also becoming one of the thorniest issues in China’s relations with other major economies.

Notably, the word was mentioned five times in the G7 Leaders Communiqué released last week, with the G7 countries framing it collectively as a global challenge.

It is a debate that was initially sparked by US Treasury Secretary Janet Yellen during her April visit to Beijing. According to her, China’s cleantech industry has excess capacities that cannot be absorbed domestically, leading to exports at depressed prices. And she stressed that this should be a concern not only for the US, but also for Europe and other emerging markets.

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China strongly disagreed with this claim, while Yellen’s concern resonated in the EU, which has long focused on China’s market dominance. In short, there is an overcapacity of “overcapacities”, with neither side finding identical terms of reference. But as this debate is a harbinger of how climate solutions and political agendas will interweave, it’s worth parsing out some lessons for each side, on their own terms.

The US’ “overcapacity” claim as presented by Yellen is a non-starter in China.

China’s clean energy industry is an important point of pride internationally and a source of legitimacy domestically for Beijing. From that perspective countering the “overcapacity” claim is both emotionally and strategically important.

Strategically, this claim is being used to justify trade measures and tariffs against China’s clean energy products. Emotionally, the cleantech industry is a modern-day success story of China’s entrepreneurship and innovation. In China’s public discourse, the US “overcapacity” claims lands as a rejection of that success.

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The result is a political debate in which – by design – no side can convince the other. And the lesson? This posturing is at odds with US-China climate diplomacy as we’ve known it to function in the past. Whatever objectives this approach serves, it does not include closer climate collaboration between the US and China, even as multilateral climate action at the UN level still requires them to take action in concert.

In China, discussion on “overcapacity” emerged from an ongoing conversation about how to manage investment hype. And the answer lies on the demand side.

For investors inside China at a time of challenging economics, few industries are as attractive as the clean energy industry. And business leaders have focused on the risks of hot money and breakneck expansion of clean energy manufacturing capacity for some time now, particularly in the solar industry.

This was probably the origin of “overcapacity”. But in China, this has been a familiar, almost perennial discussion of investment and industrial cycles. While the US argument equates exports to overcapacity, Chinese companies argue that it is demand that determines overcapacity, and they make investment and expansion decisions based on projections of both domestic and global demand.

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That said, the size of China’s domestic market means it will remain the “base” for Chinese manufacturers. In the overseas market, the “overcapacity” claim underscores the complexity and uncertainties Chinese companies face.

For Chinese policymakers, one obvious response to the new market dynamics should be taking domestic demand to new levels. That means addressing lingering questions for China’s renewable energy future – namely, how to resolve the impact of coal. China’s power market was designed for a system dependent on coal, but it needs reform to allow wind and solar to take the central role. Injecting new political momentum to accelerate the reform will be key.

The EU has long been concerned about China’s market dominance, and the “overcapacity” debate is pushing it to decide its role in this trilateral trade and climate dynamic.

Even before this debate erupted, the EU had already begun, subtly, to diversify supply chains and build its own industrial strength, reducing dependence on Chinese products. Last week, the EU announced a maximum tariff of 38% on imported Chinese-made electric vehicles, concluding that Chinese EV makers are benefiting from “unfair subsidies”.

At this stage, it’s still unclear if this is the end of the EU’s low-key approach to date. Cultivating an EU-based clean industry hub without compromising the global response to climate change is a challenge, especially as the EU positions itself as a climate leader.

Entering the fray of US-China tension only makes this feat more complex, especially given uncertainties on the US end in an election year. How the EU approaches this climate and trade nexus will ultimately shape the trilateral dynamic among the world’s three largest carbon emitters in the coming years.

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For China, where relations with the EU and other countries are concerned, it’s worth taking a step back and looking at the hidden messages in the “overcapacity” debate. Other countries want more than just Chinese products.

Climate leadership is not a buyer-seller relationship, but one between partners who want solutions that create local jobs, develop opportunities, and enable native development of a sustainable future.

China should see its role in the global clean transition as more than a manufacturing hub. The transition requires tools, technology, finance and know-how, and China has much to offer. It is time for China to think more creatively about how to leverage its industrial advantages to provide the solutions with which the world is currently under-supplied.

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