Gavekal Technologies: New Energy

Chinese EV makers have conquered their home market and are on track to export over 5mn vehicles this year, double the 2025 figure. Their next move will be to start moving production offshore, to get closer to key markets and evade tariffs. The biggest target is Europe, where half a dozen projects are under way and many more are planned.

As presidents Donald Trump and Xi Jinping prepare for their summit meeting in Washington, China’s fast-growing technology capabilities are a major topic. The big questions at the moment are how close Chinese artificial-intelligence labs are to matching the US frontier models, and whether the two sides can start negotiating rules on AI safety. But behind those lie even bigger questions: What is the balance of technological power between the US and China? And how far can the world's two big tech powers go in pulling apart the thick webs of interdependence that tie them together?

Both China and the US have devoted intense energy to slashing their technological reliance on each other. These efforts have had some impact, but the overall lesson is that decoupling is really difficult and even as old dependencies are cut, new ones pop up. This China Tech Brief examines the underlying causes.

Over the past year Gavekal Technologies has explored most corners of China’s vast and unique energy system, with a particular focus on how electrification is transforming China’s economy and its position in the world. We have now distilled our insights into our first annual China New Energy Guidebook. This concise presentation outlines China’s strategies for its energy and electricity systems, assesses the progress of wind, solar and nuclear deployment, and analyzes the key electricity related sectors: batteries, electric vehicles, AI and the “electrotech stack.”

Over the past year Gavekal Technologies has tracked China’s progress across a range of tech sectors. Today we take a step back and try to assess its overall capabilities. First, outside a handful of areas, China is still more of a fast follower than a global pace-setter. Second, China’s well-documented manufacturing dominance is mainly in products of medium or low complexity. Finally, China’s tech ecosystem still relies heavily on foreign-sourced components, equipment and intellectual property.

For most of the past two decades, the solar story was about making the panel cheaper. China has solved that problem. Thanks to massive excess capacity, Chinese producers are not making much money. With equipment now a commodity, the economic value of solar will mainly come from its installation. The broadest local benefits are likely to come in countries that can figure out how to scale up distributed solar generation at homes and businesses.