In the race for clean energy dominance, China's relentless support and investment in alternative energy sources have catapulted it to the forefront, leaving other countries scrambling to catch up. According to the International Energy Agency, Beijing accounted for a staggering 85% of global clean-energy manufacturing investment in 2022, a testament to the scale and tenacity of China's commitment.

The United States, Europe, and other wealthy nations are now making desperate efforts to close the gap, correcting past missteps and drawing inspiration from China's successes. These countries have allocated substantial funding to subsidize their own industries while simultaneously trying to impede the entry of Chinese products into their markets. This strategy has yielded some modest progress, with China's share of new clean-energy factory investment falling to 75% last year.

However, the challenge faced by Western nations lies in China's industrial dominance, which is deeply rooted in decades of experience leveraging a centralized government and banking system, while fostering fierce competition among private companies. China's dominance in solar panels and electric vehicles is the result of a comprehensive cultivation of industries such as chemicals, steel, batteries, and electronics, coupled with significant investments in transportation infrastructure.

During the period of 2017-2019, China devoted an extraordinary 1.7% of its gross domestic product (GDP) to industrial support, more than double the percentage of any other country. This commitment was accompanied by allegations of China circumventing international trade agreements, engaging in intellectual property theft, and employing forced labor practices, which the United States and other countries have vehemently criticized.

China's overwhelming production capacity in clean energy technologies, such as solar panels, is evident as it controls over 80% of global manufacturing at every step of the process. The country's strategy of going big, even at the cost of suppressing company profitability, has allowed it to flood rival countries with low-cost electric cars, solar cells, and lithium batteries, meeting the growing demand for green tech around the world.

In response, President Joe Biden and European leaders are determined to develop their countries' manufacturing capabilities in advanced technologies like semiconductors, electric vehicles, and batteries. They are even adopting certain tactics employed by China to nurture industries. This departure from the previous ideology of open markets and minimal government intervention marks a significant shift for the Western world, as they aim to reduce dependency on other countries for critical parts and strengthen their autonomy.

Biden has recently announced tariffs of up to 100% on imports of Chinese green technologies, in an effort to hinder China's access to the American market. European officials are expected to follow suit, despite concerns from some economists and environmentalists who fear that such measures may impede progress towards meeting clean energy goals. Furthermore, the West is becoming increasingly concerned about security issues as China aligns its geopolitical stance with Russia and Iran.

The adoption of industrial policy by the United States and Europe signifies a recognition of China's success and the potential power of national strategies. While China attributes its industrial capacity to success, western leaders accuse Beijing of unfair practices, including subsidizing excess production and dumping underpriced goods in foreign markets. Balancing these concerns, Western nations are now aiming to present a united front to address issues of overcapacity and to prevent China from further dominating key global manufacturing sectors.

The Biden administration's multibillion-dollar program represents one of the most extensive uses of industrial policy in American history. As the U.S. and Europe intensify their trade offensive against China, it is evident that both sides, while pursuing clean energy leadership, employ different strategies. China focuses on exporting low-cost goods globally, while protecting its domestic market from foreign dominance. Conversely, Biden's strategy is centered around limiting imports from China and denying access to key U.S. technologies, such as advanced semiconductors.

In a recent meeting of the Group of 7 finance ministers, leaders from both sides of the Atlantic emphasized the need for coordination in protectionism and subsidies to effectively compete with China in crucial industries. Treasury Secretary Janet Yellen highlighted the threat of overcapacity, stressing the importance of presenting a united front to safeguard the viability of firms worldwide.

As the global demand for clean energy technology continues to grow, the competition to dominate clean energy manufacturing is intensifying. While Western nations are determined to catch up with China's industrial prowess, their efforts to balance economic interests, security concerns, and clean energy goals prove to be a delicate and challenging task.