If Chinese firms are undercutting European firms with the help of government subsidies, then two approaches are possible:
1. Shout that this is unfair, and impose some tariffs on the stuff to slow it down.
2. Say "thanks for the subsidies" and double the order.
Option 2 is what Europe has correctly chosen for solar panels. Yes, sorry the industry has gone in Europe, but the bigger prize is cheap, home grown electricity.
Option 1 is probably better for the car industry, which employs millions of people. Of course, it needs to be accompanied by the auto industry producing its own good EV models and at a low price. Renault 5 anyone? But why did it take so long?
Batteries are somewhat in between Option 1 and Option 2. Europe desperately needs more batteries, as shown by the power cuts in Spain and the massive intraday price swings in Germany and others (caused by all the cheap solar without batteries). And of course the car makers need cheap, good batteries from the likes of BYD if they want to compete with the likes of BYD.
The truth is invariably somewhere between “China manufactures the world’s clean energy technologies because of good reasons” and “China manufactures the world’s clean energy technologies because of bad reasons”. I lived in greater China for over a decade and incredible talent and know-how thrived alongside immense corruption and disregard for environmental and human rights standards. Both things can be true at the same time.
Dear Hannah, thank you very much for this great analysis! May I suggest another, related topic: why are heat pumps so much more expensive than gas boilers? Even China does not seem to be able to make them cheaper (at least not yet). Heat pumps do not seem to have anything particularly expensive or complicated in them, so I would love to see why they are still unable to get to price parity with gas boilers!
Why does China have lower energy costs? It's because they are building rather than closing coal plants! Coal gives a constant baseload electricity supply that CAN'T be replaced with wind and solar. Solar panels or anything made with silicon requires huge amounts of electricity.
They also cut costs on dirty refining practices. There's nothing rare about rare earth metals or secret about refining them. They can colonize the dirty parts, for example, by creating toxic radioactive lakes in Mongolia to refine Neodymium.
This is like looking at Usain Bolt's very last step as he leans into the tape across the finish line, and saying "he won because his last step was ahead of everyone else's".
Of course industrial policy was everything. How do you think the competitive environment was created? How do you think the automation was possible? How could Chinese companies break ground so quickly on new facilities? Industrial policy.
The UK's, Europe's and North America's industrial policy could be summarised as "Industry? Ick. No thanks". China's as "what do you need?".
Great analysis Hannah as ever - energy enters its technological era and China are leading as they have invested heavily in - er energy technology- that’s what happen when you have limited fossil fuels - (except coal) - necessity invents and now they can export all that cheap tech globally. There is going to be a lot of leap frogging ahead as eg the global South skips the need for oil and gas infrastructure and in the global North next generation solar and EVs eg V2G. Nice analysis and insights
"When it comes to clean energy technologies, China is crushing it."
"Xinjiang has become the main hub of clean energy technology production in China, in part because it is rich in resources and has cheap coal."
THERE IS YOUR ANSWER ........CHEAP COAL .............and THERE IS THE "STUPIDITY OF THE WEST " IN FULL VIEW ......and THE HYPOCRISY OF CHINA and of THE WESTERN "CLIMATE IDEALOGUES"
[An "ideologue" is a person who strongly adheres to a particular set of beliefs, principles, or ideology, to the point of being inflexible and partisan. They are advocates for their ideology and are not open to considering other perspectives.] ......regardless of all the evidence to the contrary !
THEY USE CHEAP COAL ENERGY to produce EXPENSIVE "RENEWABLES" PRODUCING ENERGY
[ p.v. cells and "windmills" ] and STORAGE [ Batteries ] with the full knowledge and approval of the UNITED NATIONS and other REGULATORY BODIES while blissfully churning out LOWER PRICED PRODUCTS they sell to "THE WEST" who have conveniently "turned a blind eye" to this totally perverse practice ! Total HYPOCRISY !!! "THE WEST" had done itself untold financial harm by legislating itself from using the CHEAP COAL , OIL and GAS that it has available and literally FORCING it's citizens to buy and support the products produced by a FOREIGN REGIME which has simply refused to comply with anybody else's rules or requirements !
THAT IS THE DEFINITION OF STUPIDITY............AND HYPOCRISY...................right there !
CHINA builds and sells products that are supposed to diminish the production of CO2 by using energy from a source that is the main man-made CO2 emitter , has dirty mining and processing facilities for the manufacture of the components of those products , emitting more CO2 , and yet the rest of the world is supposed to ignore the FREEDOM TO PRODUCE CO2 that they are prohibited from producing..................AND "WE" SUPPOSEDLY LIVE IN "THE FREE WORLD" !
In the meantime , CHINA builds more coal-fired-power-stations , Nuclear reactors and all the required infrastructure , while selling it's products to " THE WEST" and becoming inordinately wealthy in the process ! "We" , on the other hand , lose "our" industries and manufacturing skills to such an extent that "we" have become reliant on IMMIGRATION to replenish and fill the deficit !
Such is the CORRUPTION and the INADEQUACY of "our" EDUCATION SYSTEM that "we" now only produce useless , mindless , helpless , welfare dependents [ "activists" ] rather than "graduates" and "Skilled tradesmen" [ to such an extent that "we" can't even BUILD ENOUGH HOUSES FOR OURSELVES !!!! ] . So , there is NO CHANCE that "we" will ever become self-sufficient UNTIL such times as "we" DISCARD THE CURRENT CORRUPT CURRICULA and INSTAL A NEW CURRICULUM which is EDUCATIONAL and NOT MERELY "INDOCTRINATIONAL" .
And YES ! "Our" graduates are AT BEST , SECOND RUNG and SECOND RATE !
The "educational standards" , like everything else in Australia , has been FALLING for many years !!
The "welfare mentality" , and DEI and ESG , has swamped and overwhelmed the previous desire for MERIT BASED EXCELLENCE IN ALL THINGS to "near enough is good enough" and "if I can't do it then I will use AI or Google ! " .....No wonder CONSTRUCTION BUSINESSES are "going broke" for want of expertise and endeavour !
Yep ! AUTOMATION and "doing away with useless "activists" is the way of the future Hannah !!
Coal may be cheap in China, but it obviously isn't cheap enough. That is why they are racing to replace it with solar PV, which is cheap.
Chinese coal production peaked in 2024. Electricity demand is growing fast (c 7% per year) as they electrify their economy, but the excess and more will be provided by cheap renewables.
Europe doesn't really have the luxury of cheap coal, at least in the west. It also doesn't have the luxury of cheap gas, or oil, unless imported. So the best way to cut electricity prices is to exploit China's cheap exports of solar power.
Thanks for YOUR OPINION Alex : NOW FOR SOME FACTS !
China relies heavily on coal for electricity generation primarily due to its abundance, low cost, and established infrastructure. While China is investing in renewable energy and has committed to phasing down coal consumption, coal remains a critical component of the energy mix, especially for providing reliable power and meeting peak demand.
Here's a more detailed breakdown:
Abundance and Cost:
China possesses vast coal reserves, making it an affordable and readily available energy source.
Established Infrastructure:
China has a well-developed coal power infrastructure, including coal-fired power plants and related industries.
Economic Growth:
Coal supports China's industrialization and economic growth, providing a low-cost energy source for various sectors, according to Carbon Brief.
Dependability and Flexibility:
Coal power plants are considered reliable and can be adjusted to meet fluctuating electricity demand, making them suitable for both base-load and peak power generation.
Energy Security:
While China is diversifying its energy mix, it aims to ensure energy security by maintaining a significant role for coal. ......WHICH IT ISN'T GIVING UP YET !!!!!
That looks like Chat GPT agreeing with your question.
If you want to know what is happening in China, I suggest you listen to the Redefining Energy - Tech Podcasts with David Fishman, who is a China energy specialist:
Key take away: China is the most electrified region in the world, and this led to electricity demand growing 7% in 2024. That growth was entirely met with wind and solar growth. Hydro fell a bit due to dry weather, meaning coal grew fractionally. That was a disappointment, as the peak was hoped for in 2023, but will now probably have been in 2024.
Dear Alex.......the fact is......."coal grew fractionally." GREW MEANS INCREASED.
.
and as for : "China is making strides to shut down smaller, less efficient coal plants. Efforts to grow electricity consumption without proportionally increasing coal usage remain a priority, with current coal plant utilization rates around 48-49%"...............YEAH ! CLOSING "smaller, less efficient coal plants"
BUT REPLACING THEM WITH MUCH LARGER , MORE EFFICIENT ONES !!!
The only nit pik is that Chinese coal use peaked in 2024, and not 2023 as had been hoped.
The only question now is how fast it comes down, despite electricity demand going up.
Some of the decline may be due to less efficient plant being replaced by more efficient plant, but far more is due to it being replaced with lower cost renewables.
Alex, anyone who bothers to look at reputable data sources like Embet Energy can see that you are absolutely correct: total energy use has grown quite a lot, coal rather less and renewables and, to a lesser extent, nuclear, are the ones that are really growing fast. All this indicates that China is at or fast approaching peak emissions, despite continued growth in energy demand.
But you'll never get fixed ideologues like Trevor to accept these facts.
I can’t remember which Soviet premiere said it (could have been Brezhnev), but basically it was a rueful comment that the US would sell to its enemies the very rope used to hang us with.
“It’s not about cheap labor and government subsidies”. Three paragraphs in: “Just kidding, it’s cheap labor and government subsides”. Then 3 pages of but but but China great. Hilarious.
Great article but I think you still need to put the scale of China’s subsidies in context. China provides roughly 3x the subsidies that EU and USA provide on an adjusted basis. This is significant.
It is not strictly due to subsidies that China outmaneuvered the democratic nations, but they did and still do play a significant role.
Jut an old hippy here and I spent my career as an automation tech. A machine does the exact same thing over and over as long as the raw materials are correct the end product is correct. Any manufacturing that does come back will not produce low skill assembly positions but increase the need for skilled techs, provided the companies invest in automated equipment. The need for engineers will increase also as specialized automation equipment needs to be designed. China has set-up their education system to produce lots and lots of engineers ours, not so much. Why did our manufacturers move their production to China? Because China could put 200 engineers to work on your production line while the US could only provide 10. End result the production line in China is up and running in several months, here several years. I won't go into the R&D required. Can we catch up? Sure, in time, with the proper incentives. Eliminating the Dept. of Education certainly won't help though.
Always interesting to read quantified answers to questions we all have. Thx. You tried to address the point of forced labour and subsidies. The related quote from Tim Cook I would take with a pinch of salt, however. Yes, China is no longer just a pool of cheap labour. I see it even in my own domain (space). However, you know, capitalists, oligarchs, all that, the -data- here may not be fully accurate... So yes, but also, careful...
For me however, one point missing that impacts both the cost of labour and the cost of production is what, in my view, is both the major pro and con of the "West" (whatever is left of it): Regulation.
Labour laws, environmental protection, zoning, etc... These increase significantly the cost of anything, from a pure techno-microeconomics zero-constraint basis. In my understanding, these are often blamed for the higher or increasing cost of nuclear energy, for instance.
It's a con, as endlessly argumented by yhe commentariat in the mainstream business sector (The Economist, Forbes etc...), ripe with ex-CEOs urging the abandonment of "excessive" (in their view) regulations. To the extent that the EU's Green New Deal is in the balance.
It's a pro, because, despite everything, people from emigrating countries still flow vastly more to Europe (and until recently to the US) than to China or Russia. That must mean something about where it is nicer to live...
At some point, the economics of regulations need to be developed as a discipline whereby not just the cost impact is considered but the whole socioeconomic impact. Too complicated for a blog post, obviously, but could have been mentioned as a factor.
You're missing the largest source of subsidies - local governments. The central government provides the direct r&d subsidies but the amounts are negligible mainly serve as a signalling function.
The key element is once the central government selects an industry for development, pretty much every one of the 34 provinces will shower local companies with cheap land (and the bank loans that come with this) and tax breaks ... Hundreds of these Hunger Game until a few ultracompetitive ones surface as national champions.
This is immensely wasteful of capital, AND it drives labor revenue and profit margins into the dust. It is not sustainable globally unless other countries choose to concede whole markets to Chinese industry
Brilliant. Once again. Its scary how automation is becoming such a clear cost-to-cut for...everything! Case by case it makes so much sense, but globally it's scary to contemplate where a world of 8 billion people will find purpose.
One of the best articles I have read in years. The claim is made that the US uses 6 times more workers per GWH produced. In the color graph, the US labor bar appears to be about 6 times as high as the Chinese one. Does this mean that the wages are about the same? Another possibility is that the 6 times as many workers claim applies only to BYD? Or maybe the 6x claim is about labor costs, the labor hours edge is smaller? (but not for BYD)
"50 workers per gigawatt-hour (GWh) of production"...meaning what, exactly? Do you mean each Chinese 50 workers produced one GW of solar capacity per hour?..so that 50 workers would produce 4000 GW in a year of 40 hour weeks? Or do you mean that 50 workers produced 1 GWh in a year? But solar panel output is measured in GW, not GWh. Maybe 50 workers would produce enough solar capacity to generate 50 GWh per year? Please clarify what this number is intended to mean.
It’s 50 workees per annual GWh of battery production. That mean that to produce 1 GWh of battery in 1 year, you would need 50 workers in China. It’s not solar panels
That is a really good analysis.
If Chinese firms are undercutting European firms with the help of government subsidies, then two approaches are possible:
1. Shout that this is unfair, and impose some tariffs on the stuff to slow it down.
2. Say "thanks for the subsidies" and double the order.
Option 2 is what Europe has correctly chosen for solar panels. Yes, sorry the industry has gone in Europe, but the bigger prize is cheap, home grown electricity.
Option 1 is probably better for the car industry, which employs millions of people. Of course, it needs to be accompanied by the auto industry producing its own good EV models and at a low price. Renault 5 anyone? But why did it take so long?
Batteries are somewhat in between Option 1 and Option 2. Europe desperately needs more batteries, as shown by the power cuts in Spain and the massive intraday price swings in Germany and others (caused by all the cheap solar without batteries). And of course the car makers need cheap, good batteries from the likes of BYD if they want to compete with the likes of BYD.
The truth is invariably somewhere between “China manufactures the world’s clean energy technologies because of good reasons” and “China manufactures the world’s clean energy technologies because of bad reasons”. I lived in greater China for over a decade and incredible talent and know-how thrived alongside immense corruption and disregard for environmental and human rights standards. Both things can be true at the same time.
Well said.
Thank you. It’s just jarring to read some of the comments that basically treat the opposite side like an infestation of locusts.
For Ying, there is a Yang.
People never consider the flip side..
Well this is social media and the algorithm must be fed
Dear Hannah, thank you very much for this great analysis! May I suggest another, related topic: why are heat pumps so much more expensive than gas boilers? Even China does not seem to be able to make them cheaper (at least not yet). Heat pumps do not seem to have anything particularly expensive or complicated in them, so I would love to see why they are still unable to get to price parity with gas boilers!
Thank you very much,
I
I would say hest pumps are considerably more complicated than gas boilers....but I'd love to see this article too!
This is great, thank you for dispelling the smoke around this.
I suspect cars are the same way i.e. cheap electricity and high automation is what drives prices down for Chinese cars?
Why does China have lower energy costs? It's because they are building rather than closing coal plants! Coal gives a constant baseload electricity supply that CAN'T be replaced with wind and solar. Solar panels or anything made with silicon requires huge amounts of electricity.
They also cut costs on dirty refining practices. There's nothing rare about rare earth metals or secret about refining them. They can colonize the dirty parts, for example, by creating toxic radioactive lakes in Mongolia to refine Neodymium.
They are adding coal, but they're simultaneously adding much more solar, and a fair bit of wind and nuclear.
And dispatchable energy CAN be provided by renewables, provided they are backed by storage.
This is like looking at Usain Bolt's very last step as he leans into the tape across the finish line, and saying "he won because his last step was ahead of everyone else's".
Of course industrial policy was everything. How do you think the competitive environment was created? How do you think the automation was possible? How could Chinese companies break ground so quickly on new facilities? Industrial policy.
The UK's, Europe's and North America's industrial policy could be summarised as "Industry? Ick. No thanks". China's as "what do you need?".
Great analysis Hannah as ever - energy enters its technological era and China are leading as they have invested heavily in - er energy technology- that’s what happen when you have limited fossil fuels - (except coal) - necessity invents and now they can export all that cheap tech globally. There is going to be a lot of leap frogging ahead as eg the global South skips the need for oil and gas infrastructure and in the global North next generation solar and EVs eg V2G. Nice analysis and insights
"When it comes to clean energy technologies, China is crushing it."
"Xinjiang has become the main hub of clean energy technology production in China, in part because it is rich in resources and has cheap coal."
THERE IS YOUR ANSWER ........CHEAP COAL .............and THERE IS THE "STUPIDITY OF THE WEST " IN FULL VIEW ......and THE HYPOCRISY OF CHINA and of THE WESTERN "CLIMATE IDEALOGUES"
[An "ideologue" is a person who strongly adheres to a particular set of beliefs, principles, or ideology, to the point of being inflexible and partisan. They are advocates for their ideology and are not open to considering other perspectives.] ......regardless of all the evidence to the contrary !
THEY USE CHEAP COAL ENERGY to produce EXPENSIVE "RENEWABLES" PRODUCING ENERGY
[ p.v. cells and "windmills" ] and STORAGE [ Batteries ] with the full knowledge and approval of the UNITED NATIONS and other REGULATORY BODIES while blissfully churning out LOWER PRICED PRODUCTS they sell to "THE WEST" who have conveniently "turned a blind eye" to this totally perverse practice ! Total HYPOCRISY !!! "THE WEST" had done itself untold financial harm by legislating itself from using the CHEAP COAL , OIL and GAS that it has available and literally FORCING it's citizens to buy and support the products produced by a FOREIGN REGIME which has simply refused to comply with anybody else's rules or requirements !
THAT IS THE DEFINITION OF STUPIDITY............AND HYPOCRISY...................right there !
CHINA builds and sells products that are supposed to diminish the production of CO2 by using energy from a source that is the main man-made CO2 emitter , has dirty mining and processing facilities for the manufacture of the components of those products , emitting more CO2 , and yet the rest of the world is supposed to ignore the FREEDOM TO PRODUCE CO2 that they are prohibited from producing..................AND "WE" SUPPOSEDLY LIVE IN "THE FREE WORLD" !
In the meantime , CHINA builds more coal-fired-power-stations , Nuclear reactors and all the required infrastructure , while selling it's products to " THE WEST" and becoming inordinately wealthy in the process ! "We" , on the other hand , lose "our" industries and manufacturing skills to such an extent that "we" have become reliant on IMMIGRATION to replenish and fill the deficit !
Such is the CORRUPTION and the INADEQUACY of "our" EDUCATION SYSTEM that "we" now only produce useless , mindless , helpless , welfare dependents [ "activists" ] rather than "graduates" and "Skilled tradesmen" [ to such an extent that "we" can't even BUILD ENOUGH HOUSES FOR OURSELVES !!!! ] . So , there is NO CHANCE that "we" will ever become self-sufficient UNTIL such times as "we" DISCARD THE CURRENT CORRUPT CURRICULA and INSTAL A NEW CURRICULUM which is EDUCATIONAL and NOT MERELY "INDOCTRINATIONAL" .
And YES ! "Our" graduates are AT BEST , SECOND RUNG and SECOND RATE !
The "educational standards" , like everything else in Australia , has been FALLING for many years !!
The "welfare mentality" , and DEI and ESG , has swamped and overwhelmed the previous desire for MERIT BASED EXCELLENCE IN ALL THINGS to "near enough is good enough" and "if I can't do it then I will use AI or Google ! " .....No wonder CONSTRUCTION BUSINESSES are "going broke" for want of expertise and endeavour !
Yep ! AUTOMATION and "doing away with useless "activists" is the way of the future Hannah !!
Coal may be cheap in China, but it obviously isn't cheap enough. That is why they are racing to replace it with solar PV, which is cheap.
Chinese coal production peaked in 2024. Electricity demand is growing fast (c 7% per year) as they electrify their economy, but the excess and more will be provided by cheap renewables.
Europe doesn't really have the luxury of cheap coal, at least in the west. It also doesn't have the luxury of cheap gas, or oil, unless imported. So the best way to cut electricity prices is to exploit China's cheap exports of solar power.
Sorry Alex......THIS did not attach to my previous reply !
https://www.prageru.com/video/a-world-without-fossil-fuels?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_13536507&recent=
Thanks for YOUR OPINION Alex : NOW FOR SOME FACTS !
China relies heavily on coal for electricity generation primarily due to its abundance, low cost, and established infrastructure. While China is investing in renewable energy and has committed to phasing down coal consumption, coal remains a critical component of the energy mix, especially for providing reliable power and meeting peak demand.
Here's a more detailed breakdown:
Abundance and Cost:
China possesses vast coal reserves, making it an affordable and readily available energy source.
Established Infrastructure:
China has a well-developed coal power infrastructure, including coal-fired power plants and related industries.
Economic Growth:
Coal supports China's industrialization and economic growth, providing a low-cost energy source for various sectors, according to Carbon Brief.
Dependability and Flexibility:
Coal power plants are considered reliable and can be adjusted to meet fluctuating electricity demand, making them suitable for both base-load and peak power generation.
Energy Security:
While China is diversifying its energy mix, it aims to ensure energy security by maintaining a significant role for coal. ......WHICH IT ISN'T GIVING UP YET !!!!!
That looks like Chat GPT agreeing with your question.
If you want to know what is happening in China, I suggest you listen to the Redefining Energy - Tech Podcasts with David Fishman, who is a China energy specialist:
https://open.spotify.com/episode/0BNFKPbnwUXeQV8iCbQZuJ
https://open.spotify.com/episode/2unJV4KA2Bx5WTSGbLAvrt
Key take away: China is the most electrified region in the world, and this led to electricity demand growing 7% in 2024. That growth was entirely met with wind and solar growth. Hydro fell a bit due to dry weather, meaning coal grew fractionally. That was a disappointment, as the peak was hoped for in 2023, but will now probably have been in 2024.
Dear Alex.......the fact is......."coal grew fractionally." GREW MEANS INCREASED.
.
and as for : "China is making strides to shut down smaller, less efficient coal plants. Efforts to grow electricity consumption without proportionally increasing coal usage remain a priority, with current coal plant utilization rates around 48-49%"...............YEAH ! CLOSING "smaller, less efficient coal plants"
BUT REPLACING THEM WITH MUCH LARGER , MORE EFFICIENT ONES !!!
.
STOP NIT-PICKING PLEASE.
The only nit pik is that Chinese coal use peaked in 2024, and not 2023 as had been hoped.
The only question now is how fast it comes down, despite electricity demand going up.
Some of the decline may be due to less efficient plant being replaced by more efficient plant, but far more is due to it being replaced with lower cost renewables.
Alex, anyone who bothers to look at reputable data sources like Embet Energy can see that you are absolutely correct: total energy use has grown quite a lot, coal rather less and renewables and, to a lesser extent, nuclear, are the ones that are really growing fast. All this indicates that China is at or fast approaching peak emissions, despite continued growth in energy demand.
But you'll never get fixed ideologues like Trevor to accept these facts.
I can’t remember which Soviet premiere said it (could have been Brezhnev), but basically it was a rueful comment that the US would sell to its enemies the very rope used to hang us with.
Carol.......Succinct and precise assessment !....you "aced it" ! [Apart from 'Premier' ]
This is nonsense.
https://imprimis.hillsdale.edu/words-of-warning-to-america-september-1975/
“It’s not about cheap labor and government subsidies”. Three paragraphs in: “Just kidding, it’s cheap labor and government subsides”. Then 3 pages of but but but China great. Hilarious.
Great article but I think you still need to put the scale of China’s subsidies in context. China provides roughly 3x the subsidies that EU and USA provide on an adjusted basis. This is significant.
It is not strictly due to subsidies that China outmaneuvered the democratic nations, but they did and still do play a significant role.
Jut an old hippy here and I spent my career as an automation tech. A machine does the exact same thing over and over as long as the raw materials are correct the end product is correct. Any manufacturing that does come back will not produce low skill assembly positions but increase the need for skilled techs, provided the companies invest in automated equipment. The need for engineers will increase also as specialized automation equipment needs to be designed. China has set-up their education system to produce lots and lots of engineers ours, not so much. Why did our manufacturers move their production to China? Because China could put 200 engineers to work on your production line while the US could only provide 10. End result the production line in China is up and running in several months, here several years. I won't go into the R&D required. Can we catch up? Sure, in time, with the proper incentives. Eliminating the Dept. of Education certainly won't help though.
Always interesting to read quantified answers to questions we all have. Thx. You tried to address the point of forced labour and subsidies. The related quote from Tim Cook I would take with a pinch of salt, however. Yes, China is no longer just a pool of cheap labour. I see it even in my own domain (space). However, you know, capitalists, oligarchs, all that, the -data- here may not be fully accurate... So yes, but also, careful...
For me however, one point missing that impacts both the cost of labour and the cost of production is what, in my view, is both the major pro and con of the "West" (whatever is left of it): Regulation.
Labour laws, environmental protection, zoning, etc... These increase significantly the cost of anything, from a pure techno-microeconomics zero-constraint basis. In my understanding, these are often blamed for the higher or increasing cost of nuclear energy, for instance.
It's a con, as endlessly argumented by yhe commentariat in the mainstream business sector (The Economist, Forbes etc...), ripe with ex-CEOs urging the abandonment of "excessive" (in their view) regulations. To the extent that the EU's Green New Deal is in the balance.
It's a pro, because, despite everything, people from emigrating countries still flow vastly more to Europe (and until recently to the US) than to China or Russia. That must mean something about where it is nicer to live...
At some point, the economics of regulations need to be developed as a discipline whereby not just the cost impact is considered but the whole socioeconomic impact. Too complicated for a blog post, obviously, but could have been mentioned as a factor.
You're missing the largest source of subsidies - local governments. The central government provides the direct r&d subsidies but the amounts are negligible mainly serve as a signalling function.
The key element is once the central government selects an industry for development, pretty much every one of the 34 provinces will shower local companies with cheap land (and the bank loans that come with this) and tax breaks ... Hundreds of these Hunger Game until a few ultracompetitive ones surface as national champions.
This is immensely wasteful of capital, AND it drives labor revenue and profit margins into the dust. It is not sustainable globally unless other countries choose to concede whole markets to Chinese industry
Brilliant. Once again. Its scary how automation is becoming such a clear cost-to-cut for...everything! Case by case it makes so much sense, but globally it's scary to contemplate where a world of 8 billion people will find purpose.
One of the best articles I have read in years. The claim is made that the US uses 6 times more workers per GWH produced. In the color graph, the US labor bar appears to be about 6 times as high as the Chinese one. Does this mean that the wages are about the same? Another possibility is that the 6 times as many workers claim applies only to BYD? Or maybe the 6x claim is about labor costs, the labor hours edge is smaller? (but not for BYD)
"50 workers per gigawatt-hour (GWh) of production"...meaning what, exactly? Do you mean each Chinese 50 workers produced one GW of solar capacity per hour?..so that 50 workers would produce 4000 GW in a year of 40 hour weeks? Or do you mean that 50 workers produced 1 GWh in a year? But solar panel output is measured in GW, not GWh. Maybe 50 workers would produce enough solar capacity to generate 50 GWh per year? Please clarify what this number is intended to mean.
It’s 50 workees per annual GWh of battery production. That mean that to produce 1 GWh of battery in 1 year, you would need 50 workers in China. It’s not solar panels
Ah, thanks...I saw the graph at the beginning of the article and was thinking 'solar', should have read more carefully.