“There is great disorder under heaven. The situation is excellent.” (Mao Zedong)
The main factors of competitiveness that characterize contemporary China, as highlighted in the Draghi Report[1], can be summarized as follows.
Dominance in critical supply chains: China is the largest processor of critical raw materials (CRMs) essential for the energy and digital transition, holding between 35% and 70% of global processing activity for nickel, copper, lithium, and cobalt.
It also has a predominant share in the refining of specific critical minerals, including half of the world’s lithium chemical plants and nearly 90% of nickel refining facilities, both operational and planned. Moreover, it is the EU’s main supplier for numerous critical minerals, with extremely high market shares for some of them—Magnesium (97%), HREEs (100%), Boron (99%), Gallium (71%), Germanium (45%), and others. This concentration in processing and supply creates a chronic dependency for the EU, which is unable to enter a now monopolized market, granting China exceptional market power. Historically, the EU economy has relied on a model where raw materials were extracted in certain countries, processed in others (such as China), and then imported into EU member states for use.
Lower production and investment costs: It is estimated that in the photovoltaic sector, module production costs in China are about 35%–65% lower than in the EU. Some industrial estimates indicate that integrated cell and module production costs in the EU are 70%–105% higher than in China. Investment costs are estimated to be three times higher in the EU than in China, with lower labor and raw material costs contributing to this photovoltaic cost gap. Lower costs (including know-how, economies of scale, and labor costs) are also cited as competitive advantages for China in the electric vehicle value chain.
Technological advantage and specialization: China has moved faster and on a larger, more coordinated scale along the entire electric vehicle value chain. It has demonstrated strong specialization and positioning in complex technologies—both digital and green—such as Artificial Intelligence, Battery Technology, Wind Energy, and Green Transport, as evidenced by patent data. It also holds a significant share in the semiconductor value chain, particularly in Assembly, Packaging, and Testing (70%), Materials (41%), and Wafer Fabrication (20%).
Coordinated industrial strategy and large-scale domestic market: China has adopted various strategies to encourage foreign automakers to produce and sell in the Chinese market or to enter partnerships with Chinese manufacturers (for example, through joint ventures or technology transfer agreements). These policies have established common standards and facilitated access to technologies, data, and resources for automotive production. China is the world’s largest market for electric vehicles (60% of global new registrations in 2023), enabling Chinese manufacturers to exploit economies of scale. Moreover, there is a general trend of increasing public funding for research and development.
Lower dependence on fossil fuel imports: China shows a lower or declining level of dependence on fossil fuel imports compared to the EU.
The pragmatic approach of the Chinese economy should teach us something. It is true that the aforementioned EU Competitiveness Compass emphasizes the need to bridge the innovation gap, the link between decarbonization and competitiveness, the reduction of dependencies, and the promotion of partnerships—but it seems to miss the point.
Faced with an unclear vision of the future in Europe, when examining the Chinese phenomenon on a large scale, one often risks falling back on clichés, even in understanding its past and present. This is a curious fact, since History is a particularly compelling perspective for Europeans. Why do we Eurocentrics have a view of China—and of Asia—devoid of historical perspective? Perhaps an unintentional absence, perhaps related to its “magnificent otherness,” so difficult to assess and contain, but still entirely misguided… If, in some sense, the European ethical approach has become a boomerang for us, in what way is the Chinese cultural approach superior to ours?
A past without history; an incomplete present: relying on a compressed and ideological perspective, we fail to understand that China’s potential has been a very different reality for centuries. Yet history should teach us something: our Eurocentric approach and short historical vision provide us with an unrealistic picture of China’s weight in the world throughout history.
We have a generic perception of the Middle Kingdom and possess approximate historical references covering roughly the period from 1820 to the early 2000s. This span of less than two centuries saw China experience great economic, social, and political weakness. We Eurocentrics rely too often on this misleading imprint—a backward China compared to the technological, social, and cultural progress of the West. But a broader perspective yields very different evidence. China was in fact economically superior (in terms of GDP per capita and absolute value) to Western Europe from the first century A.D. until the 14th century, with the Song dynasty (10th–13th centuries) representing in particular a period of strong intensive growth and remarkable technological innovation. Over a longer historical scale, it can be observed that China’s wealth, for roughly two millennia, consistently surpassed that of the European continent.
If, after the 14th century, per capita income stabilized at lower values, China’s absolute economic size remained greater than that of Europe, due to its larger population. In total terms, China’s population was much larger than Western Europe’s throughout the period considered, from the first century A.D. onward. For example, in the first century A.D., China’s population was close to sixty million versus the roughly twenty-five million (likely overestimated) of Western Europe; by 1820, it exceeded 380 million compared to just over 130 million in Europe—a ratio of about 3:1 maintained for nearly two millennia. This large and growing population contributed to keeping total GDP above that of Western Europe until the latter half of the nineteenth century, even though per capita income had become lower. Demographic weight and aggregate wealth allowed China, for two thousand years, to decisively and consistently surpass Europe’s economic and demographic capacity.
It must also be noted that China was technologically superior to the West—often by several centuries—in key areas such as navigation, cartography, astronomy (the calendar), and printing, maintaining this lead at least until the early 15th century. The main reasons for this superiority can be traced to technical precocity, effective bureaucracy, significant agricultural innovations, and the ability to disseminate knowledge (in part thanks to printing).
The past two centuries, in short, do not define China’s history. Rather, they indicate its appetite, its aspirations, its goal: to return to being the protagonist it once was—the technological and avant-garde champion that defined its history for more than two millennia. The isolationist stance adopted during the Ming dynasty and its disastrous consequences, which led China into regression compared with the rise of the West over the last five centuries, allowed Deng Xiaoping first and Xi Jinping later to learn the lesson and consider the entire world their “natural” market. If the loss of this advantage over the previous two centuries was linked to stagnation and the decision to close itself off from the outside world—contrasting with the West’s ascent and innovation—today China demonstrates a global vision far superior to that of other major competitors, notably the USA and Europe.
And what about today? It is often heard from short-sighted commentators: “Why should we invest in the green economy if the major players are not doing the same?” We can say this without fear of contradiction: it is a false myth, one that is heavily penalizing us. Now more than ever—and for decades—China has been investing in sustainable development, but in a very different way from what we, intellectually well-meaning Eurocentrics, might imagine. Perhaps we should examine, without prejudice—historical or ideological—what is really happening and realize that sustainability is the true opportunity to remain competitive in the market. Yet we risk letting it become such only for others—China above all. The pragmatic recipe of China works without concessions for anyone, not even for itself.
Its internal energy development is a prime example. “According to a new report by the Center for Research on Energy and Clean Air (CREA) and the Global Energy Monitor (GEM), last year China approved the largest number of new coal plants since 2015. In 2022, the People’s Republic granted permits for 106 gigawatts of capacity across 82 sites—four times the capacity approved in 2021 and equivalent to launching two large coal-fired power plants every week.”[2]
Despite Xi Jinping’s targets for carbon neutrality by 2060, China produces and uses coal based on its own estimates and goals. This alone would suffice to label it a “rogue state” and “enemy of the climate.” Yet China invests in an energy mix in which renewables are increasing their relative share—even though coal remains significant. “Coal is still king in China, despite the renewables boom with record additions of solar and wind energy. Thermal power generation, largely dominated by coal, rose by 1.5% in 2024 compared to the previous year, reaching a record 6.34 trillion kilowatt-hours (kWh), according to data from China’s National Bureau of Statistics. […] Coal consumption in the power sector continues to grow, as do Chinese production and imports. The persistent growth in coal demand—even for electricity generation—shows that coal remains the baseload of the Chinese power system, supporting the expansion of renewables and likely to remain so for years to come, as energy demand rises with the growing electrification of homes and transport.”[3]
In terms of energy, China acts quickly and decisively, according to its needs and objectives. Among these, one stands out above all: to become the undisputed global champion of green technologies and innovation in most possible sectors, achieving a competitive edge through an agile and pragmatic strategy rooted in state capitalism, price competitiveness, effective global market penetration, internal management of most of the value chain (especially intermediate segments), and the creation of a domestic market that absorbs a large share of consumption.
If there are several recipes for envisioning the future of sustainable development, the Chinese one—though controversial—appears far more successful than the European. It will therefore be necessary to keep asking ourselves: who wins? Who loses? Who depends on whom? But we must admit—the answer, at this moment, is one we do not like.
[1] M. Draghi, Rapporto «Il futuro della competitività europea», 2024
[2] L. Lamperti, La Cina produce sempre più carbone, Wired, 15.03.2023
[3] F. Lugano, Il carbone continua a dominare il mix energetico della Cina, Se – scenari economici, 27.01.2025
