While European politicians debate whether a carbon tax is politically survivable, and American ones dismantle the Inflation Reduction Act, the decisive question of the green industrial revolution has quietly been settled. The state capable of coordinating capital, technology and labour at the scale required to decarbonise an industrial economy already exists. It is not in Washington, Berlin or Brussels. It is in Beijing.
The numbers are the cocktail statistics I cannot stop repeating. In 2024 China invested more than $625 billion in clean energy, roughly a third of the global total, more than double any other single country, and enough to account for two-thirds of the entire global increase in energy transition spending that year. Its clean-energy sectors are now worth roughly $2.1 trillion, around 11 per cent of Chinese GDP, comparable in size to the entire economy of Brazil or Canada. If Chinese clean energy were a country, it would already be the eighth-largest economy in the world. Without it, China would have missed its 2025 growth target, expanding by 3.5 per cent rather than 5.
This is not green capitalism in any sense a European liberal would recognise. It is industrial policy, patient state capital, and deliberate overcapacity designed to crush prices to the point where no one else can compete.
The cost collapse was engineered
Consider solar. China now controls more than 80 per cent of every stage of solar manufacturing, from polysilicon through wafers, cells and modules. Wafers are effectively a Chinese monopoly, at 98 per cent of global output. A solar module made in China is 50 per cent cheaper than one produced in Europe and 65 per cent cheaper than one produced in the United States. In 2025 alone, China installed 315 gigawatts of solar and 119 gigawatts of wind, more solar and twice as much wind as the rest of the world combined. Chinese photovoltaic capacity crossed one terawatt in May of last year.
The story in electric vehicles and batteries is the same, only faster. More than half of new cars sold in China are now electric. Eight of the world’s ten best-selling electric vehicle models are Chinese. Six Chinese corporate groups control nearly 70 per cent of the global electric-vehicle battery market, and on lithium-iron-phosphate cathodes China’s share is above 95 per cent. BYD overtook Tesla as the world’s largest pure-electric vehicle manufacturer last year, while launching new models two to three years faster than Volkswagen or General Motors.
Then there is the choke-point. China refines roughly 90 per cent of the world’s rare earths and produces 94 per cent of the permanent magnets that power every electric motor and wind turbine. When Beijing tightened rare-earth export controls in April 2025, European prices ran up to six times Chinese prices almost overnight. A generation of Western complacency about supply chains met its reckoning in a single quarter.
Industrial policy, not carbon price
Here is what makes China’s model structurally different. Beijing has imposed ruthless competition on its own market, forcing Chinese capitalists into a war on price that no Western equivalent has been willing to wage. Overcapacity is not a bug, it is the instrument. Margins are compressed, weaker players go to the wall, prices collapse. This is not laissez-faire. It requires a strong state, not a weak one dressed up as a neutral referee, and it is precisely the kind of discipline no capitalist democracy has been willing or able to impose on its own corporate groups.
China did not get here by making fossil fuels expensive. It got here by making clean technology cheap, through three decades of coordinated state investment, strategic credit allocation, concentrated manufacturing ecosystems and the forced march of domestic competition. The Chinese state did what Alexander Hamilton, Friedrich List and every serious theorist of late development said industrialising states must do. It picked winners, and then disciplined them.
The spillover for the rest of the world is enormous, and largely unacknowledged in the Western debate. Cheap Chinese technology has enabled roughly a quarter of emerging markets to leapfrog the United States on end-use electrification, and nearly two-thirds to leapfrog the US on the share of solar in electricity generation. The democratic coalition of green growth for the rest, which I argue in Growth, Democracy, or Climate Action? is the only viable political route out of the climate trilemma, is being materially underwritten by Shenzhen, not by Brussels.
The Western response is corporate lawfare
Faced with this, advanced capitalist democracies have largely responded not with comparable industrial strategy but with tariffs, forced-labour audits, and subsidy regimes captured by incumbent corporate groups. The Inflation Reduction Act, for all its ambition, has been partially colonised by the same oil and gas interests it was supposed to displace. Europe debates anti-dumping duties on BYD while its own automotive champions sit on half-finished gigafactories. This is corporate lawfare dressed as climate policy, and it will not build a single Chinese-scale supply chain.
The uncomfortable conclusion for anyone who cares about both climate and democracy is simple. The technical and economic problem of decarbonisation has been solved, by an authoritarian developmental state. The political problem, whether capitalist democracies can build their own big green state without surrendering either the climate or democratic legitimacy, is now the only question that matters.
That is what we should be arguing about. Not whether to raise the carbon tax by another five euro per tonne.
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