China's Clean Energy Supremacy: Supply Chain Control and Technological Dominance Shape Global Markets

China's grip on global clean energy markets has tightened dramatically in 2025, driven by unparalleled control over supply chains, cost advantages, and technological innovation. As the world races to decarbonize, Beijing's strategic investments and industrial policies have positioned it as the linchpin of the energy transition-raising both opportunities and risks for global investors.

Supply Chain Control: From Minerals to Manufacturing

China's dominance begins with its stranglehold on critical minerals. By 2025, it controls 60-70% of global rare earth raw materials and 85% of processing capacity, enabling it to dictate terms for materials essential to electric vehicles (EVs), wind turbines, and high-tech magnets, according to a Metal.com report. In April 2025, Beijing added seven rare earth elements-including dysprosium and terbium-to its export restriction list, a move widely seen as retaliation against U.S. tariffs and a signal of its willingness to weaponize resources, according to an RFF brief. The impact is immediate: dysprosium prices in Europe tripled to $850 per kilogram in May 2025, while U.S. firms faced production delays and supply shortages, a China Observer article reported.

Beyond rare earths, China is expanding its influence over lithium, cobalt, and graphite. It now refines over 90% of the world's graphite and 60% of lithium and cobalt, securing mines in Africa and Latin America to mitigate import dependencies, according to a Rare Earth Exchanges study. This vertical integration-from mining to refining to manufacturing-leaves Western competitors struggling to replicate. As one analyst noted in a Tatvita analysis, "China's control over midstream and downstream processing is a moat no amount of U.S. subsidies can easily breach."

Manufacturing dominance further cements its position. China accounts for 76% of global clean-tech factory investment in 2024, producing solar PV modules, wind turbines, and batteries at costs 40% lower than the U.S. and 45% lower than the EU, according to a BloombergNEF analysis. Its EV market, where 70% of global EVs are now manufactured, is nearing a tipping point: over half of new vehicle sales in China are electric, with exports surging to emerging markets, as shown in Technology Review charts.

Technology Leadership: Patents, R&D, and Innovation

China's technological ascent is underpinned by aggressive R&D spending and a patent explosion. By 2022, it had filed over 5,000 internationally competitive clean energy patents, up from just 18 in 2000, according to an SDG Talks report. The government's "Made in China 2025" strategy has funneled subsidies into sectors like solar and batteries, enabling firms such as BYD and CATL to lead global markets. These companies now offer EVs and batteries with superior performance, safety, and cost efficiency, outpacing Western rivals, noted a New York Times piece.

R&D investment itself is staggering: China spent 2.5 times the global average in 2023, with 63 of the world's top 100 clean energy research institutions based in the country, according to a NEN Power analysis. This innovation ecosystem is reinforced by state mandates and domestic deployment targets, creating a feedback loop of scale and expertise.

Geopolitical Tensions and Global Responses

China's dominance is not without friction. U.S. tariffs and European onshoring efforts aim to reduce reliance, but progress is slow. The U.S. and EU are investing in domestic rare earth processing and alternative supply chains, yet these initiatives face long lead times and high costs, according to a Hudson Institute brief. India, too, is prioritizing domestic clean energy projects over exports, signaling a shift in global dynamics, as reported in a Rare Earth Exchanges article.

Yet, Beijing's strategic calculus is clear: it leverages its control over rare earths and manufacturing as both an economic and geopolitical tool. As one BloombergNEF report notes, "China's ability to reshape trade flows through export controls or regulatory shifts makes it a wildcard in the energy transition."

Investment Implications

For investors, China's dominance presents a paradox. On one hand, its scale and efficiency make it indispensable for clean energy growth. On the other, geopolitical risks-such as export restrictions or trade wars-could disrupt markets. The key lies in hedging: investing in Chinese-led supply chains while diversifying into alternative mineral sources or technologies less reliant on rare earths.

Conclusion

China's clean energy supremacy is a product of decades of strategic planning, industrial policy, and technological investment. While global efforts to counterbalance its influence are gaining traction, Beijing's control over supply chains and innovation remains unchallenged. For investors, navigating this landscape requires a nuanced understanding of both the opportunities and the risks-a balance between leveraging China's strengths and mitigating its potential to disrupt global markets.