In his speech on the world’s struggle against poverty at the 19th G20 Summit in Rio de Janeiro in November 2024, China’s President Xi Jinping, cited his country’s standout track record of wealth creation, and exulted: “If China can make it, other developing countries can make it too.

China’s promise to guide the Global South on the path toward modernization has included support for green and sustainable development. Yet its pledge also holds a central environmental challenge, especially as the share of global greenhouse gas emissions from emerging markets and developing economies continues to increase. 

In 2023, China issued Opinions on Promoting the Green Development of the Belt and Road Initiative, which added policy nitty gritty to its earlier unmet promises to soften the climate impact of the nation’s overseas investments. The government also has signed over 50 MOUs with developing countries on climate change mitigation, adaptation and capacity building. 

And China is putting its money where its mouth is. A recent World Resources Institute study found that between 2013 and 2022, China contributed or mobilized $45 billion to support developing countries in the tasks of reducing emissions or adapting to climate change. This total accounted for about 6% of the total climate finance provided by developed nations over the same span of time. And the Global South’s hunger for clean energy combined with low costs of Chinese-manufactured PVs, EVs, and batteries are lifting China’s foreign direct investment in clean energy to new heights.  

Vietnam offers an interesting case study in assessing China’s efforts to broaden its green commitments. While not a Belt and Road Initiative (BRI) country, Vietnam signed on to a climate MOU with China in 2023. And an October 2024 visit by Chinese Premier Li Qiang to Hanoi yielded a new agreement that emphasized green development collaboration.

Attracting Chinese Cleantech Enterprises     

It is against this backdrop that the Institute for Global Decarbonization Progress (iGDP) selected 20 representatives from Chinese think tanks, enterprises, research institutions, and universities for a study tour in Vietnam in October 2024. Its goal was to better understand the challenges and opportunities for China to promote clean energy and climate cooperation in Southeast Asia. As participants in this tour, we had a firsthand view of these efforts.

Our delegation first visited the Hanoi Authority for Planning and Investment. Our hosts observed that even during the global pandemic, Vietnam’s domestic development remained stable, with steady GDP growth fueled by increases in domestic and foreign investment. Vietnam’s competitive production costs and integration with international markets also have attracted Chinese enterprises and capital. 

This rapid growth of Vietnam’s manufacturing industry and rising living standards are driving up electricity demand, however. Vietnam’s 8th National Power Development Plan (PDP8) calls for the proportion of renewable energy to reach 30.9-39.2% by 2030 and 67.7-71.5% by 2050, with rapid progress expected in the development of wind, solar, and biomass. An expert from Vietnam Electricity noted that one key policy goal is to promote power stability in industrial parks and other areas by attracting investment in large-scale energy storage. 

Vietnam’s energy development plans are pulling in large volumes of Chinese investment. The study group also visited two solar energy companies: one Vietnamese and one Chinese. China supplies about 90% of the photovoltaic (PV) modules used in the Vietnamese company’s projects, which demonstrates the competitiveness of Chinese PV technology in Vietnam’s cleantech market. At the Chinese company, the study group learned how early overseas expansion and an excellent compliance record have given it a leading position among solar PV companies in Vietnam. 

Hurdles for China’s PV and EV Companies

Chinese solar PV and electric vehicle (EV) companies do face multiple challenges in Vietnam. On the finance side, PV companies lack subsidies or other economic support and face difficulties accessing capital from local banks. They also receive minimal local government assistance on business registration or grid connection. The logistical side also offers challenges involving unclear power transmission costs and long distances between project locations and production facilities. Chinese-invested and Vietnamese solar PV companies alike also encounter the high costs of international certification, as well as high tariffs and anti-dumping investigations in exporting to the United States. 

Our study group also met with a Chinese-funded power supply and energy storage company focused on overseas markets. Like the solar PV companies we visited in Vietnam, this company found itself having to constantly adapt to new regulations and tariff barriers in valuable export markets like the EU and the United States.  

To accelerate progress on EVs, the Vietnamese  announced an Action Program on Green Energy Transition in the Transport Sector in July 2022. The program targets net-zero vehicle emissions by 2050, with 100% of motorized vehicles powered by electricity, hydrogen or other clean energy sources. Nevertheless, one local branch of a Chinese EV company told us that Vietnam’s EV market is moving slower than its solar counterparts. To date, this Chinese EV company has built roughly 200 charging points in Vietnam. Cost is a factor in this scant supply: a charging station in Vietnam costs more than triple those in China. Additionally, local EV brands are locked into their own charging stations, creating a lack of interoperability with imported EVs. The need to build their own distribution grids significantly drives up costs for all EV companies.

Although the Vietnamese government has begun promoting EVs to reduce urban air pollution in cities rife with narrow alleys and little parking, motorcycle use is deeply entrenched and continues to dominate private transportation and commercial distribution services. To meet Vietnamese consumers where they are, Chinese two-wheeler companies like Yadea have joined a race with other foreign and Vietnamese companies who also are preparing to tap the significant e-mobility market growth in Vietnam. 

Stepping Up

While Chinese commercial investments and climate financing can be a catalyst for green tech industries in the Global South, they are not the whole story. One recent study found that between 2013 and 2021, Chinese overseas fossil fuel investments reached $57 billion, greatly surpassing the country’s climate lending over that period. However, since Xi Jinping announced the 2021 ban on building coal-fired powerplants overseas, BRI countries have not received new on-grid coal investments since September 2021. Notably, the ban notably does not yet apply to growing number off-grid captive coal plants being built in industrial parks. 

Capacity-building and knowledge sharing should also be part of the equation. Beyond formal MOUs, high-level Vietnamese officials have been having one-on-one conversations with Chinese private companies to request the tech transfer that will help them transform and decarbonize the country’s power sector. Like Western countries in previous decades, China is now in a position to share its vast store of technical and policy expertise with the Global South, injecting “sustainable” know-how into the concept of sustainable development.