Elon Musk, CEO of Tesla and SpaceX, recently tweeted that China is ahead of the United States when it comes to renewable energy and electric vehicles.
Musk's May 29 tweet reflects a recent Center for Strategic and International Studies (CSIS) report that details how the Chinese government has intentionally funded the electric vehicle (EV) sector through a range of state support measures.
"Few seem to realize that China is leading the world in renewable energy generation and electric vehicles," Musk tweeted.
According to the CSIS report, the Chinese government has sought to support both the supply and demand sides of the electric vehicle (EV) sector during the last decade, leading to over 50% of all EVs in the world being located in China by 2020.
In addition, the bulk of EVs purchased in China were produced locally.
According to the CSIS report, China's support of the EV industry is part of a larger industrial expansion strategy.
China, which subsidized the electric vehicle sector by an estimated $58 billion between 2009 and 2017, also provided an estimated $63 billion in direct subsidies in 2019, primarily to companies in priority industries such as EVs.
The Chinese government reportedly prefers direct subsidies to select firms and below-market credit to state-owned enterprises (SOEs). SOEs obtain financing rates that are, on average, 1% lower than those of private companies, demonstrating the Chinese Communist Party's (CCP) target of a strong state sector.
The report also warns that it will be difficult for officials in the U.S. to adequately deal with the state-capitalist system that currently exists in China.
CSIS estimates that China spent roughly 1.71 trillion yuan ($248 billion) or 1.73% of its GDP on industrial policy in 2019.
Comparatively, the U.S. invested $84 billion or 0.39% of its GDP in 2019 on industrial policy.
China currently produces 60% of the world's supply of EVs, according to Nikkei Asia, which also reports that the country exported more EVs than any other country in 2021 at half a million vehicles.
This high rate of export was helped in part by the fact that China's exports to Europe increased by five times after the European Union (EU) made the announcement that it will prohibit the sale of new hybrid and gas-powered vehicles by 2035.
CSIS is a nonprofit organization that has been conducting research on national security concerns since its founding in 1962.