In the first two months of 2026, China’s exports of “three new products” (electric passenger vehicles, lithium batteries, and solar cells) increased by 50.7% year-on-year.
Behind this number, there is far more than a simple “capacity output” can summarize.
To see clearly where the driving force lies, we need to dismantle it from three interrelated dimensions with different emphasis: Policy logic, industry core and global market.
The hand of policy, a precise shift from support to pressure
Judging from the logic of policymakers, the goal of promoting the “Three New Things” is no longer simply scale expansion, but systematic upgrading of industrial quality.
Its policy toolkit shows a clear path of “first supporting the horse, then giving it a ride, and finally letting the competition go”.
The “forced” effect of tax leverage: The most typical signal is the gradual cancellation of export tax rebates.
The export tax rebate for photovoltaic products will be completely reset to zero in April 2026, and the tax rebate rate for lithium batteries will also be reset to zero in 2027.
This directly responds to the international accusations of so-called “subsidy dumping”.
The policy intention is clear: although it will bring cost pressure in the short term, in the long term it will force companies to get rid of their reliance on price advantages and shift to higher value-added technologies, brands and overseas localization layout.
The results are very convincing: in the context of tax rebates and reductions, the export volume of the “three new items” will still reach 1.28 trillion yuan in 2025, an increase of 3.5 times in five years.
Standards lead governance “involution”: Policy leaders realize that low-level duplication of competition (involution) will harm long-term competitiveness.
Therefore, the State Administration for Market Regulation has deployed the development of 167 “three new” national standards in 2025, covering key areas such as quality and safety, energy efficiency, etc., aiming to eliminate backward production capacity with high standards and promote the industry’s shift from “fighting on price” to “fighting on quality.”
Local supporting facilities open up the “last mile”: Central policies need to be implemented and transformed by local governments.
For example, Changsha Customs has launched 25 measures to replicate and promote the “Lithium Battery Packaging Product Line Conformity Assessment Model” to improve customs clearance efficiency and directly help the “Three New Products” expand exports.
Anyang City has used special funds and customs clearance facilitation to promote its “three new items” exports to grow by 31.7% in the first two months of 2026.
The core of this perspective is that the policy impetus has changed from the initial “real money” subsidies to shaping a healthier and more innovative industrial ecosystem through rules, standards and market access.
The core of technology, the hard support of the entire industry chain and engineer bonus
From the perspective of industrial technological innovation, the outbreak of China’s “three new things” is based on the formation of the trinity of technological breakthroughs, complete industrial chains and cost control, which constitutes a competitive barrier that is difficult to replicate.
Technological breakthroughs enter “no man’s land”: Chinese companies no longer just follow, but lead in many frontier fields.
For example, BYD e-platform 3.0Evo achieved a system comprehensive efficiency of 92%, greatly improving low-temperature battery life; LONGi Green Energy’s back-contact crystalline silicon heterojunction solar cell (HBC) photoelectric conversion efficiency reached 27.3%, setting a new world record; the new electrolyte developed by the scientific research team can even allow lithium batteries to work in extreme environments of -70°C.
The “cost moat” of the entire industry chain: This is the unique advantage of China’s manufacturing industry.
China has the only complete system in the world that covers all industrial categories, allowing technology and supply chain capabilities to be quickly reused across industries.
In terms of cost, Chinese car companies can achieve a 30%-40% cost advantage through vertical integration.
This also explains why the overseas prices of Chinese new energy vehicles are generally twice as high as domestic prices, but the competitiveness is still strong – the advantage comes from technology and scale, not low price.
“Engineer Dividend” provides continuous momentum: A huge talent pool is the source of innovation.
As of 2024, China’s total number of engineers will exceed 20 million, and it will produce about 5 million STEM graduates every year, 10 times that of the United States.
This provides a steady stream of talent support for high-intensity, fast-paced technology iterations.
The core of this perspective is: the internal driving force for the explosion of exports is the “innovation-cost” composite competitiveness formed in specific high-tech tracks after decades of accumulation in China’s manufacturing industry. It is more durable than a simple cost advantage.
Market needs, certain opportunities and challenges of global green transformation
For the global market, the rise of China’s “Three New Things” comes at the right time, but the process is not smooth sailing, and opportunities and challenges are complexly intertwined.
Deterministic demand growth: The global green energy transformation is an irreversible trend, creating massive market demand.
The International Energy Agency (IEA) predicts that by 2030, global demand for new energy vehicles will reach 45 million, more than double that of 2025; global battery demand will surge to 3500GWh.
This provides broad digestion space for China’s production capacity.
Diversification of the market structure: The export market is rapidly expanding from traditional Europe and the United States to emerging markets.
In the first two months of 2026, China’s exports of the “three new items” to Africa increased by 49.9%, and to ASEAN by 29.4%.
Hunan’s electric vehicle exports to Brazil and Malaysia have even achieved “hundred-fold” growth.
This diversification effectively hedges the risks of a single market.
Competitors’ “double-standard” reactions: Faced with the competitiveness of Chinese products, the reactions of major developed economies are complex and contradictory.
The EU on the one hand provides huge subsidies through the “Innovation Fund” and “European Important Projects of Common Interest” (36.2 billion euros of state aid has been approved from 2018 to 2024, 17% of which is for batteries) to build a local industrial chain; on the other hand, it has launched a countervailing investigation into Chinese electric vehicles.
The United States has set localized production thresholds through the Inflation Reduction Act.
This approach of “supporting oneself + restricting others” highlights its anxiety when facing the advantages of China’s industrial chain.
The core of this perspective is: global green demand is an objectively existing “east wind”, but the international market is not a blue ocean, but full of comprehensive games of geopolitics, trade protection and industrial competition.
Comprehensive judgment: qualitative change from “policy support” to “dual-wheel drive of market and technology”
Integrating the three dimensions, the driving force behind the explosion of China’s “three new items” exports is a process of qualitative change that has successfully shifted from “policy-driven” to “market and technology-driven”.
In the early days, precise policy support and a blank window in the market allowed the industry to complete the accumulation and scale from 0 to 1.
When the industry gradually matured, policies wisely took a step back and “forced” enterprises to hone their true market competitiveness – that is, technology and cost advantages – by canceling subsidies and raising standards.
At the same time, the deterministic demand for global green transformation has provided explosive growth in exports for these competitive products.
Therefore, there is no single dynamic.
It is a successful resonance between the push of internal industrial upgrading (technology and cost) and the pull of external market demand (green transformation), under the framework of effective policy guidance.
The challenge in the future is no longer how to expand the scale, but how to continue to consolidate technological leadership in increasingly complex international competition and trade protection, and to complete a higher-level leap from product export to comprehensive overseas expansion of technology, standards and brands.
