In-Depth Analysis of the Sustainability of China's New Energy Full Industry Chain Competitive Advantages and Its Impact on A-Share Valuations

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China has established the world’s most complete industry chain system in the new energy sector, occupying a dominant position from raw material supply to end-use applications [1]:

Industry Chain Segment	Global Capacity Share	Technology Level	Representative Enterprises
Photovoltaic Silicon Material	85%	World-leading	Tongwei, GCL
Photovoltaic Silicon Wafer	95%	World-leading	Longi Green Energy, Zhonghuan Semiconductor
Photovoltaic Cell	90%	World-leading	Tongwei, Longi Green Energy
Photovoltaic Module	85%	World-leading	Longi Green Energy, JinkoSolar
Wind Turbine	60%	World-leading	Goldwind Science & Technology, Mingyang Smart Energy
Energy Storage Battery	80%	World-leading	CATL, BYD
Power Battery	75%	World-leading	CATL, BYD

This full industry chain layout enables China’s new energy industry to have the following core advantages:

: China’s photovoltaic silicon wafer capacity accounts for over 95% of the global total, forming a strong economies of scale effect. In 2025, newly connected photovoltaic capacity reached 240 GW, and photovoltaic power generation in the first three quarters reached 916.3 TWh, a year-on-year increase of 44.1% [2]. Newly connected wind power capacity reached 61.09 GW, with cumulative connected capacity reaching 582 GW, a year-on-year increase of 21.3% [2].

: China’s new energy industry chain covers the full range from upstream raw materials to downstream system integration, with the localization rate of key components exceeding 90%, effectively reducing supply chain risks.

: Chinese enterprises continue to make breakthroughs in next-generation photovoltaic technology routes such as TOPCon, HJT, and BC cells. The capacity of energy storage cells is iterating from 280Ah to 587Ah and even larger, with a technology iteration speed leading the world [3].

In addition to traditional new energy, China has also achieved milestone progress in controllable nuclear fusion, the ‘ultimate energy’ field:

• EAST (Experimental Advanced Superconducting Tokamak)
  : In 2025, it set a world record for stable plasma operation at 100 million degrees Celsius for 1066 seconds, continuing to maintain a leading global position [4]
• China Huanliu-3 (HL-3)
  : Realized the operation of ‘double 100-million-degree’ plasma with both ion temperature and electron temperature exceeding 100 million degrees Celsius for the first time [4]
• BEST (Budapest Extended Solenoid Tokamak)
  : As an engineering verification platform for the next-generation ‘artificial sun’, the Hefei Compact Fusion Energy Experimental Facility aims to achieve power generation demonstration by 2030 [4]

Controllable nuclear fusion is in a critical stage of transitioning from laboratory to engineering and commercialization, and it is expected to see ‘the first light lit by nuclear fusion’ around 2030 [4]. Breakthroughs in this field will further consolidate China’s long-term competitive advantages in energy technology.

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• The 15th Five-Year Plan clearly proposes core indicators of reaching 25% non-fossil energy consumption share and over 50% new energy power installed capacity share by 2030 [5]
• The National Energy Work Conference deployed to add more than 200 GW of wind and solar power installed capacity in 2026 [5]
• The Central Economic Work Conference clarified the strategic positioning of ‘accelerating the construction of a new energy system’ [6]

:

• In 2025, the retail penetration rate of new energy vehicles exceeded 60%, completely shifting from ‘policy-driven’ to ‘market-led’ [7]
• The cumulative installed capacity of new energy storage exceeded 100 GW, and is expected to reach 239 GW in 2026 [2]
• China is the world’s largest energy storage application market, with strong industrial growth momentum [2]

:

• In 2025, the shipment of lithium-ion energy storage batteries reached 189.7 GWh, a year-on-year increase of 86.5%, and is expected to reach 414.7 GWh in 2026 [2]
• BC (Back Contact) cells are in a capacity expansion period, with Longi Green Energy and Aixu Co., Ltd. investing heavily [8]
• Emerging technologies such as sodium-ion batteries and solid-state batteries are in the demonstration stage and accelerating breakthroughs [2]

:

• In 2024, capacity utilization rates in various segments of the photovoltaic industry were generally low, with the polysilicon segment having the most severe overcapacity. 19 enterprises across the country formed an effective capacity of 3.535 million tons across more than 30 bases, resulting in serious inventory backlog throughout the year [6]
• The industry is promoting production based on sales, refining total volume control to quarterly and monthly levels [6]

:

• Since the EU’s Foreign Subsidies Regulation (FSR) came into effect in July 2023, it has launched multiple investigations into Chinese new energy enterprises, covering clean energy, electric vehicles, and industrial equipment [9]
• The EU plans to introduce the Industrial Accelerator Act, setting a maximum 70% ‘Made in Europe’ local content requirement for key products [9]
• 81% of Chinese enterprises in the EU feel ‘increased uncertainty’ [9]

:

• Under the pressure of the new energy vehicle ‘price war’ in 2025, some OEMs transferred cost pressures to the upstream supply chain in an unordered manner [7]
• The state revised regulations requiring that the payment period for large, medium, and small enterprises shall not exceed 60 days to reverse the zero-sum game [7]

Advantage Dimension	Current Status	Trend	Main Challenges	Risk Level
Scale Cost Advantage	Strong	Stable	Overcapacity	Medium
Supply Chain Completeness	Extremely Strong	Stable	International Barriers	Low
Technology Iteration Speed	Strong	Increasing	Basic R&D	Medium
Talent Reserve	Medium	Improving	High-end Talent	Low
Policy Support	Extremely Strong	Stable	Subsidy Reduction	Low
Market Capacity	Extremely Strong	Stable	Intensified Involution	Medium

: The competitive advantages of China’s new energy full industry chain are , but short-term disturbances from capacity clearance and international trade frictions need to be monitored. Scale advantages, supply chain completeness, and policy support constitute the core competitive moat, while basic R&D and high-end talent cultivation are areas that need to be strengthened in the future [10].

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As of January 2026, the valuations of core companies in the A-Share new energy sector show differentiation:

Company Name	PE(TTM)	PB	Market Capitalization (Billion USD)	Valuation Characteristics
Longi Green Energy	-25.10	2.43	138.46	Cycle bottom, negative PE
BYD	22.87	3.99	866.36	Reasonably high
Zhonghuan Semiconductor	N/A	2.15	58.72	Loss-making
Goldwind Science & Technology	15.23	1.45	12.85	Undervalued
CATL	24.83	5.04	198.56	Industry premium

: Approximately 22x, significantly lower than that of US-listed tech/new energy companies (approximately 50x) [11]

:

1. The average PE of the A-Share new energy sector is significantly lower than that of comparable US peers, offering valuation advantages
2. PB valuation (average ~3.1x) is in a reasonable range
3. Some photovoltaic companies have negative PE due to industry cycle factors, but PB does not show extreme deviation
4. Industry leaders like BYD and CATL enjoy certain valuation premiums

:

• Industry Cycle Bottoming Out and Recovering
  : Currently at the end of the previous cycle downturn and the starting point of a new cycle [12]
• Profit Improvement Expectations
  : As market-oriented supply-side clearance enters the final stage, coupled with growing demand from new scenarios, profits are expected to improve in 2026 [12]
• Continuous Policy Support
  : Policy dividends will be released in the first year of the 15th Five-Year Plan [13]
• Recovering Capital Preference
  : In 2025, ETFs investing in Chinese assets globally received cumulative net inflows of USD 83.1 billion [14]

:

• International Trade Frictions
  : The EU’s Industrial Accelerator Act and potential US tariff measures may affect exports [9]
• Overcapacity Pressure
  : Segments such as photovoltaics and lithium batteries still face capacity clearance [6]
• Valuation Overdraft Risk
  : The electric power and new energy industry index rose 39.47% in 2025, and valuations of some companies have already been partially repaired [8]

: The current new energy sector is at the bottom of the cycle, and the industry is likely to enter a continuous upward trend. The first stage of risk appetite recovery has occurred; if corporate profits improve subsequently, it is expected that market risk appetite will continue to rise [12].

: The foundation for a long-term slow bull market in 2026 is further consolidated, with greater opportunities for rotation and upward movement in technological innovation and growth sectors. Anti-involution policies are advancing moderately, and driven by optimized supply-demand structure and expected price recovery, the profit recovery path for manufacturing and resource sectors is clear. Focus on industries such as electric power equipment [13].

: In terms of allocation, it is recommended to build a portfolio based on ‘resource + revaluation of traditional manufacturing pricing power’ (chemicals, non-ferrous metals, electric power equipment and new energy) [15].

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Based on industry chain data and institutional views, the prosperity ranking of new energy sub-industries in 2026 is as follows:

Sub-Industry	2025 Performance	2026 Outlook	Investment Rating
Energy Storage	Double-digit installed capacity growth	Entering a new phase of “volume and price growth + quality first”	Aggressive Allocation
Wind Power	Profit recovery begins	1-2 year profit recovery period	Buy on Dips
New Energy Vehicles	Penetration rate exceeds 60%	Sales expected to exceed 20 million units	Focus on Leaders
Photovoltaics	In capacity clearance	Profit recovery after spring	Wait for Inflection Point

:

• Explosive demand for energy storage supporting AI data centers: 1GW of computing infrastructure consumes approximately 7000 GWh of electricity annually, with demand for green power supporting and energy storage frequency regulation rising simultaneously [3]
• The installed capacity share of long-duration energy storage (≥4 hours) continues to increase, and 4-hour energy storage systems have become mainstream [3]
• Key Focus: CATL, Sungrow Power Supply, Hiporess [8]

:

• Offshore wind power is developing towards deep sea and large-scale, increasing demand for submarine cables and pile foundations [8]
• The global offshore wind power installed capacity is expected to achieve a compound annual growth rate of 27% from 2025 to 2030 [8]
• Key Focus: Oriental Cable, Goldwind Science & Technology, Mingyang Smart Energy [8]

:

• BC cells are in a capacity expansion period, and perovskite technology is moving towards mass production [8]
• Module prices have bottomed out and rebounded, and outdated capacity is accelerating exit [6]
• Key Focus: Longi Green Energy, Aixu Co., Ltd., JinkoSolar [8]

:

• Intelligent technology has become the core competitiveness, shifting from electrification assembly to original intelligent innovation [7]
• Globalization layout is accelerating: new energy vehicle exports in the first 11 months of 2025 increased by 102.9% year-on-year [7]
• Key Focus: BYD, Seres, Li Auto [7]

1. International Trade Policy Risk
   : The EU’s Industrial Accelerator Act and potential US tariff measures may impact exports [9]
2. Overcapacity Risk
   : The capacity clearance period for photovoltaics, lithium batteries and other segments may be longer than expected [6]
3. Technology Iteration Risk
   : New technology routes such as solid-state batteries may change the competitive landscape [12]
4. Policy Subsidy Reduction Risk
   : The new energy vehicle purchase tax preferential policy may be adjusted [7]

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The competitive advantages of China’s new energy full industry chain are

:

• Solid Advantages
  : Scale advantages, supply chain completeness, and policy support constitute the core moat
• Technological Innovation
  : Technology iteration speed continues to lead, with technological innovation evolving from application integration to underlying breakthroughs
• Market Support
  : The large domestic market provides continuous momentum for technology iteration and cost reduction
• Challenges to Monitor
  : Overcapacity, international trade barriers, and industry involution are core issues that need to be addressed in the short term

: Valuations are in the recovery process. Negative PE for some companies reflects characteristics of the industry cycle bottom, but PB valuations do not show extreme deviation, providing a margin of safety.

: As industry capacity clearance is completed and profit improvements are realized, valuations are expected to see systematic recovery, and the sector is expected to shift from ‘valuation-driven’ to ‘earnings-driven’ [14].

: China’s new energy industry’s global competitive advantages will support an upward shift in the sector’s valuation central level, and leading companies with global competitiveness will enjoy valuation premiums.

: In 2026, it is recommended to focus on allocating leaders in energy storage and wind power, monitor inflection points in the photovoltaic industry chain, seize opportunities from the intelligent upgrading of new energy vehicles, and closely track changes in international trade policies and progress in capacity clearance.

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[1] 2026 China New Energy Storage Industry Chain Map and Investment Layout Analysis

[2] 2026 China New Energy Storage Industry Chain Map and Investment Layout Analysis

[3] Energy Storage Industry Entering a New Stage of Value Growth

[4] Financial Focus | How Far Is the “Artificial Sun” from Becoming a Reality?

[5] Overcapacity, Price Wars, Innovation Pressure: Multiple Contradictions Emerge in the Photovoltaic Industry, How to Break Through in 2026?

[6] Overcapacity, Price Wars, Innovation Pressure: Multiple Contradictions Emerge in the Photovoltaic Industry, How to Break Through in 2026?

[7] 2026 Outlook for New Energy Vehicles: A Watershed from “Quantitative Change” to “Qualitative Change”

[8] Energy Storage, Wind Power, Photovoltaics, Hydrogen Energy

[9] 81% of Chinese Enterprises in the EU Feel Anxious: New EU “Compliance” Barriers in 2026

[10] 2026 China New Energy Storage Industry Chain Map and Investment Layout Analysis

[11] [Company Fundamental Data - Longi Green Energy, BYD, CATL, etc.](https://Jinling API Data)

[12] Recovery Underway, Prosperity Improving: Fund Managers Discuss New Energy Layout Strategies

[13] Top 10 Brokerage Strategies: Return to Performance! Theme Rotation Accelerates, Focus on These Sectors

[14] A-Share “Good Start” in 2026: Institutions Optimistic about Chinese Assets

[15] Top 10 Brokerage Strategies: Return to Performance! Theme Rotation Accelerates, Focus on These Sectors

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The above chart shows:

• Top left: Global capacity share of China’s new energy industry chain
• Top right: Radar chart for sustainability assessment of competitive advantages
• Bottom left: PE valuation comparison of core A-Share new energy companies
• Bottom right: 2025 growth of new energy sub-industries

The above chart shows the development history of China’s controllable nuclear fusion technology from 2006 to 2030, including milestone breakthroughs of the EAST device.