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In 2023, clean energy contributed a record 11.4 tn yuan ($1.6 tn) to China’s economic growth in 2023, 30% more than the previous year. This was the finding of an analysis by Carbon Brief based on official figures, industry data and analyst reports.
According to the analysis, investment in clean energy in China rose by 40% year-on-year to 6.3 tn yuan ($890 tn), particularly in the so-called “three new” sectors of solar energy, electric vehicles and batteries. The focus was on solar energy together with the production capacities for solar modules, electric vehicles and batteries.
“Without the growth in the clean energy sectors, China’s GDP would have missed the government’s growth target of ‘around 5%’ and would only have increased by 3.0% instead of 5.2%,” the Carbon Brief analysis states.
China could achieve its energy targets faster than expected
Clean technologies have long been an important part of China’s energy policy and climate protection efforts. In 2020, China declared that it would peak its carbon emissions before 2030 and become “carbon neutral” before 2060.
In 2023, the sector also became an important economic factor for the country for the first time. China is also a world leader in the installation of renewable energy in particular. According to the Global Energy Monitor, the rapid acceleration of installations in China could lead to the country being one of the few to achieve its clean energy targets up to five years earlier. The International Energy Agency (IEA) has also tripled its forecasts for the total renewable energy capacity to be installed in China by 2030.
“Today, China is installing about as much solar and wind power capacity as the rest of the world combined, even though the country is still heavily dependent on coal power. New installations of carbon-free electricity now exceed those of fossil fuel power plants,” says Thomas Höhne-Sparborth, Head of Sustainability Research at Lombard Odier Investement Managers.
Kathlyn Collins, Head of Responsible Investment and Stewardship at Matthews Asia, sees China’s strong efforts to transition to a less polluting economy as a good investment opportunity. “We therefore see great potential for companies involved in renewable energy, batteries and electrification as well as new clean energy infrastructure,” says Collins.
She emphasises the small caps sector in particular: “In terms of the energy transition, electrification requires batteries for electric vehicles and energy storage systems. Smaller companies are involved in supplying global car manufacturers with the chemicals and other materials needed for these technologies and have ambitious growth plans, often based on localised supply chains and ecosystems.”
