China is a clean energy powerhouse, although energy security concerns continue to fuel approvals of new coal-fired power plants
China accounted for 19% of global GDP in 2023 and its annual economic growth rate of 5.2% narrowly exceeded the government’s annual target. Despite initial signs that the recovery would be swift, China’s economy continues to face some challenges, notably with a troubled property market. Yields on Chinese sovereign bonds have been declining steadily since 2021 and reached a record low in March 2024.The People’s Bank of China, as well as other state-owned commercial banks, have continued to lower their interest rates, in contrast to the upward trend in most other major economies.
Chinese investments in energy remained extremely strong, accounting for one-third of clean energy investments worldwide and an important share of China’s overall GDP growth. China has announced dual carbon goals – to peak carbon emissions before 2030 and achieve carbon neutrality before 2060 – and has shown remarkable progress in adding renewable capacity. In 2023, China commissioned as much solar PV as the entire world did in 2022 while its wind additions also grew by 66% year-on-year. Over the past five years, China also added 11 GW of nuclear power, by far the largest of any country in the world.
The year 2023 saw robust growth for the so-called “new three” (xin-sanyang) industries – solar cells, lithium batteries and electric vehicles (EV) – which saw a 30%jumpin exports in 2023 from a year earlier, making them a major factorin Chinese trade. These trends are expected to continue into 2024, with the largest portion of China’s investments heading towards low-emission power.
Ample domestic manufacturing capacity and continued government support for clean technologies provides a foundation for strong clean energy investment within China. However, pressures are increasing on China’s ability to export these technologies to other large international markets, including Europe and the United States.
Another issue that requires close attention is China’s continued investment in fossil fuels, especially coal with nearly all the new global coal fired capacity. In tandem with its growing renewable capacity, coal still remains the most prominent fuel source in China’s energy mix, with coal production reaching a record high in 2023.While China aims to ensure that coal and coal-fired power will play a supporting role in its energy system, these developments reflect a strong emphasis on energy security in China's energy strategy.
Overall energy investment levels in China are comparable to the amounts required to meet national energy and climate goals, although full alignment with the targets implies a rebalancing away from investments in fossil fuel supply, towards grids and the end-use sectors.
