In a stark illustration of China’s commitment to a greener future, the country invested a staggering 6.8 trillion yuan ($940 billion) in clean energy in 2024. This figure, which approaches the $1.12 trillion poured into global fossil fuel investments, underscores a significant shift in the global energy landscape. However, the growth rate of China’s clean energy investments decelerated to 7% from a robust 40% the previous year, signaling potential headwinds ahead.
The lion’s share of this investment—more than half—was channeled into China’s booming electric vehicle (EV), battery, and solar industries. The clean energy sector’s contribution to China’s GDP climbed to 10% in 2024, up from 9% in 2023. This growth rate outpaced the broader Chinese economy threefold, yet its contribution to overall economic growth dipped to 26% of GDP, down from 40% in 2023. This slowdown can be attributed to deflation and the plummeting prices of renewable energy equipment, which, while beneficial for adoption, has dampened the sector’s economic impact.
The EV industry emerged as the largest contributor to GDP within the clean energy sector, with 3 trillion yuan generated from EV and hybrid production, and an additional 1.4 trillion yuan from factory investments. Charging infrastructure added another 122 billion yuan. Solar power followed closely, contributing 2.8 trillion yuan to GDP, with 1 trillion yuan tied to power generation projects and 779 billion yuan from manufacturing investments. The decline in solar manufacturing investment reflects the record-low prices of China’s solar panels, which have boosted adoption but weighed on GDP contribution.
The researchers at the Centre for Research on Energy and Clean Air (CREA) anticipate that clean power investments will continue to surge through 2025, the final year of China’s current five-year plan. However, they caution that more ambitious targets will be necessary in the 2026-2030 plan to maintain the current momentum of clean energy deployment.
This news has profound implications for global markets. China’s aggressive push into clean energy could accelerate the peak demand for fossil fuels, reshaping energy markets worldwide. The rapid expansion of China’s EV industry signals a growing demand for critical minerals and battery materials, potentially igniting a global scramble for these resources. Moreover, the deflation in renewable energy equipment prices could make clean energy more competitive globally, driving adoption but challenging manufacturers’ profitability.
The slowdown in investment growth, despite record-breaking figures, raises questions about the sustainability of China’s clean energy boom. The sector’s overcapacity issues highlight the need for strategic planning and innovative business models. Furthermore, the dip in GDP contribution underscores the complex interplay between technological progress, economic growth, and market dynamics.
As China steams ahead with its clean energy transition, the world will be watching. The global energy landscape is shifting, and China’s actions are sending ripples through markets, challenging norms, and sparking debate. The coming years will reveal whether China’s ambition can be matched by sustained, strategic growth in the clean energy sector.
