As China’s economy struggled with a floundering property market last year, clean energy industries came to the rescue.
Massive investments in solar power, electric vehicles and battery storage accounted for virtually all of the country’s economic growth in 2023, according to an analysis by the Centre for Research on Energy and Clean Air (CREA) for Carbon Brief, a climate media outlet.
China is the world’s biggest emitter of greenhouse gases, due to its heavy reliance on coal and manufacturing in its economy. But the country also increasingly dominates clean energy industries. Last year, the country hit the accelerator on nearly every clean energy sector as the central government and municipalities across the country scrambled to make up for shrinking real estate and construction sectors. Until recently, those two sectors have largely driven China’s massive economic growth.
Overall, Chinese clean energy investments rose 40% year-on-year to 6.3 trillion yuan ($890 billion), accounting for all of the investment growth across the economy, CREA lead analyst Lauri Myllyvirta concluded. That sum is equivalent to the entire world’s investment in fossil fuels last year and compares to the size of Switzerland’s economy.
Without the clean energy investments, China’s economy would have grown only 3%, compared to the 5.2% the government reported, slightly exceeding its growth target of “around 5%,” the analysis concluded.
Just last year the country added 217 gigawatts (GW) of solar power capacity, more than the United States, the second-biggest solar market in the world, has installed in the entire history of its industry, Bloomberg reported.
Maintaining this rate of expansion will likely be impossible in the short term, however. Production of everything from electric vehicles to solar panels has far exceeded domestic demand for the technologies. Chinese manufacturers are also increasingly encountering political barriers to their attempts to sell the products overseas, including in the U.S. and Europe.
Prices of Chinese solar panels, batteries and electric vehicles plunged in recent months as companies tried to sell their products into glutted markets. That is cutting into profits and encouraging the industries to scale back production, at least until demand picks up again.