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Low-Carbon Energy Led China’s GDP Growth in 2023

Low-carbon energy contributed 40% to China’s economic growth last year, climate think tank the Center for Research on Energy and Clean Air has reported, noting that without this boost, China’s GDP would have grown at a more modest 3% than the actual 5.2%.

Per the think tank’s calculations, low-carbon energy projects contributed some $1.6 trillion to the country’s GDP last year, which was more than the contribution of any other sector. The focus was on EVs, solar power, and batteries, the Center for Research on Energy and Clean Air said.

Investments in low-carbon energy also went up by 40% in China last year, the organization also reported, with the total reaching the equivalent of $890 billion. This growth in investment was in fact 100% of total investment growth across industries in China, CREA noted.

Commenting on its findings, the Center for Research on Energy and Clean Air noted that this growing importance of the so-called clean energy industry, which, per Bloomberg, also features railways, hydropower, and nuclear, makes it central for Beijing’s economic policy.

It also gives players in that industry more clout than those active in other industries but with that growing clout there are also inherent risk. Chief among these is overcapacity.

“The specter of overcapacity means China’s clean-energy investment growth — and its investment-driven economic model in general — cannot continue indefinitely,” said one of the authors of the report, Lauri Myllyvirta.

There are risks of overcapacity in EVs as well. Last year, EV production in China rose by 36%, hitting 9.6 million cars, representing 32% of all cars produced in the country. EV sales absorbed almost all of that output, at 9.5 million.

Yet the EV sector in China is as intensely competitive as its solar sector, featuring more than 94 brands with over 300 models on offer. Still, EVs are going strong in their largest market with exports starting to take off, too.

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By Irina Slav for Oilprice.com

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