China’s Green Economy Drove 40% of GDP Growth in 2023, CREA Says

Dan Murtaugh, Bloomberg News

(Bloomberg) -- Clean energy accounted for 40% of China’s economic growth last year, according to the Centre for Research on Energy and Clean Air, potentially giving the sector more political heft in Beijing.

The green economy contributed a record 11.4 trillion yuan ($1.6 trillion) to China’s gross domestic product in 2023, a 30% jump from the previous year, the independent research organization said in a report. Solar power, and manufacturing of panels, electric vehicles and batteries were the main investment drivers, it said.

The surge is helping to partially fill a massive gap left by China’s shrinking real estate sector. The country’s gross domestic product rose 5.2% last year, in line with government targets. Without clean energy’s contribution, growth would have been an anemic 3%, CREA analysts including Lauri Myllyvirta said in the report.

The massive contribution positions clean energy — broadly defined and including sectors like hydro dams, railways and nuclear power — as a key part of China’s economic and industrial policy, CREA said. That could support an acceleration in the country’s energy transition, and increased efforts to finance and develop renewable power projects abroad, it said.

It also highlights the vulnerability of the broader economy as sectors like solar and EVs face excess production that has lowered costs but also cut into profits. “The specter of overcapacity means China’s clean-energy investment growth — and its investment-driven economic model in general — cannot continue indefinitely,” Myllyvirta said in the report.