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Global Macro Research

Chinese investment turns from red to green

China’s green investment surge is supporting economic growth and more than offsetting the drag from the beleaguered property sector. This pivot is essential to meet global climate targets. But it is also adding to geopolitical tensions, and there are looming headwinds from EV consolidation and excess battery capacity.

Authors
Robert Gilhooly
Senior Emerging Markets Economist
Author image
Alexandre Popa
Sustainable Investment Analyst

Duration: 1 min

Date: 28 Jun 2024

Key Takeaways

  • The global automotive industry is being shocked by the sudden arrival of Chinese electric vehicle (EV) manufacturing, which is amplifying geopolitical tensions with the West.
  • But China has also been leaning hard on other forms of green investment, boosting the share of renewables in domestic power generation, and furthering its lead in aspects of green technology. 
  • China’s pivot to renewable energy is essential for global climate targets. Like with EVs, strong investment in solar and battery manufacturing capacity is reducing the cost of the green transition. 
  • But it also has the potential to add to geopolitical 
    tensions. And the recent breakneck rollout risks adding 
    to headwinds from consolidation within the EV sector 
    and looming excess capacity within battery 
    manufacturing.
  • Much will depend on the renewable power aims from here. The authorities have already hit their 2030 goals, and we think they will continue to add to renewable power generation, grid capacity and ancillary infrastructure, helping to counter the drag from the real estate adjustment.
  • And while other forms of green investment – particularly EVs and batteries – are likely to see investment retreat in the near term, they remain plausible drivers of Chinese growth over the long run.

    Read the full article.

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