Clean-tech investment could boost China's economy, cut emissions and achieve 2035 development goals, study finds.

Straits Times

20-06-2025

Rows of solar panels are seen during installation at a photovoltaic project in Qingdao, in eastern Shandong province. PHOTO: AFP
SINGAPORE – China is on the cusp of a clean-energy-led economic revolution that could not only achieve the government's 2035 development goals but also slash air pollution and carbon emissions in a global win for fighting climate change, researchers say.
To get there, Beijing needs to enact policies that ramp up investment in renewable energy and green-technology manufacturing and innovation as well as set ambitious emissions reduction targets for the next decade, Helsinki-based Centre for Research on Energy and Clean Air (Crea) said in a report published on June 19.
Decisions made over the coming months will be key, the authors said.
China's clean energy industries could double in value by 2035, adding US$2.1 trillion (S$2.7 trillion) to the economy, if the country and the world's other large markets follow emissions targets aligned with the United Nations Paris Agreement, the planet's main climate pact.
China is already the world's top investor in renewable energy. Sustained green investment will make an important contribution to China's target of becoming a 'moderately prosperous' country in a decade, delivering one- fifth of the targeted gross domestic product growth in 2035, the authors said.
Achieving a moderately prosperous economy is a key goal for Beijing , and to achieve this would mean doubling China's GDP from 101.6 trillion yuan (S$18. 15 trillion) in 2020 to more than 200 trillion yuan by 2035.
'The next decade will be critical in deciding whether China can seize the economic and strategic advantages of clean energy sectors and lead the world into a new phase of high-quality, innovation-led development,' said Ms Belinda Schaepe, China policy analyst at Crea and a co-author of the report .
The government needs to set out ambitious policy targets in China's 15th Five-Year Plan covering 2026 to 2030, and in its climate action plan out to 2035 that it must submit to the United Nations in 2025, she added .
The climate plan, called a nationally determined contribution (NDC), is mandatory for all parties to the Paris Agreement . NDCs are submitted every five years and are meant to be more ambitious than the previous one.
'Weak targets, by contrast, risk slowing China's momentum, creating uncertainty, and missing a historic opportunity to lead the global energy transition,' said Ms Schaepe .
China needs to submit its NDC by the UN COP30 climate talks in Brazil in November . Beijing has already said the NDC will cover the entire economy and all greenhouse gases, a first for the country.
The potential of the clean-energy sector to transform the economy is already apparent. In 2024, the sector, which includes electric vehicles, EV batteries, wind turbines and solar cells and modules, accounted for 10 per cent of GDP and 25 per cent of GDP growth, overtaking the value of real estate sales for the first time.
And China is continuing its record-breaking renewable energy investment, adding 124.9 gigawatts (GW) of wind and solar capacity in the first four months of 2025, according to Sydney-based think-tank Climate Energy Finance, based on data from China's National Energy Administration.
By April 2025, China had 1,533 GW of wind and solar capacity, far ahead of any other nation, helping to reduce its dependence on polluting coal.
In 2024, China's carbon dioxide (CO2) emissions declined year-on-year for the first time despite strong electricity demand growth. 'China's unprecedented clean energy expansion was the primary driver in reducing emissions, offsetting the increase in emissions from other industrial sectors,' the authors noted .
'Beyond economic contributions to China's GDP, clean energy sectors could also cut China's emissions by 30 per cent compared with current levels,' they added .
This is key because China is also the world's top CO2 polluter and coal consumer and what it decides on energy and economic policy will affect the global pace of climate change for years to come.
China's rapid expansion of clean-energy investment and production overseas will also help reduce global emissions growth, while also boosting the economy at home.
'The clean energy sectors stand poised to both lead China's economic prosperity and drive down the country's CO2 emissions,' said co-author Lauri Myllyvirta, lead analyst at Crea.
But if momentum in these sectors were to slow, they could instead become a drag on the economy and also curb emissions reductions, he added.
David Fogarty is deputy foreign editor at The Straits Times and senior climate writer. He also covers the environment, in areas ranging from biodiversity to plastic pollution.
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