In the early 2010s, China faced a crisis with heavy smog and PM 2.5 pollution leading to major respiratory illnesses nationwide. This prompted a shift towards greener growth as a clear policy priority, which has proven successful in reducing pollution levels and carbon intensity over the past decade. As a result, two key long-term policy goals for greener growth in China are reaching Peak Carbon by 2030 and achieving full carbon neutralization by 2060. The World Bank estimates that meeting these goals will require significant investment in green infrastructure and technology, totaling USD 14-17tn. Despite the potentially lower multiplier effect of green infrastructure investments compared to traditional sectors, they are still seen as crucial for productive fiscal policy in China.
While China’s efforts towards green development have been generally praised, some criticisms have been raised regarding industrial policies leading to overcapacity and global market dumping. The solar industry in the 2010s is often cited as an example, with concerns that the current New Energy Vehicles (NEV) industry may face similar challenges. Critics question the impact of Chinese policies on fair competition and the fate of companies that may fail as a result. However, we believe that these criticisms overlook the broader benefits of China’s approach towards greener growth. Despite some challenges, the country’s efforts are positioning it to be competitive in key industries of the future, which aligns with its broader economic goals.
