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 geopoliticaltensions. And the recent breakneck rollout risks addingto headwinds from consolidation within the EV sectorand looming excess capacity within batterymanufacturing.
- 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.
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