China’s Shift to Green Growth: Investments, Challenges, and Competitiveness in the Future

Since the 18th century, rapid industrialization has led to heavy pollution, and China was no exception. The country faced a crisis with heavy smog and PM 2.5 pollution in the early 2010s, causing widespread respiratory illnesses. This prompted a shift towards greener growth as a clear policy priority in the second half of the decade, resulting in significant reductions in pollution levels and carbon intensity over the past ten years.

China’s long-term goals are to reach Peak Carbon by 2030 and achieve full carbon neutralization by 2060. To achieve this, the country will need to make substantial investments in green infrastructure and technology, estimated to be around USD 14-17 trillion by the World Bank. While green infrastructure may have a lower economic multiplier effect compared to traditional investments, it is crucial for sustainable development and aligns with China’s fiscal policy priorities.

Despite receiving praise for its green development efforts, China has faced criticism for its industrial policies leading to overcapacity and export dumping in global markets. This has resulted in industry consolidation and the failure of many companies, with the solar industry in the 2010s being a notable example. There are concerns that the New Energy Vehicle (NEV) industry may face similar challenges, raising questions about fair competition and the fate of struggling companies.

However, from a broader perspective, China’s approach to promoting green industries remains effective in positioning the country competitively in key future sectors. While there may be issues along the way