China’s clean energy surge

By Joss Murphy on 26 February 2026 in Asia/Emerging Markets

China’s green revolution is moving at pace. Solar power, electric vehicles and other clean energy technologies drove more than a third of the growth in China’s economy in 2025, equivalent to 15.4 trillion yuan ($2.1 trillion)*. To put that in context, that’s roughly the size of the entire Brazilian or Canadian economies. But is it a reason to invest in China?

China’s green revolution is moving at pace. Solar power, electric vehicles and other clean energy technologies drove more than a third of the growth in China’s economy in 2025, equivalent to 15.4 trillion yuan ($2.1 trillion)*. To put that in context, that’s roughly the size of the entire Brazilian or Canadian economies. But is it a reason to invest in China?

China has gone full pelt on electrification. It is the main engine behind the country’s economic growth. The analysis for Carbon Brief found that without the growth of clean energy sectors, China would have missed its GDP target of 5%, instead expanding at around 3.5%*. China’s clean energy sectors are expanding at a far faster pace than the wider economy – and their growth is accelerating – from 12% to 18% in the past year alone.

EVs, batteries and solar continue to dominate. China’s investments in clean energy reached 7.2 trillion yuan ($1 trillion) in 2025, roughly four times the amount put into fossil-fuel extraction and coal power*. Even though exports of clean energy technology grew rapidly, the domestic market is still the major source of demand for clean energy.

This includes some extraordinary innovation. It has started work on an open sea solar farm, for example, where the water provides a natural coolant. These are set to be 15% more efficient than standard solar farms**. Once completed, the offshore solar farm is expected to generate 1.78 billion kilowatt-hours of power each year, enough to cover the energy demands of over 2.6 million households in the region**.

Investment returns?

While the statistics are impressive, there is a question as to whether this green energy revolution is necessarily a source of investment returns. The Chinese government’s focus and investment have created over-capacity in some industries, notably solar and EVs, and made it hard for companies to make money. The government has sought to address the problem through its “anti-involution” campaign.

Dale Nicholls, manager of the Fidelity China Special Situations Trust, says:

“The intent is to reduce excess capacity and destructive competition, while preserving confidence among private enterprises. Early evidence suggests that, while existing capacity has not been materially reduced, the pace of new capacity expansion is likely to slow. This should allow excess supply to be absorbed over time, supporting margins and profitability if demand holds up. The potential for consolidation may still be underappreciated by the market.”

However, the real strength for China is in the competitive edge it gives them in manufacturing. Shao Ping Guan, manager of the Allianz China A-Shares fund, says:

He points out that China has long viewed electricity dominance as a strategic foundation for manufacturing leadership. Its installed power generation capacity is substantially more than the US and EU combined. China already generates more than double the electricity of the US***. “It has 42 ultra-high voltage transmission lines in place, covering 25,000 miles, with another 12 under construction; the US has none,” he adds.

This should deliver cheap and reliable power across China, which gives it a major competitive advantage. Other countries continue to rely on fossil fuels, where pricing is less predictable, and where supplies may dwindle over time.

Innovation edge

Perhaps more importantly, it shows a country that is looking forward rather than back. It is a mark of what can be achieved when the country looks to develop certain sectors. Chinese policymakers have been targeting subsidies at specific areas, including electric vehicles, robotics, the chip sector and the pharmaceutical industry, through state programmes such as Made in China 2025 and the 14th Five-Year Plan.

Sharukh Malik, a manager of the Guinness Asian Equity Income fund, says innovation is everywhere:

He points to other areas of strength, such as robotics. At the recent China Media Group’s Spring Festival Gala, the most-watched official television broadcast, dancing humanoid robots performed intricate stunts, lunging, backflipping and performing martial arts. Kyle Chan, an expert in China’s technology development at Brookings Institution, a policy organisation in Washington DC stated “Unlike AI models or industrial equipment, humanoid robots are highly visible examples of China’s technological leadership”.

Sharukh holds a number of robotics groups in his portfolio, believing they are helping solve some of the labour problems associated with China’s demographic difficulties. “We hold Inovance Technology. In the 1990s and 2000s, it was making industrial automation equipment and taking market share. It expanded in EV power trains, and then robotics. They started off with lower end robotics. Now China needs the six-axis robots, the gold standard, and that’s where the company is steadily making progress.”

While the dancing robots have little industrial use for the time being, there is high demand for simpler robots that can move boxes from A to B in warehouses. By the end of 2024, China had registered 451,700 smart robotics companies.

The picture is of an economy that is planning for the future and becoming more innovative. Western democracies have struggled to match this long-term preparation and planning. While the astonishing investment in clean energy and infrastructure does not necessarily deliver significant investment opportunities today, it provides a platform for Chinese companies to grow and innovate in future. It is also a clear sign of China’s technology prowess and strategic thinking. This should encourage investors that the country is going in the right direction.

*Source: Carbon Brief, 5 February 2026

**Source: Slashgear, 3 February 2026

***Source: Allianz Global Investors, 13 August 2025