REGIONAL FOCUS: CHINA Figure 3: Selected economic and energy indicators for China Indicator
GDP (USD billion PPP [2019]) Share of global GDP
GDP per capita (USD PPP [2019]) Population (millions)
Total primary energy demand (EJ)
Primary energy demand per capita (GJ/capita) Import dependency (%)
Energy sector CO2 emissions (Gt CO2) Energy intensity (MJ per USD PPP) Carbon intensity (g CO2/USD PPP)
2000 4,790 7%
3,773 1,269 49 39
4% 4
10.2 655
2010
12,747 13%
9,479 1,345 107 80
15% 9
8.4 616 2020
24,410 19%
17291 1,412 148 104
23%* 11
6.0 412
Change 2000–2020 +410%
+12% points +358% +11%
+200% +170%
+19% points +218% -41% -37%
*2019 values
Notes: GDP = gross domestic product; PPP = purchasing power parity. Import dependency is calculated based on the difference between imports and exports relative to total primary energy demand
Source: International Energy Agency
Meeting climate goals The International Energy Agency puts China’s share of global greenhouse gas emissions at around 25%. With its period of rapid economic growth getting under way as late as 1978, its path to carbon neutrality was always going to be rather different from that of the EU and the US. The region did not achieve universal access to electricity until 2014, for example. At the United Nations General Assembly in September 2020, China’s President Xi announced that the country aims to have CO₂ emissions peak before 2030, and to achieve carbon neutrality before 2060. This has set the stage for green investment and financing to become the most important market themes of the coming decades. The government’s green transition investment agenda is much more advanced and detailed than it was two years ago, and is another magnet for capital flows and lending and, with that, client demands for innovation and support with ESG transition. Experts estimate China’s average annual green financing demand to be between RMB2.5trn and RMB16trn before 2060. “As green investment accelerates in 2022, so will the structure and breadth of China’s green finance market,” says Deutsche Bank Research China Strategist Linan Liu.
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China is seeing intensive import and export flows related to wind turbines”
Steven Yu, Head of Trade and Lending for North Asia, Deutsche Bank
As part of its energy transition strategy, China has made a significant commitment to invest in renewables. According to a United Nations Environment Programme report, China has been the biggest investor in renewable energy over the past decade, spending nearly US$760bn between 2010 and 2019 – double the US’s US$356bn investment and greater than the US$698bn from the entire European continent. Hunter Xiong, Deutsche Bank’s Greater China Corporate Coverage COO, explains that Green Investment Principles that came out of its Belt and Road Initiative (BRI) have evolved as a robust framework to guide investors and corporates doing business
in the region. And in July 2020, China and the EU set up a working group to assess existing taxonomies for environmentally sustainable investments. This resulted in the Common Ground Taxonomy, released in November 2021, identifying around 80 climate mitigation activities recognised by both the EU and China. “This paves the way for international collaboration in sustainable finance,” says Xiong. According to the Frankfurt School of Finance & Management, China has been the top investor in clean energy for nine out of the last 10 years. “In particular, China is seeing intensive import and export flows related to wind turbines,” says Steven Yu, Head of Trade and Lending for North Asia, Deutsche Bank. “For instance, a wind turbine may be produced in China, but key components are often produced by clients in Europe and then sold to a company in another country, perhaps Australia.” One example of this is the Global Power Generation wind farms in New South Wales, powered by Vestas machinery and supported by China’s export credit agency, Sinosure.
Deutsche Bank has been supporting Chinese power utilities to transition away from fossil fuels with ESG-aligned lending. In May 2022, Deutsche Bank
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