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MNI INTERVIEW: China AI Needs Green Electricity Investment

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MNI (Beijing)

Beijing needs to significantly increase investment in green energy by 2030 above the previously forecasted CNY20 trillion needed to meet carbon targets given jumps in projected demand from electricity-intensive AI and green manufacturing, a prominent economist told MNI.

Carbon peaking by 2030 and neutrality by 2060 would previously have needed CNY140 trillion of green investment, however “a lot more” will be needed to align renewable power growth with AI and green industry electricity demand, according to Peng Wensheng from China International Capital Corporation.

China’s electricity demand will grow by 6.5% this year, with MNI previously reporting that additional coal generation would fill power gaps until at least 2028 given current wind and solar energy supply growth of around 20% per year.

AI requires large amounts of energy, as will industrial production of new AI-integrated gadgets, adding to demand from the increased electrification of society, Peng continued, noting that strong appetite from overseas markets for China’s electric vehicles, batteries and solar panels would also intensify industrial consumption.

Premier Li Qiang recently said Beijing will empower AI to support economic developmentand create new formats for high-quality growth at the World Economic Forum.

Peng told MNI electricity demand had improved as an indicator of Chinese GDP, as the electrification of its economy intensifies under the green transition process.

China will see electricity growth outpace GDP for the foreseeable future, given the strong focus on the manufacturing sector, local energy analysts told MNI. (See: MNI: China Electricity Demand Growth To Fall From Q1 High)

INDUSTRY UP

AI and green development should reverse China’s decline in manufacturing as a percentage of GDP, Peng said, noting China’s cost advantage as the first country to achieve economies of scale in these areas.

In 2023, China saw lithium battery production up 25%, whilst EV output grew 35.8% and newly installed photovoltaic (PV) capacity rose 148.1%.

China’s export growth will remain strong in H2, following May's 6.1% year-to-date increase, despite the widening gap between official and private PMI results, economists have told MNI. (See: MNI: China Exports Strong In H2, Despite Diverging PMIs)
MNI Beijing Bureau | lewis.porylo@marketnews.com
MNI Beijing Bureau | lewis.porylo@marketnews.com

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