+41 22 566 56 13

Simple charts explaining why investors would better play the Decarbonization in China than Consumption

Jan 17, 2022 | China, Decarbonization, Geopolitics, Global Macro, Thematic

If consumption will likely recover rapidly once lockdowns are lifted, the impact on production and supply chains will likely be manageable.

In 2020, travel restrictions were imposed when most people had already returned to their hometowns to celebrate the Chinese New Year. Many could not go back to work in time post the CNY, causing production to slow or halt. This will not be repeated.

Omicron outbreaks are significant downside risks for near-term consumption demand. Restrictions will likely be imposed nationwide to reduce travel before the Chinese New Year and encourage people to stay where they are.

Goldman equity research team estimates that renewable power investment, which mostly consists of wind and solar power investment, will be the majority (55%) of China’s decarbonization investment over the next four years, accounting for around 0.6% of nominal GDP per year in 2022-2025.

The boost of economic growth from knock-on effects from renewable power investment is comparable with that for residential property investment. If China initially invested 1% of nominal GDP in renewables, it would trigger additional gross value added (GVA) up to 0.82% of nominal GDP. The amount of additional GVA triggered by property investment would be 0.88% of nominal GDP. This implies that if the size of investment in renewables was comparable to that of property, renewable power investment would become an important growth engine.

As emphasized by the government’s “six stabilities, six guarantees” policy focus, labor market stability is the top concern of China’s policymakers. Switching to renewable investment has a couple of effects through two channels: 1) on the aggregate level, the total number of jobs created from renewable energy investment is similar to property investment, after taking into account their respective supply chains; 2) on the distribution of jobs, however, there will be winners and losers from the switch across various sectors.

We designed our China Decarbonization 2060 in 2020 and now, the Chinese policy will feed our thematic.

We are among the sole investment company proposing building blocks to concrete your asset allocation in China.



Jacques Lemoisson

Share this:

All the best for this new challenging year 2023!

If 2022 was challenging, the new year should keep the tone. We thanks our clients for their trust. Our Global Macro strategy reached 43.89% in 2022, and every day our Global Macro Insight paves the way for our clients, helping them to navigate this complex new...

Special Report! Inflation/Ukraine de-escalation ====> TIME to INCREASE EXPOSURE in CHINESE ASSETS and OUR THEMATIC!!!!!!!!!!!!!

Our Global Macro analysis over the past few months seems relevant. As a preamble, the de-escalation in Ukraine is the work of Russia, confirming my comments yesterday in our Global Macro Insight. The USA is now the only one to gesticulate in the zone. Geopolitical...

The last addition into our Global China Thematic universe: Healthy China 2030

Let me introduce the last thematic completing our Global China Thematic universe: Healthy China 2030 Key takeaways Fully aligned with the current 5-year plan and its $600bn of investments China’s healthcare equipment market CAGR of 13.6% Traditional Chine Medicine is...

Our proprietary Quantamelental Macro Indicators are flashing!

It seems that markets are ignoring some risks ....

Beijing prepares to build airport on reclaimed land near Taiwan

Mr. Market is only concerned by Central Banks, no clue about Delta variant and geopolitical tensions. When Powell advocates for transitory inflation, China is closing ports, and the Taliban are taking control of Afghanistan, which is depicted by an internal memo from...

Inflation won’t be transitory!!!! The same for the Transition Period… Our GTO is designed for that!

Inflation continued its rapid surge in June, rising at its fastest pace in nearly 13 years amid an ongoing burst in used vehicle costs and increases in both food and energy. The consumer price index increased 5.4% from a year ago, the largest jump since just before...

EVs are not so clean, depending from where the electricity is coming from!!!!

If the electricity to recharge the EV comes entirely from coal, which generates the majority of the power in countries such as China and Poland, you would have to drive 78,700 miles to reach carbon parity with the Corolla, according to the Reuters analysis of data...



I hereby certify that I am a professional investor

More information about our Privacy Policy