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In the wake of the summit, the European Council issued a press release welcoming the bilateral cooperation on climate change between the parties, and reaffirmed that both the EU and China must lead global efforts to reduce greenhouse gas emissions, acknowledging the bloc’s goal of lowering its share of global emissions to 4% by 2030. 

The statement and scale of the European Union’s ambition to lower its carbon footprint solidifies China’s status as a leader in sustainability. With a controlling stake over the raw materials needed to deliver the clean revolution, and with the United States set to leave the Paris Agreement on January 1, 2026, the Southeast Asian powerhouse will become a key figure for the future of clean energy. 

China’s Controlling Stake in Sustainability

The return of Donald Trump to the White House in the United States has brought a renewed emphasis on building up traditional energy sources by breaking down regulations on domestic oil, gas, and coal production. Trump has also cut funding for renewable energy development, making the US position on sustainability clear. 

This conscious move away from clean energy opens the door for China to meet global demand for domestic clean energy infrastructure. 

While the fight against climate change isn’t a priority for the Communist Party of China (CPC), the nation’s strong position as a supplier of clean energy exports has been recognized as a key area for economic growth. By harboring ambitions to become a market leader in the production of wind, solar, and other renewable technologies, China can bolster its GDP through the shipping of solar panels, wind turbines, batteries, and electric vehicles (EVs). 

China’s dominance of the raw materials needed to build a clean energy revolution makes it a prosperous place for all environmentally focused stakeholders. 

By far the largest producer of most processed minerals, China processes 92% of the world’s rare earths, which are essential for the production of EVs; 91% of graphite, 76% of cobalt, 44% of copper, 33% of lithium, and 28% of nickel. 

Crucially, China has invested heavily in the process of chemically refining these materials, further strengthening the nation’s hand as a leader in sustainability. 

Attracting Foreign Investors

The impressive recent performance of the Shanghai Composite Index, which has embarked on a whirlwind 27% rally to 10-year highs since April this year, is also likely to encourage more foreign investors to look to China as a place to invest in sustainable stocks or to set up shop in Asia. 

The Shanghai Composite Index is not only the fourth largest in the world, behind the NYSE, Nasdaq, and Euronext, but it’s also renowned for its emphasis on sustainability reporting. 

China’s ESG reporting demands mean that any company in Shanghai’s SSE 180 Index or Shenzhen’s 100 Index, or any firm that’s dual listed in Shanghai or Shenzhen and overseas, must publish a sustainability or ESG report. 

This makes China a particularly suitable market for foreign investors with a focus on sustainability, and the government’s increasingly relaxed rules on attracting investment from overseas as a means of boosting the economy show that there are few better places in the world to build a presence. 

As part of the CPC’s stimulus initiative, the government unveiled a series of plans in 2024 designed to attract more foreign investment locally. This included lower borrowing costs and allowing banks to increase their lending to companies. 

In February, China introduced an action plan to stabilize foreign investment by expanding market access, easing financial restrictions, and fostering a fair business environment with a special focus on sectors like biotechnology, telecommunications, education, and healthcare. 

The action plan has carried significant ramifications for foreign investors looking to take advantage of China’s powerful position in Asia to build a presence domestically. 

Given China’s dominant position in the sourcing of raw materials that are essential to sustainable development, there are clear supply chain advantages to setting up a business in the Asian nation, as well as a major market of consumers that is accessible. 

China’s skilled workforce is also more accessible than ever before, making the sustainability-friendly nation a powerful location for supporting the growth efforts of any green business. 

Although foreign direct investment (FDI) into China has been shrinking of late, declining 13.6% year-over-year to $163.2 billion in 2023, its recent agreement with the European Union to lead the way on exporting clean energy on the world stage shows that there’s plenty to be excited about when it comes to the nation’s role in the future of sustainability. 

The Clean Energy Revolution

With the United States rolling back its sustainability commitments, China, buoyed by its exceptionally strong position in global clean energy supply chains, has a clear path to becoming a sustainable energy superpower in the years ahead. 

Although the nation’s economy has shown signs of weakness, recent rallies in the Shanghai Composite Index, coupled with an increasingly lenient outlook for foreign direct investment, show that it may be an opportune time to build a presence in China. With more nations seeking to ramp up their ESG commitments in the coming years, China’s clean energy prowess could uncover a major opportunity for overseas investment.

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