Longji Rice Terraces in Longsheng County,Guangxi Zhuang Autonomous Region Photo: TUCHONG

The 14th Five-Year Plan (FYP, 2021–25) identifies vigorously developing a green economy as a key measure to accelerate the green transformation of the development model, clarifying the positioning and objectives of China’s green economic development. Over the past five years, guided by the concept that “lucid waters and lush mountains are invaluable assets” (hereinafter referred to as the “Two Mountains” theory), China has integrated green development into all areas and aspects of socioeconomic progress. By synergistically advancing carbon reduction, pollution control, ecological expansion, and economic growth, China has elevated the development of its green economy to new heights.

Significant increase in ‘green content’

First, green industries have become a major engine of economic growth. Since entering the new era, China has pursued high-quality development, actively promoting the comprehensive green transformation of its economy and society. By internalizing green values within economic development, the economic benefits of green development have become increasingly evident. Since the start of the 14th FYP period, China’s green industries have expanded rapidly, emerging as a critical driver of economic growth.

The energy transition has also made notable progress. In 2023, China’s installed renewable energy capacity surpassed that of coal-fired power for the first time in history. By the end of 2024, installed renewable energy capacity reached 1.889 billion kilowatts, a year-on-year increase of 25%, accounting for approximately 56% of the national total. By the end of March 2025, the combined installed capacity of wind and solar power had reached 1.482 billion kilowatts, exceeding the total installed capacity of coal-fired power.

The new energy vehicle (NEV) industry has also delivered stellar performance. During the 14th FYP period, the NEV sector experienced explosive growth, with production and sales growing by more than 30% annually from 2021 to 2024. According to data from the China Association of Automobile Manufacturers, in the first half of 2025, NEV production and sales increased by over 40%, with NEVs accounting for 44.3% of new car sales.

Meanwhile, the energy-saving and environmental protection industry has continued to expand. Data from the China Association of Environmental Protection Industry reveals that from 2022 to 2024, annual revenue in the sector exceeded 2.2 trillion yuan for three consecutive years. As China’s comprehensive green transformation deepens, this industry is poised for rapid growth. It is estimated that by 2030, the scale of China’s energy-saving and environmental protection industry will reach approximately 15 trillion yuan.

Second, new quality productive forces are enhancing the quality of green economic development. Developing new quality productive forces is a central task for achieving high-quality development in the new era. In recent years, China has actively promoted the deep integration of technological and industrial innovation, accelerating the cultivation of new quality productive forces. These forces are inherently green: they both embody the requirements of green development and, through disruptive and cutting-edge technologies, greatly expand the scope of green economic growth.

In the energy sector, the rapid development of hydrogen-based new energy not only further enhances energy cleanliness but also strengthens the storage and utilization of renewable energy. The new power system empowered by digital and intelligent technologies is reshaping the energy landscape, while controlled nuclear fusion holds the promise of revolutionizing the energy sector.

In the resource sector, advances in deep-sea and deep-space technologies have opened up new possibilities for resource acquisition. Emerging technologies such as synthetic biology and alternative proteins are creating conditions to reduce dependence on traditional resources.

In production, digital and intelligent technologies have profoundly transformed production methods, significantly improving resource and energy efficiency and promoting the application of systematic green technologies. In end-of-pipe treatment, biotechnology and new materials are enabling high-value utilization of waste, while low-carbon technologies are playing an increasing role in pollution control and meteorological disaster response. Beyond these areas, the integration of green technologies with digital and intelligent technologies is driving the green transformation of transportation, construction, trade, services, and lifestyles.

Third, market-based mechanisms for green economic development are becoming more refined. As China’s green transformation accelerates, development is shifting from policy-driven to a dual emphasis on policy and market, with market mechanisms gradually maturing. The steady formation of a green development institutional framework has significantly increased public awareness of green issues, making green consumption an integral part of market demand.

To adapt to the new landscape of green development, China has actively advanced innovative market-based mechanisms in recent years. In April 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Opinions on Establishing and Improving the Mechanism for Realizing the Value of Ecological Products,” which laid out plans and explorations for these mechanisms.

One key example is the establishment and steady development of the national carbon emissions trading market, launched in July 2021 after earlier pilot programs. By the end of 2024, cumulative trading volume of carbon emission allowances reached 630 million tons, with a turnover of 43.033 billion yuan. As more industries join the system, it is expected to cover over 60% of China’s total carbon emissions.

In 2024, the first batch of pilot projects for realizing the value of ecological products was also launched. Meanwhile, the environmental, social, and governance (ESG) policy system continues to improve. Over 40% of A-share listed companies now disclose ESG information, and the number and scale of ESG funds continue to grow, injecting new vitality into financial support for green and low-carbon development.

Fourth, China is emerging as a leader in the global green economy. Ecological and environmental issues are global challenges, and the green economy is a vital means to achieve sustainable development. In recent years, China’s green economic development has achieved remarkable results, playing an increasingly significant role in global green progress.

China boasts a vast and growing market for green demand. The “China Energy Ecology Report” shows that in 2024, China’s clean energy investment reached $625 billion, accounting for one-third of the global total. Over the past decade, China’s contribution to global non-fossil energy consumption growth exceeded 45%. China has also become the world’s most important manufacturing base for green products and equipment. In the photovoltaic industry, China’s 2024 production of polysilicon, wafers, cells, and modules accounted for over 93%, 96%, 94%, and 84% of global output, respectively. In the wind power industry, China’s global share of output value reached 64%, with wind tube blade, engine, and gearbox capacities accounting for 64%, 73%, and 80% of the world’s total respectively.

China’s strength in green technology innovation is also becoming increasingly prominent. According to the “2024 China Patent Survey Report,” nearly half of Chinese enterprises have already engaged in or plan to engage in green technology innovation. In 2024, China was granted 53,000 green and low-carbon invention patents—twice the number in 2020. The number of PCT international patent applications for green and low-carbon technologies reached 6,356, ranking first globally for the fourth consecutive year. Frontier and disruptive technological innovations are also steadily advancing, with some already reaching internationally leading levels.

Coordinating domestic and international efforts

Since the advent of the new era, China’s persistent efforts in building an ecological civilization have made the green economy a new driver of growth and a “new calling card” of China’s international engagement in green development. Recently, however, rising uncertainty in the global environment has introduced new challenges. Facing a complex and evolving situation, China must effectively coordinate domestic and international efforts.

On the one hand, in accordance with the essential requirements of Chinese modernization, it is suggested to deeply understand the theoretical connotations and practical significance of the “Two Mountains” theory, vigorously promote green economic development, and effectively integrate green development with economic development. First, green industries should be expanded. Taking the implementation of major national projects and programs, including those aligned with major national strategies, building up security capacity in key areas, as well as the large-scale renewal of equipment and the trade-in of consumer goods, as an opportunity, we should further unleash the potential of China’s green demand, give full play to the advantages of China’s green market demand, improve the green financial system, and strongly support the development of green industries. We should also focus on cultivating green future industries to form a “successive” green industrial system.

Second, green technological innovation should be promoted. By taking advantage of China’s complete industrial system and rich application scenarios, we should actively carry out green technological innovation, promote the integration of digital technology and green technology, especially the original innovation of green frontier and disruptive technologies, and further cultivate and expand green productive forces.

Third, we should improve the market-oriented mechanism for green economic development, improve green development policies, actively carry out market-oriented mechanism innovation, strengthen the role of green factors in the economy through “carbon” as a link, and at the same time implement the requirements of deepening economic system reform, standardize market order, and focus on rectifying unfair competition behaviors to promote the healthy development of the green economy.

Internationally, China should recognize its growing influence in global green development and actively engage in cooperation to strengthen its role in the global green economy. It should adhere to high-standard opening up, support green product and equipment manufacturers, attract investment from internationally influential enterprises in green manufacturing, finance, and services, and launch major international scientific initiatives and platforms in the green sector. It should also expand green markets by advancing the green development of the Belt and Road Initiative, fully leveraging China’s green industrial advantages to contribute more to global ecological improvement.

Finally, China should actively participate in the formulation of international green standards and rules, make full use of bilateral and multilateral cooperation and exchange mechanisms, strengthen cooperation with international organizations, and enhance its voice in shaping regulations for global green trade, carbon footprint assessment, and ecological governance.

Wu Bin is a research fellow from the Institute of Quantitative & Technological Economics at the Chinese Academy of Social Sciences.