China's clean energy sector is filling in a vacuum created by the nation's real-estate crash

• China's clean energy sector is replacing a gaping hole left by the real estate crash.
• Clean energy investment contributed to 40% of China's economic growth in 2023.

China's property sector has tanked — enter clean energy.

Investment in solar power, electric vehicles, green hydrogen, and a spate of other clean energy technologies in China rocketed to 6.3 trillion yuan ($890 billion) in 2023, climate outlet Carbon Brief reported on Thursday. That's a 40% increase from 2022, which saw 4.6 trillion yuan invested.

In total, clean energy contributed to 40% of the country's economic growth in 2023. Without the sector, China's GDP would have risen only 3% instead of the recorded 5.2%.

The ballooning industry is helping fill a gaping hole created by China's real estate collapse.

At its peak, China's property sector was an estimated 25%-30% of the country's GDP. Then, property developer Evergrande found itself drowning in debt, tipping the dominos that would spark a deep real estate slump that experts predict could last a decade.

Since the property meltdown, money has been drying up in the industry, with investment shrinking 10% in 2022, and another 9% in 2023, Carbon Brief noted.

The weakness in the property sector has created a big void in available investment opportunities, which local governments have quickly begun replacing with sectors like clean energy.

Investment in manufacturing — specifically in clean energy — rose 9% year-over-year in 2023.

China's lead in EV and solar panel manufacturing is being felt in markets around the world. In Europe, solar module prices have been crashing after a glut of Chinese supply flooded the market.

And last September, the president of the European Commission announced an "anti-subsidy investigation" into Chinese EVs, concerned that Beijing's cheap prices were warping the market. Later, in January, BYD dethroned Tesla as the world's largest EV maker.

Still, the rise of the clean energy sector is not a cure-all for the malaise that has gripped China's economy. The country continues to face a deflation problem, stunted consumer demand, and capital flight among foreign investors.