At the national Two Sessions meetings on 5-11 March, China announced plans to stimulate the economy, end local protectionism, and develop the AI sector.
The government kept the same 5% GDP growth target it has had for the last two years. In efforts to boost consumption and help reach this target, it is issuing CNY 300 billion (USD 41 billion) of special treasury bonds. The money raised will go toward subsidising people to buy replacement electric, domestic appliances and cars, as part of the Old for New Exchange Programme. The Two Sessions also focussed on the development and use of AI, and the creation of carbon-footprint standards.
Addressing the meeting, Premier Li Qiang acknowledged the need to boost economic growth and strengthen investor confidence in response to growing barriers presented by trade tariffs and geopolitical tensions.
The national Two Sessions targets are high-level goals. Actual development of green industries depends on provincial government action, and often competition between provinces. It was such government competition that drove development of the renewable-energy sector and in turn boosted economic growth. In 2024, 26% of China’s GDP growth came from the clean-energy industry. Electric vehicles, lithium batteries and solar power modules accounted for over 18% of total GDP. Steady development of such industries will depend heavily on provincial government policy decisions and implementation.
Dialogue Earth has reviewed government work reports and policies from 31 province-level governments. We found that beside development of the clean-energy industry, provincial governments are engaged in a new round of competition, not just for cash but also bonds and tax reduction from the central government. But it is not yet clear if the current measures in place to encourage “green consumption” will be enough to promote the low-carbon transition.
A 2022 government document states that green consumption “refers to promoting the green transition of consumption across various sectors, including food, clothing, housing, transportation and tourism. It emphasises the integration of consumption with production, distribution, recycling, and reuse, while strengthening technological, service, institutional, and policy support. The goal is to achieve systematic resource conservation, waste reduction, and energy-saving carbon reduction.”
Intensive subsidies to compete on AI
For the second year running, AI is a policy focus for both central and provincial government.
At the provincial level, administrations have been competing on policy as they try to attract AI investment. The aim is to replicate the rapid expansion and acquisition of market share some localities saw during the height of the renewable-energy boom.
Since last year, at least 28 of the 31 province-level administrations have put AI-related policies in place. Beijing, for example, created a 15-year CNY 100 billion (USD 13.8 billion) investment fund to support AI and other industries. In the south-east, Guangdong is offering up to CNY 50 million (USD 6.9 million) to facilities working on AI and robotics innovation. Out west, Sichuan is planning CNY 1.2 billion (USD 165 million) of investment over three years to support the AI industry, with up to CNY 20 million (USD 2.8 million) per project. Sichuan is also issuing “compute vouchers” to subsidise the use of computing power by small- and medium-sized enterprises. Early this year, after the successful launch of Chinese AI tool DeepSeek, Shenzhen and at least six other cities began integrating it into their government service platforms.
But can the rapid roll-out of the clean-energy sector be replicated for AI? And if it can, would that result in a green outcome?
One AI insider, speaking to Dialogue Earth on condition of anonymity, said: “Some local governments are using data centre capacity to lure in large-language-model [AI] companies, but it’s not clear how successful that will be.” The insider pointed out that big tech companies often build and run their own data centres. Start-ups, meanwhile, work on cloud platforms, such as Alibaba Cloud, rather than rely on local government data centres.
Shift to green computation urgently required
In 2024, with competition on AI heating up, use of power for computation hit new highs across China. From January to July, internet data centres used 33.1% more electricity than in the same time in 2023.
Only some Chinese tech firms have committed to using renewable energy, and action by those who have has been slow. According to Greenpeace’s Clean Cloud 2024 report, only one data centre operator, GDS, had a renewable-energy ratio of over a third. Alibaba, Tencent and Chindata hit over 10%, while others had only minimal usage of renewable energy or failed to make any disclosure, the report found.
In 2022, China launched a project to encourage companies with big computational needs to send their data to the west of the country, where there is ample hydro and wind power. Ten national data centre clusters were created in the east, north-west and south-west. Data centres built in these hubs must be using 80% renewable electricity by the end of 2025, according to a recent National Development and Reform Commission document.
Provincial governments, meanwhile, aren’t all following that national lead, and only a few have policies on green computation. Qinghai will require data centres built or expanded from 2025 to rely entirely on renewable energy. Inner Mongolia, one of the ten national hubs, has said its data centres get more than 80% of their power from renewables. But in Guizhou, China’s largest big data province, there was no mention of green computation issues in a 2025-2027 development plan.
Trade barriers spurring carbon accounting
Provincial governments are faced with central government climate targets, as well as international systems to tax exports of carbon-intensive products, such as the EU’s carbon-border adjustment mechanism. In response, they are speeding up work on carbon-footprint standards that would allow sectors like steelmaking and EV battery manufacturing to avoid such taxes.
Ouyang Cheng, technical director with carbon consultancy Carbonstop, told Dialogue Earth that the climate targets had pushed trade-focused provinces on China’s eastern coast to start work on carbon-accounting standards.
Provincial governments and industries are hoping to see their own standards incorporated into the national system, as this will give them advantages in the future. Dialogue Earth found mention of the creation or improvement of systems for calculating product-level carbon footprints in 12 of the 31 work reports presented to provincial Two Sessions meetings this year. The specific products covered relate to what the provinces generally produce. Jiangsu, for example, focused on steel, power transmission, electric bicycles, electric vehicle batteries, green construction materials, and solar power equipment. The Hebei city of Handan, meanwhile, is prioritising steel products.
In its report to last year’s Two Sessions, the government had said it would “improve our carbon accounting and verification capacities”, as well as “develop a carbon-footprint management system, and expand the coverage of the national carbon market to more sectors”. In May last year, the State Council issued a more detailed plan, stating that by 2030, carbon-footprint standards for around 200 key products will be in place, covering energy, steel, electricity, industry and vehicles.
Cheng explained that there are 100 carbon-footprint standards due to be ready earlier, by 2027. Some are to be produced by central government ministries and industry associations, while the others will be selected and adapted from various local trial standards. The next year or two will also see important work on a “factor database” for various products – an essential foundation for carbon-footprint calculations, he noted.
Previously, China has used the values provided for the country in international factor databases. At a January press conference held by the Ministry of Ecology and Environment’s Department of Climate Change, an official said those overseas databases are out-of-date and tend to overestimate carbon emissions because they don’t take into account progress on China’s electricity mix and low-carbon transition.
China’s own factor database will be based on national standards for greenhouse gas accounting and reporting, which differ from the international ISO14067 standard in terms of definitions, scope of calculations and allocation methodology. The country is however working to bring its standards into line with the international equivalents. In February this year, the National Energy Administration and other bodies published average carbon-footprint factors for the electricity sector, referring both to ISO14067 and China’s own standards. According to the ecology and environment ministry, more is to be done to improve data quality and coverage in order to help Chinese exporters deal with carbon-border taxes and win international recognition for Chinese databases.
‘Swap new for old’ to promote green consumption
A consumption slump has been hampering China’s economic recovery, and a recent policy encouraging greener upgrades of certain goods is intended to change things. In 2025, almost every provincial government work report referred to “stimulating consumption” and “swapping new for old”. The latter refers to a scheme to subsidise the replacement of cars, domestic appliances and digital devices.
This approach has already been used to encourage car buying since 2024. That year, the policy spurred at least 6.8 million car purchases and 62 million domestic appliance purchases, worth nearly CNY 1.2 trillion (USD 165 billion), according to Ministry of Commerce data. This year, the special treasury bonds China is issuing are worth CNY 300 billion – double the 2024 figure. The range of products is also larger, with mobile phones, tablets and smartwatches now covered.
Li Shiyang, general manager at the Rare China Centre for Behaviour, a sustainability consultancy, told Dialogue Earth that for domestic appliances, the stated aim of the policy is to encourage consumers to upgrade to more energy-efficient goods. However, goods which meet China’s highest energy-efficiency standard already account for more than 90% of sales of the home appliances covered. The main underlying point of the policy is therefore to increase sales, Li said.
Speaking at the Two Sessions, Premier Li Qiang stressed the importance of establishing green and low-carbon ways of production and living. It seems, however, that extra policy support is needed if the “new for old” scheme is to effectively promote green and low-carbon production.
Last year, Chen Ying, a researcher at the Chinese Academy of Social Sciences’ Research Institute for Eco-civilization, wrote in People’s Daily that in some cases, there is a limited range of greener products, which sell at higher prices, and a lack of green certification. These put people off making purchases.
Additionally, Li Shiyang pointed out that consumers aren’t keen on paying the premiums for greener products, so companies are reluctant to produce them. “There’s a need for more subsidies and incentives for companies manufacturing green and low-carbon products, in order to increase market share,” he said.
Li added that standards and certification for green consumption should be further improved, covering energy consumption during manufacturing, recyclability, and the product’s own power use. More products should also be covered, including food, Li said.
