/biz/ - Business & Finance

But its economy is changing. China’s leaders have long acknowledged that its current phase of
massive and resource-intensive investment in urbanisation, infrastructure and factories must
end. As far back as 2007, China’s then Premier warned that "the biggest problem with China's
economy is that growth is unstable, unbalanced, uncoordinated and unsustainable". This
rebalancing could have substantial impacts on the outlook for China’s energy sector, and
given China’s size, for the world too.


The rebalancing of the Chinese economy still has a long way to go. Savings and investment
levels remain very high, the debt-to-GDP ratio has continued to climb, and the construction
sector retains an outsized role in GDP (Figure 1.6). This model is pushing against inherent
constraints. China already has a world-class infrastructure stock, and after growing almost
30% in the last decade its per capita residential floorspace is already equal to that of Japan,
despite China’slower level of GDP per capita. China’s working age population peaked around
2015 and is projected to fall by more than 20% by 2050. With this will come a reduced need
for investment, such as in new housing and infrastructure (Figure 1.7

Although the current property crisis in China has attracted much attention, it has not yet
significantly impacted the energy sector (Box 1.1). Moreover, the property crisis is a
symptom of the broad structural change facing the Chinese economy. How this economic
transition plays out is one of the key uncertainties in this Outlook. In our scenarios, we have
revised downwards the long-term projection of GDP growth in China to just under 4% per
year for the period 2022 to 2030, and 2.3% per year for the period 2031 to 2050. This
compares to more than 4.5% and more than 2.5% respectively in the World Energy Outlook2022 scenarios. As a result, the economy is around 5% smaller in 2030 than projected last year, and slightly less than 15% smaller in 2050.