China’s annual congress is meeting against the backdrop of industrial overcapacity, a still-floundering property market, and the prospect of a worsening trade war with the US. The decisions made by the world’s biggest consumer of raw materials could be decisive for global commodities markets.
The five-year plan, which began in 2021, is nearing its end, and Beijing has set ambitious goals for clean power adoption and fossil fuel output. However, the country is falling short on reducing carbon emissions and increasing energy efficiency.
To address these challenges, China’s policymakers are likely to focus on consumption with fiscal policy, targeting subsidies for purchases of durable goods and investment in public works. This could favor base metals like copper and aluminum over ferrous metals like steel.
The country’s coal supplies have expanded, preventing blackouts that occurred at the start of the decade. However, renewable power growth is expected to slow down due to market pricing for wind and solar energy.
To curb industrial capacity, Beijing has implemented measures on various commodities, including copper smelting. Local governments must manage their biggest industries while meeting growth targets from Beijing and employment needs.
Food security remains a priority, but the government’s approach to managing agricultural surpluses will be crucial in supporting rural incomes amid the glut.
The upcoming congress marks a turning point for China’s energy transition, with President Xi Jinping facing a make-or-break moment in forcing the country back onto a more sustainable track.
Source: https://finance.yahoo.com/news/china-congress-chart-course-global-233211899.html