China's property market is failing. These are the 3 new growth areas Beijing is focusing on to pull itself out of a tailspin.

China's President Xi Jinping

Lintao Zhang

• China's economy has been struggling to recover post-pandemic, and its real-estate crisis isn't helping.
• President Xi Jinping's administration is now looking at other industries for growth.
• The green industries of EVs, batteries, and solar cells are a key new area of growth for China.

China's real-estate sector has been mired in a debt crisis for over two years with no signs of a strong recovery. One analyst estimates the country could feel its impact for up to a decade.

The problem is that real estate is a really important pillar of China's economy: It contributes as much as 30% to the country's economy, which has been struggling to recover post-pandemic.

So, China — the world's factory floor for four decades — is moving back to its tried and tested formula: manufacturing. This time, it's focusing on the sustainability sectors.

"Green industries have long been central to President Xi Jinping's political objectives and personal legacy," analysts at the Eurasia Group wrote in a note on Wednesday.

It also helps that "green sectors stand out as politically safe," they added.

In particular, China's championing what it calls the "new three" industries to drive its economy. Here's what they are.

1. Electric vehicles

Thanks to government subsidies, China is already the world's largest market and producer of electric vehicles.

The Chinese EV market is expected to continue growing 25% this year, although the growth is slower than the 36% the industry posted in 2023 as Beijing winds down its subsidies.

Still, China-made EVs are now being exported to Europe and beyond. They also are poised to enter the US market, Business Insider reported in May.

In the last quarter of 2023, Chinese EV maker BYD overtook Tesla to become the world's largest seller of electric vehicles.

Other Chinese EV brands with international expansion plans include Nio, Geely, and Zeekr.

2. Lithium-ion batteries

China's lead in the EV sphere is complemented by its dominance in the battery industry. The country is now one of the biggest producers of the LFP — lithium, iron, phosphate — batteries that power many EVs.

China's "clear advantage" in the battery industry is an indication of the comprehensive supply chain it has control over, Ilaria Mazzocco, a senior fellow at the Center for Strategic and International Studies in Washington, DC, told BI in October.

This has enabled it to manufacture batteries at a cheaper price than its rivals — less than $60 million per gigawatt hour of batteries produced, as compared to $88 million per gigawatt hour for South Korean manufacturers, the Financial Times reported in August, citing Bernstein analysts.

This has enabled China's top two battery firms – BYD and CATL — to control about half the global market.

3. Solar cells

China outpaced all other countries in the setup of solar and wind energy installations in 2023 as the country pushes ahead in its energy transition plans.

So intense is the investment in solar panels that the industry is facing an overcapacity and squeeze on profit margins.

But it also means the industry is huge. China is expected to dominate 80% of global solar manufacturing capacity until 2026, according to Wood Mackenzie, a commodity research and consultancy firm.

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