On March 24, 2025, the Ministry of Finance released the "2024 China Fiscal Policy Implementation Report," which explicitly stated that the 2025 fiscal policy will implement a more robust "green shift." Under the "dual carbon" goals framework, the development of renewable energy and the promotion of NEVs will serve as strategic pivots. This policy direction not only reflects the intrinsic demand for high-quality economic development in China but also provides a Chinese solution for global energy transition.
The Ministry of Finance's 2024 implementation report shows that China's policy layout in the NEV and renewable energy sectors exhibits a "dual-wheel drive" characteristic. NEV sales for the year reached 12.866 million units, up 35.5% YoY, with market penetration exceeding 40%. Notably, the penetration rate in county-level markets surpassed 53.7%, demonstrating the effectiveness of policy implementation at the grassroots level. This growth is underpinned by the precise application of structural policy tools: 1 trillion yuan in ultra-long-term special treasury bonds was primarily allocated to charging infrastructure and smart power grids, while the first batch of county-level battery swapping and charging pilot projects covered 67 counties, directly addressing the "last mile" charging bottleneck in rural markets. It is worth noting that the purchase tax reduction and exemption policy adopted a progressive design of "full exemption in the first two years and half reduction in the following two years," which not only stabilized consumer expectations but also provided a buffer period for technological upgrades in the industry chain.
The renewable energy sector demonstrated an expansion speed that exceeded expectations. In 2024, China added 278 million kW of PV installed capacity, bringing the cumulative installed capacity to 887 million kW, achieving the 2030 wind and PV installed capacity target six years ahead of schedule. This leapfrog development benefited from the targeted allocation of fiscal resources: 4.756 billion green electricity certificates were issued, and 439 million were traded, establishing a market-based consumption mechanism. Of the 5.4 billion yuan in local renewable energy subsidies, PV poverty alleviation projects accounted for over 70%, reflecting the policy's tilt toward livelihood-related areas. However, the sharp price fluctuations in the industry chain, with declines ranging from 35% to 80% within the year, coupled with the US's imposition of a 50% tariff on Chinese PV products, exposed the vulnerability of the existing capacity layout. This necessitates a shift in policy focus from mere scale expansion to the construction of technological barriers.
The synergistic effects of the two major strategies are beginning to emerge. The cascade utilization of NEV power batteries and renewable energy ESS form a closed loop. Top-tier enterprises like BYD have increased thermal efficiency to 46% through the fifth-generation DM hybrid technology, with R&D investment intensity reaching 6.97%, far exceeding the industry average. Such technological investments are reshaping the competitive landscape of the industry. Meanwhile, the surge in PV installed capacity has bolstered the supply of green electricity, supporting carbon reduction throughout the NEV life cycle. This "green electricity-green vehicle" coupling model may reshape the global automotive industry value chain.
The current policy system still faces tensions. Although the NEV rural promotion has achieved significant results, charging infrastructure coverage has only reached the township level, with gaps remaining in village-level networks. The battery recycling system has yet to achieve large-scale operation, posing environmental risks. In the renewable energy sector, despite leading in installed capacity, insufficient ESS support has led to a rebound in the curtailment rate of PV power generation in north-west China to 4.2%, exposing the shortcomings of the existing power system's flexible regulation capabilities. These structural issues require fiscal tools to shift from "flood irrigation" to "precision drip irrigation," such as allocating more special bonds to new-type infrastructure like distributed ESS and smart microgrids.
The 2025 policy direction may see three shifts: first, from consumption subsidies to the formulation of technical standards, using carbon footprint accounting to drive low-carbon transformation in the industry chain; second, from production-side support to market mechanism construction, expanding green electricity trading and carbon market linkages; third, from domestic circulation to participation in international rules. This transformation will test policymakers' wisdom in balancing short-term growth stabilization with long-term competitiveness, especially against the backdrop of rising global trade protectionism. How to maintain the global competitiveness of China's green industries through fiscal policy tool innovation will be a key benchmark for measuring policy effectiveness.
SMM New Energy Industry Research Department
Cong Wang 021-51666838
Rui Ma 021-51595780
Disheng Feng 021-51666714
Yanlin Lyu 021-20707875
Zhicheng Zhou 021-51666711
Haohan Zhang 021-51666752
Zihan Wang 021-51666914
Jie Wang 021-51595902
Yang Xu 021-51666760
Bolin Chen 021-51666836
