Li Xunlei: The global demand for new energy still has potential and is expected to become a driving

Li Xunlei, Chief Economist of Zhongtai International:

Thank you, Professor Li. It is a great honor to participate in the Wudaokou Chief Economist Forum. Today's topic is not my forte, so I will speak less and let Professor Zou speak more.

My own experience this summer has been particularly noticeable. I don't know much about meteorology, but I feel like the greenhouse effect is getting worse. This summer was the hottest I've ever experienced. It was still very hot in mid-September. I was in Shanghai, and this was unprecedented.

So, to address climate change, the application of new and clean energy should be more widespread. The two experts mentioned earlier made excellent points: we are already far ahead in terms of production capacity, but where is the bottleneck? The bottleneck likely lies on the consumption side. We have such a large production capacity, while Western countries have already achieved such a high percentage of new energy consumption; our current percentage is not high enough. Therefore, our focus should be on how to utilize new energy sources, whether it's wind or solar power. To date, we haven't actually used new energy sources, even though we've been talking about it for many years, and our country's proportion of new energy consumption is increasing. Currently, it's only around 20%, which is still significantly lower than Germany's. Therefore, I think our policy focus should shift from increasing production capacity and supply to stimulating consumption.

I've been consistently advocating for change, pointing out that the overcapacity problem we're facing now exists in many sectors. In some areas, I believe the overcapacity is essentially irreversible; the only solution is to reduce production. For example, in the textile industry, the advantage of labor is no longer present, and globally, production capacity is already very high, leaving no room for further increases. We've also talked a lot about overcapacity in the new energy sector, with various regions rushing to launch projects, resulting in redundant construction. However, the problem lies in the fact that there's still considerable room for the utilization and consumption of new energy. Globally, it hasn't peaked yet. Since it hasn't peaked, it means the industry still has significant future growth potential. Locally, in a short period, it's overcapacity, and compared to our consumer demand, it's overcapacity. But these are all relative.

Therefore, given the downward pressure on our economy, especially this year—with our economic growth rate in the second quarter lower than in the first, and the third-quarter data not yet finalized, I think the outlook is also not optimistic—how can we find new drivers for economic growth? We definitely need new consumption channels, not traditional consumption. This is already reflected in our export growth, with the proportion of the "new three items" (referring to three key consumer goods/products) rising significantly. However, domestically, we don't seem to see a significant increase in the proportion of the "new three items" in consumption, although it is rising, but not as significantly as in exports. Given our large production capacity, if domestic consumption growth lags behind global consumption growth, it's unacceptable and could easily lead to resistance from Western countries towards our exports. Therefore, I strongly agree with the suggestions of the two experts mentioned earlier.

For example, I've been mentioning that we issue 5 trillion yuan of ultra-long-term special treasury bonds every year. Where should these bonds be used? I think they should be used for people's livelihood, which means stimulating consumption. Consumption needs an application scenario, and I think new energy provides a very good one.

The second point I want to mention is the enormous impact of new energy on our capital market. Having long been engaged in capital market research, I know that we have a large number of listed companies, approaching the number in the United States. However, there are very few large global leaders. But among them, there are two companies related to new energy that have become the world's number one. I won't name them, but you should all know who they are—that's truly remarkable. In China, companies like these don't yet have a large enough market capitalization, but their production capacity and global sales are already far ahead.

So, what does this indicate? This sudden surge reflects both the success of our country's industrial policies and the enormous global demand for new energy. I believe that given the overall overcapacity in the future, industry differentiation is inevitable—the strong will become stronger, and the weak will be weeded out, as many local governments support the development of new energy. However, are there issues such as redundant construction? Is the focus not on more advanced technology and a more complete industrial chain? Shouldn't we have a process of natural selection? In the past, we relied on policy subsidies; in the future, we hope for market-driven selection.

Of course, our central government should have a systematic plan to cultivate our new energy industry chain more completely and provide certain policy support. At least we have done a very good job in supporting the development of the new energy industry. Next, we need to be more refined and focus on the development of our industry leaders. We should build our industry chain with industry leaders as the main force. The completion of this industry chain will greatly help our international competitiveness and promote our consumption.

Therefore, I am very optimistic about the new energy industry, which is currently undergoing economic transformation. One suggestion is that we should further support the development of new energy from a consumer perspective.