China Economic Update : Rebalancing Growth - Special Topic : Building the Skills Gap for China’s Low-Carbon Transition

World Bank

Published

17 Jul 2026

Coverage

China

This edition highlights that China’s economy maintained solid growth at the start of the year, with high-tech investment and exports offsetting subdued consumption. Momentum softened in the second quarter on the heels of the global energy supply shock, though the impact on China’s economy was mitigated by large oil reserves, diversified fuel imports, a high share of renewables, and policy measures. Growth is projected to moderate to 4.4 percent in 2026 amid persistent domestic demand headwinds. Near-term macroeconomic policy will need to remain supportive of growth while structural reforms are phased in to address the deeper drivers of weak domestic demand and accelerate rebalancing. The Economic Update also examines how China’s low-carbon transition is reshaping its labor market. Demand for green technical skills and transferable competencies such as systems thinking and adaptive learning is expanding beyond narrowly defined low-carbon sectors. These skills are associated with sizable wage premiums of around 22 to 25 percent, yet skill mismatches are constraining inclusive employment gains. Realizing the full employment benefits of the transition will require a proactive, coordinated approach to workforce development on two tracks: in the short term, strengthening on-the-job training, reskilling, and labor mobility support; and over the longer term, reforming education curricula and strengthening labor market institutions.