Welcome to Thoughts on the Market.

I'm Robin Xing, Chief China economist for Morgan Stanley.

Along with my colleagues, bringing you a variety of perspectives, I will be talking about

China's green revolution and what does it mean for investors.

It's Tuesday, March 30th at 8 p.m. in Hong Kong.

China's recent pledge of peak emissions by 2030 and carbon neutrality by 2016 implies

a steep energy transition marked by near-term disruptions, but also long-term opportunities.

China will use administrative production controls, but looking beyond the near-term, we see

a green revolution with massive green investment instead of production cuts to facilitate

this energy transition.

In the short run, we will see production cuts to control the emissions, which have

kicked off in heavy industry hubs such as Tangshan, the largest steel production base in

China, which could lead to a 2% decline in national steel production this year, elective

impact on China's growth, however, the magnitude should be manageable at around 0.1% of

annual GDP.

In the meantime, this reduced supply could drive steel prices in China to rise a lot this

year, feeding into upstream prices.

This could mean produce a price inflation in China would rebound quickly to around 7-8%

in the second quarter.

But looking beyond the near-term, we see an all-rond and coordinated efforts on green revolution

in coming decade with China naming on massive green investment rather than production cuts

to facilitate this energy transition.

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