China is already the world's largest producer of renewable energy and is likely to overtake more developed economies as the world's cleantech hub.

That is the conclusion of a major new report from environmental think-tank The Climate Group, which claims the argument that developed economies cannot afford to cut carbon emissions until China does likewise is looking increasingly outdated.

"For too long, many governments, businesses and individuals have been wary of committing to action on climate change because they perceive that China - the world's largest emitter - is doing little to address the issue," said Steve Howard, chief executive of The Climate Group. "However, the reality is that China’s government is beginning to unleash a low carbon dragon which will power its future growth, development and energy security objectives."

The report analysed Chinese environmental regulations and found that in many cases they are tighter than those found in the West. For example, fuel efficiency standards for cars are 40 per cent higher than in the US, while a raft of mandatory efficiency standards for home appliances, green car taxes, building efficiency codes and renewable energy subsidies have been introduced in recent years to support the government's target of improving the energy intensity of the economy by 20 per cent.

The regulatory framework has underpinned a huge increase in renewable energy investment, according to the report, with the $12bn invested last year putting the country almost on a par with global leader Germany in terms of cleantech spending.

The report also claimed that China has already overtaken Germany as the biggest producer of renewable energy. This is in large part down to China's huge installed hydroelectric capacity, but it is also making rapid progress in newer renewable energy technologies with the country second only to Japan in terms of solar panel production. It is also set to become the largest exporter of wind turbines by 2009.

"China's current trajectory will ensure it remains a strategic global hub for low carbon investment, innovation and growth over coming decades," added Howard.