China replaced the U.S. as the biggest investor in renewable energy for the first time in five years as the Asian nation raced to meet rising demand for power and reduce carbon emissions.

China invested $34.5 billion in wind turbines, solar panels and other low-carbon energy technologies in 2009, Bloomberg New Energy Finance said Wednesday in London. The U.S. spent about half as much last year, or $18.6 billion, slipping to second.

Demand for electricity, fuels and heating has soared in China as millions of farmworkers have moved to the cities, found jobs and bought appliances. Economic growth averaging 10 percent a year the past three decades made the country of 1.3 billion people the largest polluter, forcing the government to implement tougher emissions rules and set clean-energy targets.

"The rise of China as an investor in clean energy is a striking development that reflects, in part, Beijing's determination to be at the forefront of manufacturing key technologies such as wind turbines and solar PV modules," said Michael Liebreich, founder of Bloomberg New Energy Finance. "Investment in the U.S. was held back last year by a shortage of long-term private- sector financing for projects."

China has pledged to reduce its carbon-dioxide output per unit of gross domestic product by 40 percent to 45 percent of 2005 levels by 2020. Premier Wen Jiabao in January called pollution in his nation "grim" and said the government will curb emissions from power plants, cement and steel producers.

U.S. investment in clean energy fell 42 percent from a year earlier, reflecting tighter credit conditions amid the worst recession since World War II and the lack of a federal plan encouraging renewable power.

Worldwide, only 9 percent of the $182 billion of global economic stimulus packages earmarked for clean energy had been spent by the end of last year, New Energy Finance estimates. Two-thirds of the spending is scheduled for this year and next, which follows last year's $162 billion.

China, the world's third-largest economy, boosted its installed capacity of renewable energy projects to 52.5 gigawatts, mainly in the form of wind turbines and biomass plants. That's the equivalent of 52 medium-sized coal plants. Low-carbon energy now accounts for 4 percent of the total.

The U.S. still leads the world in installed renewable capacity at 53.4 gigawatts, or 4 percent of the total. Spending this year is poised to climb, reversing last year's 40 percent decline, with much of the $66 billion of the clean-energy stimulus money being spent, New Energy Finance said.

Venture capital spending was the highest in the U.S., accounting for 60 percent of the world total.