Evolution, not revolution, is China’s energy goal

The closure of the Strait of Hormuz earlier this year triggered a perverse optimism in some quarters of the climate lobby. The movement’s archenemy, US President Donald Trump, had, in one fell swoop, accomplished its dream of raising the price of oil.

Yet, the most surprising outcome of the Iran crisis to date is that the price has not risen nearly as much as many analysts expected. The biggest reason is that China cut its fossil fuel imports massively in the months since the closure.

But that answer begs another question: Why would China, the global champion of clean energy technology, do that? 

Why wouldn’t it maximize the pain felt by fossil fuel consumers worldwide, thereby boosting the sales of solar panels, batteries, and electric vehicles – the export industries that President Xi Jinping has lauded – even if it had to pay more for its own imports in the short run?

Global politics

Many political analysts have proposed answers to those questions. China values stability generally. It wants to be seen as the adult in the room in global politics. China might want to do the Trump administration a favor in the hope of a reciprocal benefit in the future. 

It might even prefer continued Republican control of the United States government. All these speculations need to be seen in the light of a cold, hard economic fact – China exports more than cleantech. A lot more. 

In 2025, it exported about US$220 billion worth of solar panels, electric vehicles, batteries, and wind turbines. That sounds like a lot, and it is. But it’s only 6% of the $3.77 trillion that China exported overall.

The manufacturing juggernaut is the leading trade partner of more than 120 countries. 

Every additional dollar that those nations spend on imported oil and liquefied natural gas, or LNG, because of the Iran crisis isn’t being spent on Chinese electronics, textiles, metals, and chemicals. All of these bring in hundreds of billions of dollars more than the cleantech.

Moreover, the rising price of oil is slowing global economic growth and could trigger an economic crisis if it gets too high, with knock-on effects for Chinese exports. 

Sustained hostilities

The International Monetary Fund’s economic outlook, which assumed that the Strait of Hormuz would reopen in mid-July, forecasted global growth of only 3% in 2026, shrinking to 2% if the strait remained closed amid sustained hostilities. 

The slowdown would be steepest in emerging markets.

China is in desperate need of export revenues. Its economy has slowed considerably and it seems unable to boost domestic demand. Exports account for virtually all its economic growth. China is also saving money on its remaining imports of oil and LNG. 

In the long run, the crisis is likely to accelerate the adoption of cleantech, much of it imported from China. Using electricity generated by renewables will help many countries cut petroleum imports and escape the economic risks of the Strait of Hormuz crisis. 

This package of technologies is also getting increasingly affordable even as its performance improves. These countries may not be happy about their growing dependence on China.

But even if cleantech imports were cut off, the immediate consequences would be far less severe than if their current energy systems are starved of fuel.

Clean energy

The idea that Trump may inadvertently accelerate the transition to clean energy isn’t crazy. But the transition will be an evolution, not a revolution. 

David M Hart is a senior fellow for climate and energy at the Council on Foreign Relations. 

This work represents the views solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy. 

This edited article was published by the Council on Foreign Relations under a Creative Commons license. Read the original here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.