A geopolitical shield immune to conflict
China’s resilience also stems from the fact that it uses oil and gas differently than most Asian countries. Most of the imported oil from Iran and the Middle East is used mainly in the southern half of the country for transport and industry. However, the north of China is mainly supplied with domestic production and Russian oil through pipelines – these resources are not threatened by the conflict in the Middle East.
At the same time, Russian oil represents almost a fifth of imports, which makes Moscow the largest supplier. Moreover, coal remains the dominant source of electricity and is available locally – China produces more than half of the world’s coal. Combined with the fact that oil and gas make up less than a quarter of the energy mix, the country is not as dependent on imports as Europe or the US.
China’s daily oil consumption is 15 to 16 million barrels, and most of it goes to transportation. While foreign supplies are key, diversification from Iran and Saudi Arabia to Russia mitigates the effects of the outages. This explains why China is able to keep the industry going even as the rest of Asia struggles with fuel shortages.
The green road to energy freedom
However, China’s energy resilience is not just about oil. The country has invested heavily in the “supergrid”, a vast electricity network that connects renewable sources and distributes power efficiently across regions. China has become a world leader in green technologies: wind, solar, hydro and nuclear will produce more than a third of its electricity as early as 2025. Today, renewable capacity accounts for more than half of installed capacity.
As energy economist Roger Fouquet points out, “China’s ambitious transition to renewables is not only an environmental step, but also protects the economy from global risks, such as we see in the conflict with Iran.” According to him, the country “was somewhat lucky to start investing in renewable resources 25 years ago – today it is benefiting from it”.
Electric car owners in Beijing are virtually unaffected by the shocks from the Middle East on their mobility costs. The combination of vast reserves and fast-growing renewable resources thus gives China a unique space to respond to shocks – to minimize short-term impacts and strategically plan for its future, while others just put out current fires.
At the same time, even though a significant portion of oil still comes from the Middle East, a combination of renewable resources and technological superiority make China more resilient than most of the region. The current crisis can thus further this trend, including ambitions to reach peak emissions by 2030 and carbon neutrality by 2060.
A new geopolitical dilemma?
However, energy transformation also raises new questions. The transition from fossil fuels to renewable resources may paradoxically create a new form of dependence – this time on China. Today, it dominates the production of key technologies, from solar panels to electric cars, which causes concern especially in Europe and among US allies.
It is no coincidence that trade disputes between China and the European Union are increasingly focused on green industries. Chinese restrictions on the export of critical raw materials, which are necessary for the energy transformation, are also increasing the tension. This creates a dilemma for many countries: reduce dependence on oil, but at the same time become more dependent on Chinese technology.
The green transformation also has indisputable advantages. In addition to environmental benefits, it allows energy to be produced locally and reduces vulnerability to global supply cuts. Unlike oil or gas, it is an infrastructure that can operate for decades without depending on geopolitically unstable regions.
There is no simple solution for energy-dependent countries. The optimal strategy remains diversification – a combination of different resources and technologies, which reduces risks on both sides.
