Opinion | China’s clean energy transition solves several problems at once
6 Aug 2025
By increasing investment in renewables, China’s economy stands to benefit from more sustainable growth rates and improved terms of trade
China has been increasing investment in renewable energy to give its economy a boost. In the first half of 2025, China’s solar power generation capacity jumped 54.2 per cent year on year, while wind power’s generation capacity increased by 22.7 per cent in the same time period. The country is also constructing what is set to be the world’s largest hydropower project, expected to cost less than 1 per cent of China’s gross domestic product (GDP). Reduced consumption of crude oil coupled with lower prices could cut China’s energy import bill by half a per cent of GDP. The clean energy push will increase investment and lower supply-side costs, killing two birds with one stone. Cheap and abundant renewable energy is the most important pillar of China’s long-term prosperity.
China’s initial industrialisation was dependent on imported energy. But renewables are giving the country the means to turn its own industrial power into energy; China will no longer need to rely on imports to power its economy.
In 2024, China’s primary energy resource consumption was equivalent to 5.96 billion tonnes of standard coal. Its electricity consumption was 9.8 trillion kilowatt hours (kWh), of which solar reportedly generated 834 billion kWh – up 44 per cent from the year before – and wind generated 992 billion kWh, up 16 per cent.
Solar and wind made up 18.5 per cent of total electricity consumption last year, and nearly 60 per cent of the increase. Together, solar and wind could account for 80 per cent of this year’s increased electricity consumption, which would be a significant turning point in China’s green transition. Electricity accounted for roughly 27 per cent of China’s energy consumption last year. China’s coal power generation averages 300 grams of standard coal per kWh, about twice as efficient as in the US. Electric vehicles (EVs) are highly energy efficient. They convert about 80 per cent of energy into motion, substantially more efficient than cars with internal combustion engines. If China can shift all its energy use to electricity, I estimate that it would require around 25 trillion kWh.