China’s major energy moves over the next decade may drastically reduce its dependence upon the fossil fuel imports from the Gulf Cooperation Council (GCC) states as well as Australia and North America. While also possibly turning China into a major coal exporter and reducing its need for iron ore imports. Such major changes will have large impacts on global fossil fuel and other commodity markets, while also greatly increasing China’s energy security.
At the same time, China will gain a reputation as the Green Energy and Climate Change Action global champion; supporting a discourse of China as “the future” and the West as “the past”. Most especially among non-Western nations with populations not extensively propagandized by the Western media.
The Trump administration’s aggressive moves against China, and its attempts to force it to reduce its trade with Russia, have fully rebounded as China strives even more to gain greater energy security while continuing to support its ally Russia.
In 2024, China imported 11.1 million barrels per day (mbpd); 25% of global oil imports. With domestic production of 4.3 mbpd. As I have detailed separately, China is capable of very significantly reducing its oil consumption in the next 5-10 years through transport electrification, by 2.4 mbpd by 2030 and 6 mbpd by 2035. All of that reduction would be taken by imports, which would fall from 11.1 mbpd to 5.1 mbpd. For geopolitical reasons, China would not reduce its imports from Russia, Central Asia, or Iran and Venezuela (via Malaysia); and perhaps even increase them. These countries accounted for 4 mbpd of imports in 2024, so by 2035 China could be in a position of having no oil imports except from those nations, and oil imports would only fall further in future years.
This would completely remove China’s energy security risks related to the Persian Gulf (Iran has an oil export terminal on the Gulf of Oman), and also perhaps leading to it having little interest in the affairs of the Middle East apart from Iran and the Red Sea link to the Suez Canal. Especially when it may not need any natural gas supplies from the region either.
With oil consumption continuing to decline in Europe, and on a plateau in the US, the Chinese reductions could offset increases in other regions; resulting in falling global oil demand. Especially if cheap Chinese EVs start to make an increasing impact in other nations outside the West (e.g. Southeast Asia, South America and Africa). And that’s with a good few mbpd of production being held off the market by OPEC+, Western sanctions (Iran, Venezuela) and conflict (e.g. Libya).
The global oil supply is highly price inelastic, so even a relatively small drop in demand can have a very large effect on price, an effect that would be secular rather than short term; an existential threat to the Gulf Cooperation Council monarchies that need vast oil revenues to stay in power.
In 2024, China consumed 435 billion cubic metres (bcm) of natural gas. With 246 bcm coming from domestic production and the balance from imports. With the signing of the memorandum of understanding (MOU) on the Siberia 2 pipeline with Russia, and the increase in supplies through the Siberia 1 pipeline, together with increases in the capacity of the Central Asia gas pipelines, China may be in a position within a decade to meet its gas consumption needs from domestic production (which is still growing) and pipeline gas only:
Siberia 1: 44 bcm/yr
Central Asia: 85 bcm/yr
Sakahalin: 10 bcm/yr
Siberia 2: 50 bcm/yr
Domestic production: 246 bcm in 2024 and growing 5% per year (projected to be 262 bcm in 2025).
China is also replacing natural gas powered heating with heat pumps etc., LNG in trucks with electric vehicles, and fossil fuels in energy generation. So future demand may actually be lower than current demand, although demand is currently still growing. In addition, China’s domestic gas production is growing at a rate of 7% per year; a ten year doubling rate.
The supply of all domestic consumption with domestic production and pipeline imports would completely remove the need for LNG imports; including from Australia and Qatar. As with the reductions in oil supplies, this would remove Chinese dependency upon the Persian Gulf; specifically Qatar. Also, it removes dependency on the US vassal Australia.
With huge amounts of new LNG supply coming on line in the next few years, a drop in Chinese demand could significantly drop prices; a glut is already being predicted without any foreseen reduction in Chinese demand. Very negative for countries such as Qatar and also all of the US and Australian LNG export terminals, but very good news for Europe.
In 2024, China consumed 4.9 billion tonnes of coal, of which 500 million tonnes were imported; with Indonesia as the biggest import source of thermal coal and Mongolia the biggest import source of coking coal (used for iron and steel production). With the probable rapid reduction in coal consumption over the next decade, China could become a major thermal coal exporter; negatively affecting global coal export prices. Its scale of production would easily overwhelm the non-Chinese global coal industry, even pushing out domestic coal production in other consuming nations and delivering a massive price and volume shock to nations such as India, Indonesia, Russia, the United States and Australia.
The longer-term threat to coking coal is the revolutionary new technique for producing iron and steel that does not require coking coal, produced by Chinese scientists; “flash” iron making. A team in Sweden is also developing a process which replaces coking coal with hydrogen. The Chinese process also utilizes much lower grades of iron ore, which China has in abundance. In contrast to the higher grades that have to be imported from Australia and Brazil. So China would then not just remove the need for coking coal imports, but also for iron ore imports; especially from US vassal Australia.
If China successfully executes the moves above, it will be markedly reducing its greenhouse gas emissions year over year, gaining the title of not just Clean Energy Giant but also as the leading nation combating anthropogenic climate change. Compared to a West lead by a US that is doubling down on fossil fuels, together with both Canada and Australia. This will be as part of a large discoursal change as China is seen more and more as “the future”, the position that the US enjoyed in the post-WW2 era, and the West seen as “the past”. Such a change has huge implications for Chinese and Western international soft power and for the success of their brands in foreign markets.
In 2024, China’s imports of oil were 11.1 mbpd. At an average price of US$60 per barrel, that’s US$243 billion (China’s current account surplus in 2024 was US$424 billion). Compared to China’s GDP of US$18.74 trillion at market exchange rates; 1.7% of GDP (with a greater GDP impact when multiplier effects taken into account). China also spent about US$65 billion on natural gas imports, and about US$35 billion on imported coal.
So, China’s clean energy shift will provide a modest boost to GDP through the trade account in addition to the one-off growth from the installations of wind and solar generation facilities. It will also free up over US$100 billion in the current account that could be used to increase non fossil fuel imports from other nations; amounts which may be significant to many of China’s non-Western trading partners.