China is poised to benefit from the Iran war as global energy disruptions accelerate a shift away from fossil fuels and toward clean technologies and renewable power, industries that China dominates, experts say.
Most of the oil and gas from the now mostly shut Strait of Hormuz was Asia-bound. Asian nations are scrambling to conserve energy and bolster dwindling reserves. As a temporary ceasefire teeters, gasoline prices in the U.S. and Europe are spiking.
While most of Asia is hit hard, China will likely benefit from the fossil fuel disruptions despite being the biggest purchaser of Iranian oil. China leads the world in battery, solar and electric vehicle exports, and its industries are forecast to face a rise in demand for renewable products.
Before the start of the Iran war in late February, China’s lead in clean technologies was lengthening. The U.S. under President Donald Trump scaled back on renewable energy and leaned on its vast oil and gas resources, promoting energy exports to achieve what Trump described as “energy dominance.”
Now Chinese industry giants like vehicle-maker BYD and battery-producer CATL are well-positioned to capitalize on growing interest in low-emissions energy products as the world confronts the fragility of fossil fuels.
“China’s approach to energy sector development and geopolitics has been completely validated by the Iran conflict,” said Sam Reynolds with the U.S.-based Institute for Energy Economics and Financial Analysis.
Over a decade ago, Chinese President Xi Jinping merged energy security with national security. China has since stepped up its focus on renewable energy, even though fossil fuels still dominate its domestic energy mix.
China makes up over 70% of EV manufacturing and about 85% of battery cell production globally, according to the International Energy Agency. Its current five-year plan until 2030 continues to prioritize these industries.
“They are at the very forefront of this, more so than any other countries in the world, certainly more so than the United States,” said Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub.
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