Written by Kate Logan, Director of the China Climate Hub

In May, China’s power sector capacity breached 4000 gigawatts (GW) – exceeding the total magnitude of the U.S., EU, Indian, Russian and Japanese power sectors combined. The paradox of this scale, of course, is that China leads the world in clean power installations and is approaching a power sector based primarily on non-fossil sources while still burning the most coal of any country, accounting for over half of the global total.

Subscribe now

Beijing recently released its 15th five-year plan for building a new-type energy system, which introduced little by way of flashy new targets for clean energy or emissions control. But asking why officials avoided any surprises, along with a deeper read of the plan, can reveal useful insights about how domestic policymakers are approaching China’s energy transformation. In particular, three points deserve attention from those aiming to understand how Beijing intends to thread the needle between the triple imperatives of economic growth, energy security, and decarbonization.

First, the plan centers the next phase of China’s efforts to safeguard its energy security as it emerges from the Hormuz energy crisis relatively unscathed.

Recent weeks have seen a flurry of media coverage declaring China to be the “winner” from the Strait of Hormuz energy crisis. While some analysts were surprised by China’s relative ability to weather deep shocks to global energy markets, Beijing emerged from the crisis with greater confidence, reaffirming its conviction to double down on energy independence and self-sufficiency. The new plan places energy security at the center while outlining how officials plan to reduce China’s remaining import dependencies. This focus is evident from the opening paragraphs, which foreground compounding security risks while framing energy security and supply adequacy as the prerequisite for economic viability, technological innovation, and decarbonization.

The document outlines a variety of steps for further substituting imported fuels with domestic alternatives, while pledging that “energy imports will be diversified and controllable.” Major components of this strategy include expanding the development of coal-based synthetic fuels; expanding and commercializing green fuels, including by increasing green hydrogen output eightfold by 2030; and deepening electrification of heavy-duty trucking and marine shipping. In the power sector, natural gas, which already plays a minimal role in electricity generation, is to be constructed “rationally” while scaling up domestically produced gas turbines. China will also aim for 35 percent electrification by 2030, five years ahead of a newly proposed global target.

For China’s emissions, the implications of this strategy are likely mixed. On one hand, further minimizing oil and gas use and accelerating electrification will deepen reductions. However, even with the emphasis on green fuels, renewed political support for coal-to-chemicals investments risks unleashing a massive new emissions “bomb” – and one that may become increasingly difficult to track via official statistics.

Second, the plan’s emphasis on enhancing grid flexibility signals Beijing’s concern over high levels of “wasted” renewables, which are a bottleneck for both economic growth and decarbonization.

With newly installed wind and solar capacity growing at record rates in recent years, China’s relatively inflexible grid has struggled to integrate this sudden influx of intermittent power. Just last year, China added 434 gigawatts of wind and solar, a figure nearly one and a half times the size of Japan’s entire power sector. Official data now place renewable energy curtailment at just under the government’s recently-established limit of 10 percent, which was doubled from 5 percent last year. Analysts, however, believe that the actual curtailment figure is substantially higher than official figures suggest. High curtailment is impeding clean power from keeping up with

China’s rapidly growing power demand, which increased by around 5 percent last year, forcing greater coal consumption than it would be otherwise.

The solution – making China’s power sector more flexible – is at the core of the new plan. It includes a new target for the grid’s “regulating capacity” to rise by over 40 percent, which serves as a proxy for the grid’s adaptability. Details about how this will look in practice are vague, however, and the language seems to indicate Beijing’s intention to continue “bundling” coal alongside cleaner sources of generation. But several additional targets for 2030 provide a strong growth incentive for cleaner means of balancing load variation: raising “new energy storage,” which includes batteries, to 300 GW; increasing pumped-storage hydropower to 160 GW; and expanding vehicle-to-grid capacity and virtual power plant capacity to 50 GW each. Some of these targets fall short of industry association benchmarks, but they are more ambitious than the objectives around clean energy installations – reflecting Beijing’s focus on making the existing system work better before adding even more new energy.

Third, the plan reaffirms Beijing’s shift away from control-based targets and toward an “additive” approach that leverages China’s clean technology dominance as the main driver of decarbonization.

For those hoping for firmer signals on how China will limit fossil fuels and cap its emissions, the new plan will disappoint. Although the overall 15th Five-Year Plan pledges to peak oil and coal consumption – and another recent initiative integrates oil and coal use totals into local cadres’ evaluations – the new energy plan provides no additional details about the timing and level of such peaks. This is despite earlier indications in state media that oil consumption will likely peak around 2026 and coal consumption around 2027. On renewables, the plan mostly consolidates existing targets, including 2030 goals for non-fossil energy to account for 25 percent of total energy consumption and for “new energy generation” – i.e., wind and solar – to reach 30 percent of total power generation. An additional, new target for all non-fossil sources to comprise over half of power generation would still leave room for overall emissions to rise.

From Beijing’s perspective, these conservative renewables targets and the absence of hard caps on fossil fuels allow China the flexibility to grow its economy and weather potential geopolitical shocks while remaining on track to peak its emissions before 2030, as Xi pledged in 2020. They also underscore that Beijing’s level of ambition is likely to be driven less by climate commitments than by economic incentives from its leading clean technology industries, as my colleagues Neil Thomas and Guoguang Wu argued in a recent CCA report. Innovation will be an important part of China’s recipe: the plan puts forth new targets for international patent applications to rise by 5 percent and for over 100 “first-of-its-kind” demonstration projects to be launched by 2030. The plan also elevates a May 2025 policy calling for computing power demand to be met with green sources, marking the first time that “computing power” was referenced in a national energy plan.

Observers may debate whether Beijing’s new energy strategy meets the moment, especially whether it balances economic and security interests with the realities of climate change: in 2025, China suffered over $35 billion in economic losses from natural disasters, and Xi recently chaired a Politburo study session on emergency management in the wake of disastrous flooding in China’s Southern regions this year. Even without ambitious targets, however, Beijing would argue that it has already demonstrated the essential role of electrification for bolstering energy security in a volatile world. With an electrification rate significantly higher than those of the United States or Europe, China may also be better positioned to transform a wide range of industrial sectors while reducing both energy costs and carbon emissions.

We’re glad to have you here for the inaugural issue of the China Energy Brief, a monthly newsletter from the China Climate Hub. Each issue offers forward-looking, evidence-based insights into the forces shaping China’s green tech and energy action—and what it means for the U.S. and beyond.

This month, we take you onto the floor of the world’s largest-ever Beijing Auto Show, where the future of the electric vehicle industry was on full display. Beyond the gleaming new models, we unpack two trends with far-reaching implications: the accelerating global push of China’s cleantech exports, and how those tailwinds are reshaping Beijing’s leverage in its dealings with the rest of the world.

We hope you find this first issue valuable. If this isn’t the kind of content you signed up for, no hard feelings—you can unsubscribe from China Energy Brief in your Substack subscription preferences, using the button below, and tailor the content you receive from us:

Adjust Subscription Settings

Otherwise, we look forward to bringing you our analysis each month.

Enjoy the read.

China Energy Brief: Issue 1

Written by Kate Logan, Director of the China Climate Hub

The Beijing Auto Show was held from April 24 to May 3, setting an official record as the world’s largest auto show by both scale and vehicle count. What was once a standard car exhibition has morphed into a showcase for the forefront of electric vehicle innovation. I visited this year’s show, which coincided with the lead-up to Trump’s recent summit with Xi in Beijing and took place as the global energy crisis from the Iran conflict entered its third month. Beyond the shiny new car models, two important trends reflect how China and its leading firms are approaching their global strategies.

First, China’s cleantech exports will grow even stronger, which will pivot cleantech companies’ hypercompetitive mindsets into the global domain.

The official tagline of the Beijing Auto Show was translated as “future of intelligence.” But a secondary, unofficial theme permeating countless booths was “made in China, for the world”—underscoring the shift from serving the domestic market to serving overseas consumers. This trend is driven by both domestic and international factors.

Within the Chinese market, demand for EVs and other cleantech is waning, especially as incentives are removed and prices and purchases adjust accordingly. Weakening demand started “pushing” Chinese cleantech exports toward global markets well before the current energy crisis. One analyst shared that they had to revise their earlier projections that EV exports would slow by mid-2025 after observing sustained strong flows, especially in markets with few trade barriers, such as Australia and the Philippines. Export growth has been further amplified in recent months by the “pull effect” from international consumers looking to take advantage of low-cost clean energy amid spiking fuel prices. In April, domestic auto sales fell for the seventh straight month and were down 21.6% year-on-year, while EV and plug-in hybrid exports surged to more than double the same month a year prior.

Amid the Auto Show’s 17 massive exhibition halls spanning two separate conference centers, nearly every major automaker showcased a new, competitively priced luxury electric or hybrid-electric SUV—a trend that surprised me given the international obsession with China’s uber-affordable electric sedans, such as the BYD Seal. The factors elevating SUVs to the forefront reflect shifting market dynamics. Some of these vehicles will be sold domestically in an attempt to recover declining revenues. But with many of these models appearing nearly identical, many brands emphasized their desire to court global consumers, especially in high-end markets, including the Middle East. In Europe, hybrid vehicles are not subject to the same tariffs as EVs, paving the way for these battery-electric hybrids to make greater inroads.

While the show was about cars, batteries were the real stars. Attendees clustered around the pavilions of CATL and BYD’s battery arm, both of which featured cold chambers to showcase their batteries’ consistent performance even in Arctic environments ranging from –30 to –50 degrees Celsius (approximately –22 to –59 degrees Fahrenheit). While BYD emphasized the speed of its flash chargers—“ready in 5, full in 9”—CATL’s centerpiece was battery swapping, with a working model demonstrating the speed and convenience of swapping. CATL has touted its use of large language models (LLMs) to revolutionize battery chemistry research, thus freeing up revenues to spend on other areas of its global strategy.

The technologically sleek, all-electric vehicles of Chinese firms stood in contrast to those of several legacy foreign automakers, such as BMW, Audi, and Mercedes-Benz, which positioned some of their most historic vehicles as the centerpieces of their pavilions—as if to remind consumers that they had invented the internal combustion engine that powered the original automobile revolution.

Second, the tailwinds behind China’s exports have empowered Beijing to wield its leverage in responding to various demands from other countries.

In the weeks before the Trump-Xi Summit, letters emerged from House Democrats and Republicans, respectively—followed by bipartisan House and Senate bills—urging President Trump to prevent Chinese EVs from entering the U.S. market. Legislators feared he might strike a deal with Xi, akin to Canadian Prime Minister Mark Carney’s offer, in which Canada would import a limited number of Chinese EVs in exchange for Chinese investments into Canada.

But few in Beijing were closely following each escalation of this American pushback. Instead, Chinese players are eyeing more compelling opportunities elsewhere. This dynamic is perhaps also underscored by the Chinese companies invited by Xi to the state banquet with Trump during the summit: the overall absence of China’s cleantech darlings, save for perhaps tech brand Xiaomi, reflects Beijing’s hesitation to push deals if Washington remains ambivalent about accepting them.

The lingering effects of China’s October 2025 export controls on rare earth elements and lithium-battery materials still loom large, with companies lacking confidence that bilateral relations are stable enough to guarantee that Beijing will renew its temporary suspension. Moreover, Chinese companies that had been pursuing deals involving international tech transfer in other markets are facing down bureaucratic uncertainty from their own government. As one example, Chinese battery maker Hithium’s proposed partnership with Indian renewable conglomerate Reliance has yet to move forward despite sustained efforts. The important role of China’s Ministry of Commerce (MOFCOM) as a closed-door arbiter introduces significant procedural uncertainty into potential deals; new State Council regulations on overseas investment will further compound this. Beyond bureaucratic factors, competition among leading cleantech firms with similar products is so intense that preserving leverage vis-à-vis rivals may further dampen companies’ willingness to share their technology.

Commercial interests are most attracted to those markets that have issued some sort of political signal that Chinese firms are welcome to invest. As one example, while cynicism abounds toward the EU’s proposed Industrial Accelerator Act—especially since Japanese and Korean firms would be exempt from the various strings attached to future Chinese investments—enthusiasm for the Spanish market remains strong in the wake of Spanish Prime Minister Pedro Sánchez’s trip to Beijing. Following the visit, SAIC Motor announced its decision to locate a new EV factory in Spain rather than Hungary, underscoring how political signals can tilt Chinese investment decisions even at the margins. Reports also indicate that wind manufacturer Ming Yang, fresh off a UK rejection on security grounds, is now eyeing the Spanish market.

These two trends will no doubt accelerate global electrification—but they will also pose tough questions for international markets, especially those struggling to preserve their local industries. As I wandered around the show, I could not help but wonder how long global consumers could resist the high quality and marked affordability of the products I was seeing. Will other markets continue doubling down on trade barriers, or will they reconsider them? And will Beijing be willing to engage with increasingly restrictive investment environments, or will it start abandoning them in lieu of those that welcome Chinese firms?

Leave a comment