No country was better prepared for a war with Iran than China. While the rest of Asia suffers from oil and gas supply shortages as a result of the war, Beijing appears to be in a comfortable position thanks to its massive crude oil reserves and its enormous clean energy infrastructure.
Over the past years, China has worked to develop its domestic clean energy sector at a faster pace than any other country in the world. At the same time, it has stockpiled large quantities of surplus oil and gas in anticipation of a major geopolitical disruption like the one the world is currently witnessing. As a result, China's ability is not only limited to weathering the current global energy crisis better than any other country, but it may also emerge from it stronger and more capable of consolidating its position on the international stage.
Under normal circumstances, about one-fifth of global oil and gas supplies pass daily through the Strait of Hormuz, which connects the Arabian Gulf to the Gulf of Oman and the Arabian Sea, making it a vital corridor for transporting energy from the oil-rich Middle East to global markets, especially buyers in Asia. However, this flow has now largely declined, pushing world leaders to urgently seek alternative energy sources.
This disruption which is considered the largest of its kind in world history is likely to push the global transition toward clean energy to accelerate significantly, as the sharp rise in oil and gas prices will make wind and solar energy more competitive and less expensive compared to fossil fuels. Forbes magazine mentioned earlier this month: "For many years, clean energy was promoted as a moral necessity, but now it has simply become an economic and geopolitical necessity. It is no longer just about emissions, but about resilience and price stability."
This development is positive news for China, which has worked for years to strengthen its global dominance in the field of clean energy, as part of its quest to become the world's first "electric state" that relies broadly on clean energy and electricity in its economy. It is likely that the acceleration of the global transition toward clean energy will depend heavily on Chinese supply chains, as Beijing currently controls the largest share of the world's production of solar panels, wind turbines, batteries, and electric vehicles.
Yang Peking, an analyst specializing in Chinese affairs from the energy think tank Ember based in London, said in statements recently reported by the Washington Post: "This is part of a long-term trend and not just an immediate response to rising oil and gas prices. Energy security has become increasingly important on government agendas, and the transition toward clean energy is increasingly seen as a means to enhance energy security."
This shift is likely to play significantly into China's interest, especially in light of the United States Beijing's largest economic competitor moving away from the clean energy sector during the administration of President Donald Trump. While Trump described support for clean energy as a threat to national security, China used government subsidies for green energy to transform itself into a clean energy superpower that the world cannot ignore or do without dealing with, especially amidst growing concerns over inflation and recession resulting from the war with Iran and the energy crisis looming on the horizon as a result.
Increasingly, it seems that the world's two largest economies are engaged in what resembles an "energy war": one country heading toward a future based on electricity and clean energy on one hand, and a country relying on traditional fossil fuels on the other.
Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, told the Washington Post: "In the future energy system, geopolitics play a role no less important than the economic choices of countries. It is no longer limited to choosing between fossil fuels and green energy, but has become to some extent a choice between two camps in the world and how countries position themselves within this divide."
At the same time, China continues to strengthen its strategy in the energy sector that placed it in this strong strategic position. Although clean energy is a fundamental element in this strategy, assuming that China is fighting a pure climate war would be an oversimplification. Chinese President Xi Jinping has called for accelerating the planning and construction of a new energy system that maintains an "all options are available" approach to ensure the country's energy security, including expanding the role of hydropower and nuclear energy, along with continued reliance on coal, which is the most polluting type of fossil fuel.
Xi said: "The path we followed when we were among the first countries to develop wind and solar energy has proven to be a forward-looking path." He added: "At the same time, coal-fired power plants still form the basis of our energy system and must continue to perform their supporting role."