The rise in energy demand has been a defining feature of industrialization, beginning with Britain in the late 18th century, where the emergence of factories powered by steam engines led to a dramatic surge in coal consumption. This transition from agrarian economies to industrial powerhouses not only spurred manufacturing growth but also significantly increased urban populations, as coal facilitated industries like textiles and metallurgy and fueled transportation advancements, notably railways.
Following Britain, countries like Germany and France in Europe adopted similar energy-intensive practices, incorporating electricity to further enhance productivity. In the United States, the late 19th and early 20th centuries saw rapid industrialization, driven by the expansion of railroads and the automobile industry, which created new energy needs primarily met by coal and oil, while electricity revolutionized industry and domestic life. Today, China’s transformation from an agrarian society to the “world’s factory” marks a new chapter in this narrative, characterized by unprecedented industrial growth and an extraordinary demand for energy resources, particularly coal. Yet, Chinese energy appetite is growing at an unprecedented level, making it many times larger than those of western Industrial giants.
While China itself possesses vast resources, the country’s foremost status as the largest consumer in the world is as a result of rapid industrialization, urbanization and an ever-growing demand for technological advancement. China has continued to face the pressure of energy demand through manufacturing, infrastructure, and an attempt to control the technological sector. As China turns its focus to AI, EVs, and smart manufacturing, its insatiable appetite for resources – be it, fossil or renewable – is reshaping energy demand, markets and supplies, and geopolitics in unprecedented ways.
Overview of China’s economic growth and Industrialization
The growth and transformation of China’s economy are subtle but powerful.
                                                                                                                  —Francisco Betti
Over the past four decades, because of economic reforms, China’s economy is growing at an unprecedented rate of more than 9 percent, and this has lifted more than 800 million Chinese citizens out of poverty. Energy demand in China has remarkably reached higher levels, since the Chinese Economy has expanded at a very high rate.
The export-oriented growth model of the country that was mainly led by investments and exports is shifting towards the consumption and services sector. China’s Gross Domestic Product expanded by 5% year on year in the first half of 2024 but the quarterly growth rate has calmed down from 5.3% in the first quarter to 4.7% in the second half indicating the need for stronger policy support to achieve the set year’s targets. While extreme poverty was eliminated by 2020, still, 17.2% of the population lives on under $6.85 a day.
Global energy consumption trends are being dictated by Asia’s energy consumption titan “Chinaâ€, owing to its mammoth size. China overtook Europe in per capita energy consumption in 2023 backed up by more renewable capacity alongside coal fired power. Having been the world’s factory, China’s energy consumption requirements are escalating. The Dragon economy has displayed consistent growth in renewable power, especially renewable electricity, with freshly installed renewable energy capacity of 1.59 billion kilowatts early in 2024. Still, it needs investment in infrastructure, smart grid, and energy transition to support its economic growth, maintaining energy security and sustainability.
Factors Contributing to Rising Energy Demands
The foremost factor driving energy demand is the industry, for instance, the sector has experienced substantial growth in 2024, with the added value of major industries rising by 6% in the first half of the year. The high-tech industry, in particular, saw an impressive 8.7% growth rate. This industrial expansion has been accompanied by increased energy demands, driven primarily by urbanization. China’s cities now consume more energy than its industrial sector due to the rising living standards of a growing middle class and large-scale migration to urban areas. It is predicted that for every 1% increase in urbanization, the country’s energy consumption will rise by at least 60 million tons of coal.
The urbanization rate in China has soared from 17.92% in 1978 to 66.16% in 2023, and this movement is expected to continue, with the government aiming to create over 12 million jobs in metropolitan areas by 2024. As urbanization increases, so does energy consumption, as city households consume 50% more energy than rural ones. By 2025, China’s power consumption is anticipated to reach 10,498 TWh, compared to 4,475 TWh in the United States.
China is also focusing on technological advancements and renewable energy to meet its growing energy needs. Investments in 5G networks, artificial intelligence, and renewable energy sources such as wind and solar reflect the country’s commitment to modernizing its industrial and energy infrastructure. The “Made in China 2025†campaign highlights China’s ambition to become a global technological leader. However, balancing energy demand with sustainable consumption remains a complex task, as the adoption of advanced technologies and rapid urbanization continues to fuel the nation’s rising energy requirements.
Energy Mix of the DragonÂ
The main sources of energy in China’s energy mix are still coal, oil, and natural gas. China relies heavily on these resources. By mid-2024, China accounted for 54% of the world’s coal-fired power capacity, with 1,147 GW in operation. Even the number of new coal power approvals has slowed down recently—just 12 new projects were approved in the first quarter of 2024—coal still plays a mammoth role in the energy mix. Globally, China helped install 67% of the coal-fired capacity that was being commissioned in 2023.
Where China imports its fossil fuels from?
As Gas imports are concerned, China is the world’s largest importer of natural gas, bringing in both pipeline gas and liquefied natural gas (LNG) to meet its growing energy demands. Russia, the Power of Siberia 1 pipeline remained one of the main suppliers of natural gas to China. This pipeline supplied nearly 38 billion cubic meters of natural gas in 2024. Turkmenistan is also a key contributor of approximately 33 billion cubic meters. Uzbekistan and Kazakhstan also contributed significantly.
The country is also a major importer of LNG, and the largest supplier, Australia supplied nearly 24 million mt of LNG by 2024. Qatar’s LNG exports amounted to 25 million mt in 2024 to China. United States 12 million tons. Malaysia and Indonesia jointly exported around 15 million mt of LNG to the Chinese market.
Despite having abundant coal resources, the country heavily relies on imported coal. China’s major supplier of coal is Indonesia; all through the year 2024, importers bought about 130 million tons of coal. Russia supplied about 70 million tons and Australia about 55 million tonnes of coal. Mongolia supplied about 30 million tons.
Renewable EnergyÂ
China has installed 1,180 GW of solar and wind power by early 2024, more than coal’s 1,146 GW for the first time. Compared to previous years, China added almost twice as much utility-scale solar and wind capacity in 2023. Between 2023 and 2028, the nation is anticipated to contribute 56% of the additional renewable capacity globally. This expansion is facilitated by government regulations and investments, which include notable developments in the production of wind turbines and solar photovoltaic (PV) systems. China’s rapid deployment of renewable technologies reflects its commitment to achieving net-zero emissions by 2060, although the country will need to manage the ongoing role of coal and other fossil fuels in its energy usage.
Challenges and Implications
China’s rapid industrialization and heavy reliance on coal have led to severe environmental challenges, including widespread air pollution and significant greenhouse gas emissions. While the country is a global leader in renewable energy expansion, particularly in wind and solar capacity, its dependence on coal hampers progress in environmental protection. Despite incorporating more renewable energy sources, the nation faces issues like system congestion and curtailment, with solar power curtailment exceeding 5% in March 2024, highlighting the challenges in managing the surge in renewable energy and effectively integrating it into national power grid.
Likewise, if we look outside of China, the situation depicts China’s vulnerability on imported energy and its continuous reliance on the littoral states from where the imports are being made. For instance, the South China Sea dilemma is one such bad dream, which haunts China and it desperately wants to get complete control of the maritime routes either by hook or by crook. This region is significant for Chinese energy imports, as over 80% of China’s imported oil is shipped through the South China Sea region and dominance of these sea lanes is crucial for PRC’s energy policy.
As a result, China has intensified its naval patrols in the area to protect its sea communications from disruptions due to ownership of the economic zones or presence of foreign navies. One of them concerns the creation of Ultra High Voltage (UHV) transmission lines to interconnect renewable energy centers, wind and solar in western China with densely populated areas in the eastern part of the country. Furthermore, China is gradually expanding on the demand for coal fired power because risks on access to the energy mix from suppliers may be disrupted by tensions in the South China Sea and competition with other main energy consumers like the U.S., Japan and India.
Future Outlook
Significant changes in China’s energy sector are anticipated over the next few years, with electricity generation projected to increase at a rate of 3.33% annually from 2024 to 2029. This growth is primarily driven by the rapid development of renewable energy sources, particularly wind and solar power, as well as the increasing energy demands of the nation.
By the end of 2024, China is expected to add 1,200 GW of wind and solar capacity, surpassing earlier projections and achieving ambitious targets ahead of schedule. This expansion is part of China’s overarching plan to enhance its total renewable power generation capacity by over 300%—or 3.9 TW—from 2022 to 2030. However, despite these advancements, coal power continues to play a significant role in China’s energy mix, as new coal projects are still being pursued to manage the intermittency associated with renewable energy sources.
Plans are underway to integrate a unified national power market by 2030 to improve the efficiency of renewable resource utilization and mitigate fluctuations in energy supply and demand. To fully harness renewable energy resources, advancements in storage technologies and improvements in the power distribution network are necessary, including the deployment of Ultra High Voltage (UHV) transmission technology to connect renewable energy sources with demand centres across the country.
End Note
China’s energy landscape is shaped by rapid economic growth, urbanization, and industrial demand. Despite significant investments in renewable energy like solar and wind, coal remains a major part of the energy mix due to its role in ensuring energy security. China intends to significantly increase its use of renewable energy by 2030 and is on target to surpass 1,200 GW of wind and solar capacity by the end of 2024.
Reducing reliance on coal and integrating these renewables into the grid are still major obstacles, though. Addressing these issues is crucial for China’s sustainable growth and its impact on the global energy market. Effective management of this transition will be essential for achieving environmental goals and maintaining economic stability.
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