How Robust Is China’s Energy Security?

Energy security is a crucial pillar of the economic and national security of every country. Disruptions that upset the steady supply of power can cause cascading ripple effects throughout industries and society.

China’s energy security is characterized by a mix of vulnerabilities and strengths. It is by far the world’s largest consumer of energy, placing enormous pressure on policymakers to fuel the nation’s sprawling manufacturing sector. China is also significantly reliant on foreign fossil fuels, leaving it exposed to disruptions stemming from instability and geopolitical competition.

Yet China has major energy security strengths. It is rapidly deploying renewable energy infrastructure to reduce its reliance on fossil fuels. China also leads the world in producing critical minerals that are central to its energy security, and heavy investments in its energy grid are enabling China to prepare for a future powered by renewables. Finally, China’s abundant supply of coal offers policymakers a safety net in the event of major disruptions to other energy sources.

This ChinaPower report explores these key strengths and vulnerabilities. It focuses not just on China’s absolute security needs but considers China’s situation in a global context—especially in comparison to the next-biggest energy consumer, the United States. Overall, China’s energy security position is relatively strong, and its advantages are poised to grow.

Vulnerabilities in China’s Energy Security

Beijing is acutely aware of the importance of energy to China’s economic and national security situation. Between 2013 and 2024, Chinese leader Xi Jinping mentioned “energy security” (能源安全) in at least 180 different speeches, meetings, and other official activities.

Xi’s focus on energy security surged in 2022 as the world grappled with disruptions to global energy flows following Russia’s full-scale invasion of Ukraine. For Beijing, the conflict highlighted China’s need to pursue greater energy independence, with Xi repeatedly emphasizing that energy security “is one of the most important security issues” facing the country.

China faces two important energy challenges, each of which is examined below:

• Massive and Growing Demand for Energy
• Reliance on Foreign Oil and Gas

1. Massive and Growing Demand for Energy

Decades of rapid economic growth have dramatically increased China’s demand for energy. In 1980, around the start of China’s economic “reform and opening” period, China consumed less than one-fourth of the amount of energy of the United States. By 2008, China surpassed the United States to become the world’s largest energy consumer, and, in 2023, China consumed more energy than the United States, European Union (EU), and Japan combined.

China’s unparalleled demand for energy is largely a factor of its globally dominant manufacturing sector. In 2022, Chinese manufacturers accounted for 57 percent of the country’s total energy consumption at approximately 90 exajoules (EJ), which is comparable to the total energy consumption of the United States and nearly 15 percent of global consumption that year.

However, Chinese households are accounting for a slowly rising share of total energy consumption as they become wealthier. Energy consumption in China’s residential sector has expanded from 10.5 percent of China’s total in 2012 to 13 percent in 2022.

China’s energy consumption is slated to increase further in the coming years as new technologies like artificial intelligence (AI) drive greater demand for electricity. Leading technology companies in the United States, China, and elsewhere are racing to set up energy-hungry data centers to power their AI models.

Chinese official estimates indicate that in 2025, data centers in China are expected to consume between 150 and 200 terawatt-hours (TWh) of electricity, which is approximately 1.5-2 percent of the country’s total electricity consumption. That could more than double by 2030 to around 400 TWh, which is roughly equal to the entire electricity consumption of Saudi Arabia in 2023. More bullish estimates suggest an increase to around 530 TWh is possible by 2030.

While China’s energy demand is growing, it will likely eventually plateau. Some studies suggest that this peak will not occur for another two decades, around 2049, but the exact timing will depend on several factors such as macroeconomic conditions and the speed of industrial adaptation.

Improved energy efficiency explains part of the story. In 1990, China consumed twice as much energy as the United States to produce an equivalent amount of GDP. Since then, China’s energy intensity (as this measure is called) has plummeted dramatically, yet as of 2023, it was still 40 percent less efficient than the United States and about 50 percent less efficient than the EU and Japan.

Other long-term factors, like population decline, may also reduce energy demand. After peaking at over 1.42 billion people in 2021, recent forecasts project that China’s population will shrink by about 2 million people by 2030, and by 2050, it could fall another 130 million. While a shrinking population presents many economic and social challenges for China, Xi Jinping himself has pointed out that it could help to alleviate some issues like resource constraints and environmental damage. 

2. Dependence on Foreign Oil and Gas

Surging demand for energy has left China more reliant on foreign sources. Until the 1990s, China was a net energy exporter, but as of 2022, it imported about one-fifth of its total energy needs.

Compared to some major economies, China is in a less precarious position. For instance, Japan’s limited endowment of natural resources and its island geography leave it reliant on imports for almost all its energy (87 percent in 2023), and the EU imports about two-thirds of its energy.

China’s biggest energy imports are foreign oil and gas. China is the world’s largest crude oil importer by a wide margin, accounting for about 25 percent of global imports. It is also the largest natural gas importer. In all, China imported 83 percent of its oil and 39 percent of its natural gas supply in 2023.

This stands in stark contrast to the United States’ energy position. In 2018, the United States surpassed Saudi Arabia to become the world’s top crude oil producer, and in 2019, it became a net energy exporter for the first time since the 1950s. U.S. strengths in fossil fuels were primarily driven by the shale revolution, in which advancements in hydraulic fracturing, or “fracking,” and horizontal drilling unlocked vast reserves of oil and natural gas, and the expansion of liquefied natural gas (LNG) infrastructure enabled U.S. suppliers to scale up global exports.

Despite recent efforts, China faces challenges in replicating U.S. successes. While China is estimated to have the largest shale gas reserves in the world—almost twice that of the United States—its reserves are deeper, more geographically scattered, and located in more mountainous areas, making extraction more challenging. As of 2020, China was home to just 1.5 percent of the world’s technically recoverable oil and 4.5 percent of global natural gas reserves.

Energy independence and diversification have taken on new urgency for many countries amid worsening geopolitical tensions. Since Russia invaded Ukraine in 2022, the EU has sought to reduce its dependence on Russian energy and deny Moscow income to support the war. So far, the results have been mixed. At the end of 2024, the EU only imported 2 percent of its oil from Russia—down from 18 percent in the fourth quarter of 2022. However, EU reliance on Russian LNG imports increased from 11 percent to 22 percent over the same period, even as pipeline natural gas (PNG) imports have fallen dramatically.

China has moved in the opposite direction as part of Beijing’s broader strengthening of ties with Moscow since Russia’s invasion of Ukraine. Between 2021 and 2024, the share of Chinese crude oil imports coming from Russia increased from less than 16 percent to nearly 20 percent. Over the same period, the share of China’s PNG imports coming from Russia nearly tripled from 13 percent to 38 percent, largely owing to the ramp-up of Russian production along the Power of Siberia 1 pipeline. Russia’s share of China’s LNG imports also climbed from 6 percent to 11 percent during this period.

China-Russia energy ties could strengthen further in the coming years. Russia is negotiating with China for a new natural gas pipeline named Power of Siberia 2, which would carry gas from Russia’s Yamal peninsula in West Siberia through Mongolia into northern China. Moscow reportedly sought to begin construction of the pipeline in 2024, with the goal of starting gas deliveries in 2030; however, China appears to be waiting to secure a more favorable price for the gas before moving forward. China has been involved with other Russian natural gas projects, including the Arctic LNG 2 plant, which provides further avenues for strengthening energy ties. 

Buying energy from Russia offers important benefits for Beijing. Chinese purchases have been a crucial economic lifeline for Russia amid its war in Ukraine, binding Moscow closer to Beijing. Russia’s proximity to China also reduces the likelihood that physical energy deliveries will be cut off, which enhances China’s overall energy security.

Yet buying from Russia does not solve all of China’s import dependency challenges. China’s reliance on other countries for oil and gas leaves it exposed to disruptions. More than half of China’s crude oil comes from the Middle East, where conflicts and instability have long caused disruptions and price fluctuations.¹

More broadly, almost all the oil China imports from countries besides Russia (about 80 percent of its crude oil imports) travels by sea through the Malacca Strait, a strategically important maritime chokepoint connecting the Indian and Pacific Oceans. Likewise, nearly one-third of China’s total goods imports transit through the Taiwan Strait, which in 2022 included some $500 billion worth of crude oil, refined oil, and other mineral and metal products. Conflicts over Taiwan or the South China Sea could seriously jeopardize China’s continued access to energy flowing through these key trade routes.

Strengths in China’s Energy Security

Despite notable challenges China faces in energy security, it is in an increasingly strong position to overcome surging demand, environmental costs, import reliance, and energy infrastructure. China has four interrelated strengths to secure energy for its population and the economy: 

• Technological Leadership in Renewable Energy Technologies
• Leading Player in Critical Mineral Production
• Rapid Progress Toward Grid Modernization
• Deep Reserves of Coal as a Fallback

1. Technological Leadership in Renewable Energy Sources

China’s leaders have set their sights on reducing the country’s reliance on fossil fuels, and they view renewable energy as key to China’s long-term energy security, economic growth, and carbon emissions goals. They are investing accordingly to position China as a global leader in renewable energy technologies. 

China is deploying renewables at a rapid pace, with solar and wind leading the way. In 2023, China installed 217 gigawatts of solar capacity—adding more in a single year than the entire solar capacity already installed in the United States at that time. China’s installed capacity in wind likewise increased nearly 21 percent in 2023, three times faster than Europe and nearly five times faster than the United States.

China’s impressive gains in renewables are buoyed by unparalleled investments, as its state-backed banks and investment firms pour financing into green energy projects. According to estimates from BloombergNEF, China’s investments in clean energy reached $818 billion in 2024.

Like China, the United States is also investing heavily in renewable energy sources. Its 2022 Inflation Reduction Act (IRA) sought to stimulate renewable energy investments through grants, loans, and tax credits totaling approximately $370 billion. These projects have catalyzed growth in the U.S. renewable energy sector, but despite these gains, U.S. spending continues to lag behind China’s. In 2024, U.S. investments in clean energy only reached $338 billion, less than half of China’s level.

China’s lead in clean energies is poised to widen thanks to high-level policy support. Beijing views clean energy and related technologies as critical to not just energy security and decarbonization but to economic growth as well. In an April 2025 speech, Xi noted that “the green transition… is a new engine for economic and social development.”

Specifically, since at least 2023, Chinese economic planners have referred to the “new three” (新三样)—photovoltaic cells, lithium batteries, and electric vehicles—as a source of economic vitality. Chinese manufacturers have grown to dominate the global supply of these three key green technologies and other renewables like wind and hydroelectric components.

Would-be competitors in the United States, the European Union, and emerging markets remain heavily reliant on Chinese suppliers for upstream manufacturing inputs into clean energy projects. As economic competition with China has intensified, U.S. policymakers have moved to reduce U.S. dependence on China for future decarbonization efforts.

Beyond just renewables, China is looking to a broader suite of non-fossil fuels to power China’s economy. The 14th Five-Year Plan for Renewable Energy Development, released in 2022, calls for a “clean, low-carbon, secure, and highly efficient” energy system, and stipulates that non-fossil fuel electricity generation should contribute “about 39 percent” of total electricity generation by 2025. China is on track to reach this target. By 2024, hydro, solar, wind, nuclear, and biofuels collectively powered over 38 percent of China’s total electricity production.²

Nuclear power is an increasingly important part of these efforts. According to the International Atomic Energy Agency, China has built over 55 gigawatts of installed nuclear electricity generation capacity, putting it third behind the United States (97 GW) and France (63 GW). China has an additional 30 GW of nuclear power capacity under construction, which, once completed, would place China ahead of France. According to some estimates, nuclear power could contribute to around 10 percent of China’s total electricity generation by 2035—up from just 4.5 percent in 2023.

2. Leading Player in Critical Mineral Production

China’s leadership in many new energy technologies is underpinned by the country’s dominance in critical mineral supply chains. Decades of intensive industrial policy, comparatively lax environmental regulations, and massive economies of scale enabled China to position itself as the leading refiner and processor of many critical minerals that are indispensable to the global economy.

China plays a significant role in both the upstream and downstream portions of many critical minerals. Upstream, China is a leading provider of many ores—the raw deposits containing minerals that can be extracted and processed into more pure products for downstream use.

China’s dominance in downstream refining and processing is even more pronounced.  As an instructive example, in 2024, China produced 21 percent of the world’s bauxite—the main ingredient used to produce aluminum—but produced almost 60 percent of the world’s refined aluminum. This has further spillover effects, since processing bauxite into aluminum can generate gallium as a byproduct. That is how China came to produce 98 percent of the world’s gallium, which is used in many energy technologies, including solar cells, electric vehicles, and fast-charging devices.

Beyond these, China refines nearly half of the world’s steel, zinc, and lead, as well as more than two-thirds of the world’s cobalt and lithium. Furthermore, in 2023, China refined 79 percent of the world’s battery-grade graphite and 92 percent of the rare earth elements used to produce permanent magnets, which are integral to wind turbines, electric motors, and many other technologies.³

China’s key role in critical mineral supply chains confers advantages to its clean energy sector. For instance, an abundance of refined critical minerals makes China’s energy transition more cost-effective and scalable, as the country’s metallurgy industry can provide reliable supplies of critical components to downstream green technology manufacturers.

3. Rapid Progress Toward Grid Modernization

When it comes to energy, production only tells part of the story. For power to be useful, it must be delivered reliably and affordably to end users. This is the task facing China’s rapidly growing electrical grid.

Much of China’s energy demands are concentrated in its densely urbanized east coast. This poses a challenge for China’s green transition goals, since its most quickly growing sources of renewable energy—solar and wind power—require large tracts of land. China’s newer renewable energy facilities are concentrated in western inland provinces, where land is more plentiful, but they suffer from wasted power and low rates of utilization. In the western region of Tibet, for instance, 27.5 percent of wind power and 32.2 percent of solar power went to waste in January and February 2025, far higher than the national averages of 6.2 percent and 6.1 percent, respectively.

China’s grid operators have sought to remedy this through massive grid infrastructure spending and redesigned grid architecture. A cornerstone of this effort is China’s ultra-high-voltage (UHV) grid network, which can deliver electricity over long distances and thereby alleviate supply-demand disconnects by transmitting energy produced in the west to consumers in the east.

China’s global leadership in UHV infrastructure is decades in the making. Planning for this network began as early as 2006, during China’s 11th Five-Year Plan. The newest UHV grid commenced construction in 2024 with a total investment of about RMB 35.3 billion ($4.8 billion). This will add to the 42 UHV projects already completed, but more work remains to achieve Beijing’s goal of country-wide grid integration and power market unification.

China’s efforts to upgrade its grid infrastructure are complemented by steps toward energy market liberalization. Prior waves of renewable energy investment benefited from price control policies that disincentivized coal-based production, but these measures were blamed for precipitating energy shortage crises in 2021 when it became unprofitable for coal-based producers to operate in certain parts of the country. The aftermath of this debacle accelerated calls for a unified, market-based pricing structure. Chinese regulators responded by launching significant market-oriented reforms in February 2025, which analysts predict will drive smarter battery investments and grid resource allocation.

Though China’s grid upgrading remains a work in progress, its efforts are outpacing those of the United States. Experts have called for investment in UHV infrastructure in the United States, but to date, no projects have been completed. U.S. grid designers face permitting and financing hurdles that dampen the appetite for UHV investments. One study cited a 17-year regulatory timeline before construction could begin.

The United States still leads China in some metrics of grid performance, such as frequency and duration of power outage events—a common metric for grid reliability. However, China has made rapid strides in recent years and is steadily closing the gap.

4. Deep Reserves of Coal as a Fallback

Despite China’s efforts to transition to renewables and other non-fossil fuel sources, coal continues to play a leading role in its energy system. Coal supplied 54 percent of China’s primary energy in 2023, dramatically higher than the United States (9 percent). In fact, since 2011, China has consumed more coal than the rest of the world combined.

China is far more self-reliant in coal than in other fossil fuels, like oil and gas. It boasts about 13.3 percent of the world’s technically recoverable coal reserves, and it is by far the largest coal producer in the world. China does import some coal—mostly from Russia, Australia, Mongolia, and Indonesia—but the amount of imported coal accounts for only about 6 percent of China’s total energy consumption.

Coal has become especially important in the wake of recent energy crises. Record-high coal prices due to coal shortages and state-enacted electricity price controls culminated in a severe electricity supply crisis in China in late 2021, impacting 20 provinces and leading to prolonged outages in some regions. In summer 2022, record temperatures and drought in the Yangtze River reduced the supply of hydroelectric power amid peak power demand, leading to power disruptions in southern provinces like Sichuan, which relies on hydropower for 80 percent of its electricity.

Following these crises, China doubled down on coal as a backup energy source, and it is rapidly expanding its coal-fired power capacity. As of April 2025, at least 311 coal-fired power plants were under construction in China with 204 gigawatts of combined capacity—nearly four times the combined level of coal-fired capacity under construction in the rest of the world. Just one Chinese province, Inner Mongolia, has more coal-fired power capacity than all but two countries (the United States and India) in the world in 2025.

Burning coal may be China’s most dependable path to ultimate energy security, but it comes at a price. According to Carbon Atlas, 72 percent of China’s CO2 emissions came from coal in 2023, compared to 66.4 percent in India and 15.8 percent in the United States. Increased coal reliance may jeopardize China’s carbon emissions goals for 2030 and 2060, or at a minimum, make the deferred transition more costly.

Large emissions also translate into health costs. In 2021, household air pollution from burning solid fuels like coal and wood was attributed to an estimated 29.2 deaths per 100,000 people in China—over 415,000 people altogether, compared to about 16 people in total in the United States.

Moreover, coal-fired power generation adds to China’s water burden. China is one of the world’s most water-stressed countries, and coal plants consume large volumes of freshwater for cooling facilities, cleaning coal, and powering turbines in the form of steam.

Water-scarce northern and western regions, which often have a higher density of coal plants, face trade-offs in distributing water between energy and agricultural industries, the latter of which consumes a large portion of the country’s water. Chinese policymakers have pushed for the adoption of air-cooling technologies in coal plants since 2012, an effort that has reduced water consumption in energy generation but could negatively impact thermal efficiency and emission rates.

Despite the environmental and health costs, it is unlikely that China will back away from coal in the near term. China’s growing power needs will strain China’s power supply and impact industrial growth if demand is not met. For now, the government’s continued insistence on long-term coal contracts incentivizes many electricity buyers to choose coal over renewables. Some provinces are also particularly reliant on the coal industry for tax revenue and employment, making it politically challenging for local governments to rapidly shift toward renewables.

Conclusion

China’s current energy security situation is a mixed bag. On one hand, the country faces substantial near-term challenges. Beijing’s push to dominate global manufacturing is consuming an eye-watering amount of the world’s energy, and China’s limited domestic energy reserves have left it reliant on vulnerable foreign energy supplies to a level that is concerning for Chinese leaders. 

On the other hand, China has marshaled a formidable set of strengths. Its dominance in renewable energy technologies and critical minerals, as well as its rapid grid modernization, puts it at the forefront of global efforts to transition to the energies of the future. Meanwhile, in the event of a crisis, China can lean on coal as a stopgap, although doing so comes at political and environmental costs. Ultimately, China’s energy security hinges on its ability to balance competing priorities. How Beijing navigates this path will have not only domestic consequences but also global implications for energy markets, climate action, and geopolitical competition. 

Authors:
Brian Hart, Bonny Lin, Hugh Grant-Chapman, Leon Li, Truly Tinsley, Claire Tiunn, Peter Dazheng Huang

The authors would like to thank Jane Nakano and Joseph Webster for their thoughtful feedback on an early draft. Any errors are the authors’ alone.