China’s Green Energy Revolution and Global Leadership

Source: The post China’s Green Energy Revolution and Global Leadership has been created, based on the article “How is China leading the green energy sector?” published in “The Hindu” on 18th July 2025

UPSC Syllabus Topic: GS Paper3- Environment  and GS paper 2-Effect of policies and politics of developed and developing countries on India’s interests

Context: China’s unmatched expansion in renewable energy in 2024—installing more solar and wind capacity than the rest of the world combined—has positioned it as a global green energy leader. This transformation stems from long-term state planning, crisis-driven urgency, and the strategic deployment of state-owned enterprises.

For detailed information on China’s role in global emissions and renewable energy read this article here

Strategic Foundations of China’s Green Push

1. Planned Transition through Policy and Investment: China’s green energy shift began in the early 2000s with small pilot projects. The transformation gained momentum with the Renewable Energy Law (2005) and the 11th Five-Year Plan (2006–2010), which elevated clean energy to national priority status. Massive subsidies, grid access guarantees, and regulatory incentives were extended to producers.
2. Massive Financial Commitments: Investment surged from $10.7 billion in 2006 to $940 billion in 2024, according to Carbon Brief. In contrast, India attracted only $3.4 billion in 2024–25, showing China’s unparalleled commitment.
3. Tackling Pollution and Energy Insecurity: Air pollution at crisis levels in Beijing and Shanghai triggered public outcry and urgent state intervention. Simultaneously, energy insecurity due to rising electricity demand and dependence on oil imports pushed China to diversify energy sources.

The Pivotal Role of State-Owned Enterprises (SOEs)

1. Execution Power of SOEs: SOEs like State Grid, Huaneng, and Genertec rapidly developed wind and solar parks without private sector constraints. Backed by state loans and policy mandates, they converted national ambitions into infrastructure realities.
2. Blending State Direction with Market Forces: While domestic policies ensured demand, large-scale manufacturing reduced global prices. Through initiatives like the Belt and Road Initiative, SOEs exported technology, constructed hydropower stations, and built wind farms abroad.
3. Global Investment Leadership: SOEs accounted for 55% of global renewable investment, positioning China as a clean energy exporter. Specialised SOEs innovated in niche areas, enhancing vertical integration and global technological influence.

Challenges and Mid-Course Corrections

1. Infrastructure Bottlenecks: Rapid wind and solar expansion outpaced grid readiness, causing curtailment rates up to 20% in provinces like Inner Mongolia and Gansu. In response, China heavily invested in ultra-high voltage lines, doubling State Grid’s investment over a decade.
2. Subsidy-Driven Inefficiencies: Early subsidy policies led to overbuilding and inefficiencies. Beijing eventually tightened oversight and promoted efficiency-driven planning, prioritising grid-readiness over mere capacity creation.

Global Impact and the Next Frontier

1. Exporting the Green Model: China’s SOEs now operate in 61 countries, forging global partnerships and embedding Chinese influence in local energy infrastructures. Supported by state aid, firms like Longi, Goldwing, and CATL achieve cost dominance and vertical integration.
2. A Race for Future Technologies: China is eyeing AI-powered smart grids, green hydrogen, and thorium reactors as the next frontiers. The same model of rapid state-backed investment is being deployed for dominance in emerging climate technologies.
3. Shaping the Global Energy Order: As the U.S. and allies invest through mechanisms like the Inflation Reduction Act, the contest is not just about deployment but about rule-setting in global energy. China’s scale-driven, centralised model now stands in contrast to the West’s slower, costlier, and decentralised green transitions.

Conclusion

China’s green energy revolution is not merely technological—it is geopolitical. Through sustained planning, SOEs, and international influence, Beijing has redefined the rules of global climate leadership, challenging the world to match its speed, scale, and strategic clarity.

Question for practice:

Examine the key factors behind China’s dominance in the global green energy sector.