China: An Energy Goliath

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Jason Szeftel

As the summer of 2021 set in, cities all along the Chinese coast struggled to keep the lights on. Hot weather, limited rain, and surging consumer exports overwhelmed the power system, forcing the state to ration electricity in some of its most productive regions. Outages during the winter had caused similar problems. These recent events show that China’s seasonal energy challenges are growing larger and more frequent. They are also a harbinger of what the country faces as it strives to transform its energy infrastructure over the next decade.

China has an energy dilemma. It uses a lot of energy but does not produce enough to meet its own needs. As a result it confronts the classic problem of 20th century industrial states: it must feed its economy on foreign fuel. The difference is that China’s needs are much larger than those of earlier industrial states. In 2020 China consumed more energy than the United States, Japan, Germany, France, Britain, and Italy consumed together in 1990.

Total Chinese energy use is over 50% larger than American energy use. However, while American energy use has barely changed over the last 30 years, Chinese energy consumption is still growing and is not expected to peak until the mid-2030s. Scale matters and here scale does not work in China’s favor. China uses more energy than any other country ever has, and over the coming years it will become more dependent on foreign supplies. China’s energy future is out of its hands.

The next decade will be a trying time. China may be able to overcome its challenges through innovation and dedication. It may exit the 2020s with a greater supply of domestic renewable energy sources, a large and expanding nuclear sector, and a competitive natural gas industry. However, it is far more likely that the country will struggle to balance the many changes and demands pressing in upon it.

Energy Dependence

Chinese energy dependence is already worse than American energy dependence was at its height in the mid-2000s. Back in 2005 the United States imported 60% of its oil. In 2019 China imported 43% of its natural gas and 67% of its oil. Energy dependence on this scale is unprecedented: China imports more energy than Japan consumes in total. While shale oil has since made the United States functionally energy in