China seen gaining edge as energy shock reshapes global markets

Jacky Tang, chief investment officer for emerging markets at Deutsche Bank

On the Agenda

As conflict-driven volatility rattles global oil and gas markets, China may be emerging as an unlikely winner in the race for energy security, according to investment strategists cited by Bloomberg News yesterday.

Jacky Tang, chief investment officer for emerging markets at Deutsche Bank’s private banking arm, said China’s diversified energy mix and rapid expansion in clean technology position it advantageously amid the turmoil.

“China is the winner in this war from an economic standpoint, from an energy mix standpoint,” Tang said in an interview reported by Bloomberg.

The assessment comes despite clear vulnerabilities. Analysts at the Brussels-based think tank Bruegel warn that China’s continued reliance on Iranian oil could pose a “severe test” if disruptions intensify around the Strait of Hormuz – a chokepoint for roughly a fifth of global oil and LNG trade.

Yet China’s long-term strategy appears to be cushioning the blow. Low-carbon sources now generate nearly 40% of its electricity, up from about 25% a decade ago, while renewables account for almost half of installed power capacity, according to estimates cited by Bloomberg from Ember and Barclays.

A recent Barclays note said a decade of renewable build-out and electrification has “materially reduced China’s exposure to energy shocks,” with oil and gas now playing only a minor role in power generation.

That shift is becoming more significant as energy markets react to instability in the Middle East. Prices surged as uncertainty persisted over access through Hormuz, with analysts at Goldman Sachs warning the situation remains “fluid.”

Beyond resilience, China may also benefit commercially. As Asia’s largest importers – including Japan, South Korea and India – seek to diversify energy sources, demand for renewable infrastructure is expected to rise. Much of that equipment, from solar panels to battery systems, is produced in China.

Yet, years of rapid expansion have left parts of China’s clean-tech sector facing overcapacity and intense competition. Beijing has responded with measures to stabilize pricing and support viable firms.