Over the past decade, China's clean energy sector rapidly expanded, outpacing the overall economy. In 2023, investments in renewable energy and related technologies hit a record 7.2 trillion yuan ($1 trillion), accounting for more than 11% of GDP and growing three times faster than the national economy.

Solar, batteries, and electric vehicles, the new three, were key contributors, driving over 90% of the rise in overall investments. China maintained its dominance in solar and wind technologies, installing 315 GW of solar capacity and 119 GW of wind, surpassing the combined total of the rest of the world.

Despite these advances, fossil fuels remain crucial to China's energy security and industrial base, providing over 80% of primary energy and more than 60% of electricity.

Coal, in particular, is the cornerstone of the energy sector, generating more than 50% of the country's electricity and accounting for 60-70% of primary energy consumption. China consumes over 4 billion tonnes of coal annually, representing more than half of global consumption. In 2023, coal imports reached a record 474 million tonnes, cementing China's position as the world's largest coal consumer and importer.

Even as China invests heavily in renewables, coal-fired power plants continue to play a significant role in the economy, particularly in sectors such as steel. The construction of new coal plants reached a 10-year high in 2024, with 94.5 GW of new capacity under development and 3.3 GW of previously suspended projects resumed.

President Xi Jinping pledged to control coal expansion and reduce consumption, but heavy reliance on the fuel continues to contribute to air pollution and carbon emissions.

Oil also plays a critical role in China's energy mix, powering transport and the petrochemical industry. The country consumes approximately 16.3 to 16.4 million barrels per day (b/d) of oil, making it the second-largest global consumer.

In 2024, China imported around 11.1 million b/d, meeting about 74% of its demand. Projections for 2025 indicate total oil demand will average 16.74 million b/d. Russia, Saudi Arabia, and Iraq are the key suppliers, with Russian imports exceeding 2 million bpd, around 20% of China's total. Russian oil is delivered both via pipeline and by sea, often using a shadow fleet to bypass Western sanctions.

In response to growing demand, China is ramping up domestic oil production, which is expected to reach a record high of 4.3 million b/d in 2025, up from 3.8 million b/d in 2020. The increase is driven by exploration in offshore and unconventional fields, particularly by state-owned companies such as CNOOC, CNPC, and Sinopec. Despite these efforts, the high cost of extracting from mature fields leaves a significant gap in domestic supply, requiring imports to meet demand.

Natural gas is increasingly seen as a bridge fuel in China's transition to cleaner energy, helping to reduce reliance on coal, improve air quality, and stabilize renewable energy production.

In 2024, China's natural gas consumption reached around 428 billion cubic meters (bcm), up from 330 bcm in 2020. The country is also the world's largest importer of Liquefied Natural Gas (LNG), with imports projected to increase by 10% in 2026. Australia, Qatar, and Russia supply the bulk of China's LNG, with additional gas imported via pipelines from Russia and Turkmenistan.

China's dominance in the clean energy sector is further bolstered by its near-monopolistic control over rare earth elements (REEs), essential for the production of electric vehicles, wind turbines, and solar energy components.

The country controls about 60-70% of global REE mining and over 90% of processing and refining. Elements such as neodymium and dysprosium are critical for the high-strength magnets used in electric motors and wind turbines, while others like yttrium, lanthanum, and cerium are essential for solar inverters and converters.

In sum, while China's renewable energy sector continues to grow, fossil fuels, particularly coal, oil, and gas, remain essential to its energy security and industrial expansion.