As the United States under former President Donald Trump stepped back from global leadership in green energy, China is seizing the opportunity to drive the transition towards a low-carbon world. While Washington has been deregulating its fossil fuel industry, Beijing is positioning itself as a leader in defining the standards and rules for a global low-carbon economy.
China’s dominance in global green energy supply chains is already evident. The nation leads in the production of solar panels, wind turbines, grid equipment, storage systems, and electric vehicles. This strategic positioning allows China to influence global standards for green products and the criteria they must meet.
China’s Strategic Moves in Green Energy
China’s next likely step is to implement a robust monitoring, reporting, and verification system across heavy industries. This system would enable carbon emissions to be priced, compared, and audited, aligning with the European Union’s recent measures to combat “carbon leakage.” The EU’s regulations require companies to purchase certificates indicating the carbon produced when importing goods, a model the UK plans to adopt as well.
Market access is increasingly tied to documentation, with exporters needing to demonstrate the carbon content of their products. The EU’s digital “battery passport,” mandatory from February 2027 for electric vehicle and industrial batteries, exemplifies this trend. Although China does not control access to the European market, it can facilitate global compliance with EU-style requirements by standardizing necessary infrastructure and tools.
Leveraging Supply Chain Dominance
China can leverage its supply chain dominance and digital infrastructure to offer traceability tools, reporting templates, verification services, and management platforms. As firms are expected to publish more consistent sustainability and climate information, China’s role in providing these solutions becomes crucial.
China’s investment in renewable energy has surged from $117 billion in 2015 to $290 billion in 2024, outpacing the United States.
China’s Economic Transformation and Challenges
Since the Paris Agreement, where 195 countries committed to tackling climate change, China has strategically transformed into a clean energy superpower. By 2025, this sector is projected to be worth $2.1 trillion, or 11.4% of China’s GDP. Despite this growth, China faces challenges, such as falling short of its emission reduction targets and dealing with over-capacity and price collapses in its solar panel industry.
Meanwhile, some U.S. states are independently advancing renewable energy initiatives, despite federal policies. U.S. investment in renewable energy has increased by 2.6 times from 2015 to 2024, slightly outpacing China’s growth rate. However, the divergence between the U.S. and China is most apparent in their approaches to multilateral engagement.
China’s Role at the Global Stage
At the UN’s climate summit, COP30, in 2025, China presented itself as a global leader in renewable energy production. Renewables are not merely another sector for China; they are a core pillar of its strategy for economic growth and security. This focus has been central to China’s economic transformation since the 2010s.
China’s clean energy sector is projected to be worth $2.1 trillion by 2025, accounting for 11.4% of its GDP.
Implications for Global Green Economy
As the U.S. retreats from the green economy, China is poised to become a broker of compatible green finance rules, particularly for emerging markets seeking capital without being caught between competing standards. The integration of green rules into the global economy is becoming increasingly critical as businesses and investors seek stability and predictability.
China’s potential to position itself as the international rule-maker for green products and energy could secure its place as a leader in the future low-carbon economy. This move would not only benefit China’s economy but also shape the global landscape of green energy and sustainability.
In conclusion, China’s proactive approach to green energy and its strategic investments position it as a formidable leader in the global transition to a low-carbon economy. As the world grapples with climate change, China’s influence in setting standards and providing solutions will likely grow, impacting markets and policies worldwide.
