China’s energy profile is a paradox. The country accounts for more than half of global coal use even as it builds the world’s largest solar-panel and EV industries.
Cheap coal power gives Chinese factories rock-bottom electricity costs, and state oil/gas revenue bankrolls clean-energy projects.
By spring 2025 wind and solar already supplied over a quarter of China’s power, suggesting domestic coal use may have peaked. But the coal wealth remains strategic: With slower demand at home, Chinese miners are now exporting more (early 2025 coal shipments were ~13% higher year-on-year).
In effect, China’s green ascent has been underwritten by its coal economy.
Fossil fuel powering solar manufacturing
Much of the world’s solar gear is made on fossil power. The IEA finds that “coal generates over 60% of the electricity used for global solar PV manufacturing,” far above coal’s ~36% share of typical grids. That is because over 80% of PV factories sit in Chinese provinces like Xinjiang and Jiangsu, where coal dominates the grid.
China has poured over $50 billion into solar factories since 2011, roughly ten times Europe’s investment, cutting panel costs by about 80% and fueling a worldwide solar boom. But those panels were produced on coal.
In one analysis, they repay their manufacturing CO₂ in only months, meaning the emissions were dumped up-front in China’s coal plants. Any major disruption to China’s coal power or factories (from grid shocks to trade barriers) could thus send ripples through the global PV market.
Coal, steel and clean-tech inputs
China’s coal and heavy industries also feed its clean-tech supply chain. Coal-fired steel mills supply the aluminum and metal parts for EVs and panels, and coal chemicals provide battery precursors and silicon for solar.
Even Chinese coal exports now link to Asia’s green economy. In May 2025, Shanxi Coking Coal Group quietly shipped metallurgical coal to Indonesian steel mills, the first such export in years showing China’s surplus being sold to other Asian industries. Although coal itself isn’t part of the green economy, metallurgical coal is used to make steel and steel is essential for clean technologies such as solar panel frames, EV parts, wind turbines and power transmission structures.
So, in that sense, Chinese coal exports are indirectly feeding the materials used in Asia’s green infrastructure.
At the same time, Chinese oil and gas giants (CNPC, Sinopec) have set up solar, wind and battery divisions, redirecting fossil profits into green ventures. Yet China’s capital continues to flow through fossil channels. Even after Xi Jinping’s 2021 pledge to halt new overseas coal financing, Chinese development banks still funded roughly four times as much coal/oil abroad as renewables during 2013-21.
In short, China’s state capital remains tied to both legacy and clean energy.
Electric vehicles: a Southeast Asian rush
China’s EV juggernaut is rolling across Asia. Bolstered by huge domestic subsidies and a world-leading battery industry, Chinese automakers are flooding neighboring markets. In Thailand, Asia’s long-time auto hub, Chinese EV brands now command more than 70% of EV sales.
Battery-electric vehicle sales in Thailand surged from under 10,000 units in 2022 to about 76,000 in 2023, with BYD alone taking roughly 40%. Chinese firms have invested heavily in Thai assembly: BYD and Great Wall Motor pledged about $1.4 billion for EV plants there, and Chery’s new Thai factory will produce 50,000 cars per year by 2025.
Some smaller Chinese brands are finding the Thai market cut-throat. One analyst notes Neta’s recent troubles show that second-tier Chinese EV makers are “fragile” under intense price competition. Many have cut prices by 20% or more to stimulate demand, squeezing profit margins. Some smaller Chinese brands are finding the Thai market cut-throat.
One analyst notes that Neta’s recent troubles show that second-tier Chinese EV makers are “fragile” under intense price competition. Many have cut prices by 20% or more to stimulate demand, squeezing profit margins.
Thai dealers warn that a glut of cheap Chinese EV imports could undermine domestic automakers but that said, Chinese EV ventures often involve local joint ventures bringing technology and some jobs to the region. Some analysts see these Chinese EV ventures in Thailand as a potential ‘back door’ to Western markets, allowing firms to export cars assembled locally, even if trade restrictions target Chinese-made products.
Financing and infrastructure in South Asia
China’s fossil-clean mix is visible in South Asia, too, and Bangladesh is a prime example. Nearly 90% of Dhaka’s planned power projects are financed by China. Bangladesh had approved 13 Chinese-backed coal plants, but environmental and popular pressure forced Dhaka to cancel 10 of them in 2021.
The government has since pivoted to solar, wind and LNG. Officials say Bangladesh now needs roughly $80-100 billion – and thus is in talks with China, Japan, the ADB and others – to reach ~40% renewables by 2050.
In effect, Bangladesh’s energy future hinges on China: if Beijing redirects funds from coal to green energy, Dhaka can meet its goals. If not, it could be saddled with stranded coal debts.
Pakistan’s story is the converse. Under the China-Pakistan Economic Corridor (CPEC), Chinese companies built large coal-fired plants (over 2 GW) to provide baseload power. Yet Pakistanis themselves have driven a solar boom: Renewables First reports that about 39 GW of solar modules have been imported since 2020, nearly all from China – exceeding three-quarters of Pakistan’s grid capacity.
In 2024 alone, 16 GW of panels arrived, making China Pakistan’s largest solar supplier. The result is strategic tension: China is financing coal on the one hand and flooding the market with solar on the other. As analyst Basit Ghauri notes, “China’s solar panels are outcompeting China’s power plants” and Pakistan has become “ground zero for this energy disruption.”
Regional energy dependence: risks and rewards
Across Asia, the coal-to-clean linkage cuts both ways. On the one hand, Chinese-built solar farms, transmission lines and EV factories have driven down costs and accelerated renewable deployment.
For example, major Chinese panel makers (Trina, Jinko, Longi) have set up factories in Malaysia, Vietnam, Thailand and Cambodia; those four countries now hold over 40% of global solar-module capacity outside China. Southeast Asia has thus become a major solar exporter. In the first half of 2024 over 80% of US solar imports were from Malaysia, Vietnam, Thailand and Cambodia.
Chinese investment has spurred clean-industry growth, yet heavy reliance on China also creates vulnerabilities as many Asian grids and industries are now tethered to Chinese technology and policy. External shocks can ripple instantly.
In April 2025 the US finalized tariffs on China-linked solar from ASEAN, causing Chinese-owned panel factories in Vietnam and Malaysia to idle or shift output to Indonesia. This showed how a Washington policy aimed at China can destabilize a Chinese-backed solar hub.
Analysts also warn of the flip side in coal. Indonesia’s ambitious net-zero goals are still hampered by its continuing dependence on coal, reflecting how legacy fossil projects can slow clean transitions.
China’s clean-energy rise has been strategically enabled by its legacy fossil economy. Coal mines and oil wells have financed the factories and grids that now churn out solar panels, batteries and EVs. This has reshaped Asia’s energy map. From Dhaka to Bangkok, Chinese solar panels glitter on rooftops and Chinese EVs run on the roads.
The benefits are clear: cheaper clean technology, rapid deployment and industrial jobs. But the strategic reality is more nuanced – much of Asia’s green transition is now linked to Chinese capital and carbon. Asian policymakers should welcome China’s green investments but also diversify sources, build local capacity and enforce high standards. Otherwise, Asia risks trading one energy dependence for another.
Naina Sharma is a research assistant at the Center of Policy Research and Governance (CPRG).
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