China Set to Benefit from Iran War as Energy Crisis Accelerates Renewable Transition

China is poised to capitalize on the ongoing Iran war as global energy disruptions drive a faster shift toward clean technologies and renewable power—industries where Chinese companies maintain dominant market positions.

The conflict has severely restricted oil and gas shipments through the Strait of Hormuz, a critical chokepoint that primarily served Asian markets. As nations across Asia scramble to conserve energy and bolster dwindling reserves, gasoline prices in the United States and Europe have spiked sharply. While a temporary ceasefire appears increasingly fragile, the energy disruption’s economic impacts continue to spread.

Although most Asian countries face significant challenges from these fossil fuel disruptions, China stands to benefit despite being the largest purchaser of Iranian oil. As the global leader in battery, solar panel, and electric vehicle exports, Chinese industries are experiencing surging demand for renewable energy products.

“China’s approach to energy sector development and geopolitics has been completely validated by the Iran conflict,” said Sam Reynolds with the U.S.-based Institute for Energy Economics and Financial Analysis.

Diverging Energy Strategies

China’s advantageous position in clean energy technologies was already strengthening before the Iran war erupted in late February. Under President Xi Jinping’s leadership over the past decade, China strategically merged energy security with national security priorities, substantially increasing its focus on renewable energy development despite fossil fuels still dominating its domestic energy mix.

Meanwhile, the United States under President Donald Trump had scaled back renewable energy initiatives, instead leveraging its vast oil and gas resources to promote what Trump described as “energy dominance” through increased energy exports.

This divergence in strategies has left China particularly well-positioned. The country now controls over 70% of global EV manufacturing capacity and approximately 85% of battery cell production, according to the International Energy Agency. China’s current five-year plan through 2030 continues to prioritize these strategic industries.

“They are at the very forefront of this, more so than any other countries in the world, certainly more so than the United States,” said Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub.

Investment Surge in Chinese Clean Tech

The Iran conflict is driving unprecedented demand for Chinese clean energy technology. Exports of solar panels, batteries, and electric vehicles reached a record $22.3 billion in December—a 47% increase from the previous year—with significant shipments to Southeast Asia and Europe, according to the think tank Ember.

Investment in renewable power generation and battery storage infrastructure is expected to accelerate in countries heavily dependent on energy imports, particularly in Europe, according to credit rating firm Fitch Ratings.

Investors have already begun betting on this trend. In March, shares of Chinese battery producer CATL and vehicle manufacturer BYD rose approximately 24% and 11% respectively on the Hong Kong exchange.

“The energy shock is going to help the Chinese industry globally and hurt the American car industry globally,” said Amy Myers Jaffe of New York University’s Center for Global Affairs.

Chinese EV manufacturers had already been expanding production and increasing exports faster than American or European competitors before the conflict, offering more affordable models and gaining market share in regions like Southeast Asia. The energy crisis will likely accelerate these trends, despite high U.S. tariffs largely preventing Chinese EVs from entering the American market.

Global Adoption Accelerates

The impact of higher energy costs is pushing households and governments worldwide toward cleaner power alternatives.

Pakistan offers an early example of this transition. Its renewable energy program launched in 2017 has already led to more than 50 gigawatts of Chinese solar panels being imported by December 2025. While Pakistan still imports a third of its energy needs—with about 80% of its oil previously flowing through the now-restricted Strait of Hormuz and Qatar supplying a quarter of its LNG—the country’s solar investments have softened the blow.

“The shock isn’t as big as it would have been without solar,” said Nabiya Imran of Renewables First. If prices remain elevated, solar could save Pakistan approximately $6.3 billion in fossil fuel imports over the next year, according to analysis from think tanks Renewables First and the Centre for Research on Energy and Clean Air.

In the United Kingdom, electric vehicle leasing demand jumped by more than a third in the first three weeks of March compared to a similar period in February before the war, according to Octopus Energy, a renewable energy group. The company also reported significant increases in rooftop solar installations and solar-related inquiries.

Even Indonesia, the world’s largest coal exporter, is shifting its energy strategy in ways that could increase demand for Chinese clean energy technology. In March, Indonesian President Prabowo Subianto announced a major push into EVs, including plans to produce electric cars domestically and expand charging infrastructure across the country.

Chinese firms already play a crucial role in Indonesia’s clean energy supply chain, having signed more than $54 billion worth of deals with the state utility in 2023, followed by an additional $10 billion pledge during Prabowo’s visit to Beijing in 2024.

“There will be direct financial benefits to Chinese companies,” said Reynolds of IEEFA.

While prolonged fuel price spikes may drive further EV adoption globally, analysts note that it will take time to see the trend fully reflected in purchase patterns, as many customers are waiting to see how the conflict evolves before making major investments in new vehicle technologies.