Middle East conflict strengthens China's green-energy industry position

The Middle East conflict is expected to strengthen China’s position in green-energy industries, including solar equipment, energy-storage batteries and electric vehicles, analysts said.

The conflict is reducing about 20% of global oil and gas output passing through the Hormuz Strait, pushing fuel prices higher. In response, countries are accelerating energy-saving measures and signaling a shift toward cleaner energy.

Investment outlook for renewables and storage

Fitch Ratings expects investments in renewable electricity and storage batteries to rise in energy-import-dependent nations, including some European countries. China, meanwhile, remains the world’s leading supplier of storage batteries, solar equipment and electric vehicles.

According to the International Energy Agency, China produces more than 85% of the world’s batteries and 70% of electric vehicles. As a result, analysts said China’s green industry is likely to benefit from the Middle East conflict.

Market signals and demand shifts

Investors broadly expect the war to spur demand for renewable-energy development, which could benefit Chinese suppliers. In March, shares of CATL and BYD in Hong Kong rose 24% and 11%, respectively.

In the UK, demand for renting electric vehicles rose by more than 30% in the first three weeks of March compared with February, according to Octopus Energy. The renewable-energy group also reported higher sales of rooftop solar systems.

Indonesia as a potential growth customer

Indonesia, the world’s largest coal exporter, is positioned to become a major customer for China’s green technology. In March, President Prabowo Subianto announced plans to promote electric-vehicle development, including plans to manufacture electric cars and expand charging infrastructure.

Putra Adhiguna, a researcher at the Energy Shift Institute in Jakarta, said renewed attention is being drawn to electrified transport and that Chinese companies play a key role in Indonesia’s clean-energy supply chain.

Chinese firms signed deals worth more than $54 billion with the state-owned electricity company in 2023 and added another $10 billion in commitments during Prabowo’s 2024 visit to Beijing. “Chinese firms will benefit directly financially,” said Sam Reynolds of the Energy Economics and Financial Analysis (IEEFA) based in the United States.

Scale of China’s clean-technology exports

Analysts said China’s lead in clean technologies has widened even before the Middle East conflict. Chinese automakers have expanded electric-vehicle development and production, with export growth outpacing the United States and Europe, and they have gained market share in regions such as Southeast Asia.

Pakistan imported more than 50 gigawatts of solar panels “made in China” in December 2025. Ember research shows that cumulatively over the last year, China’s green industrial exports—including electric vehicles, solar panels and energy-storage batteries—reached nearly $22.3 billion, up 47% from the previous year.

Geopolitics and policy context

More than a decade earlier, Chinese President Xi Jinping linked energy security with national security. Since then, China has increased renewable-energy development, though fossil fuels still dominate the national energy mix.

China’s five-year plan through 2030 continues to prioritize green industries. “They are at the forefront of this field, more than any other country in the world, certainly more than the United States,” said Li Shuo, Director of the China Climate Center at the Asia Policy Institute.

In the United States, under President Donald Trump, investment in renewable energy was reduced and fossil-fuel resources were emphasized to promote energy exports, a strategy described by Trump as “energy dominance.”

Amy Myers Jaffe, a scholar at NYU’s Center on Global Economy, said the energy shock from the Middle East conflict “will benefit China's industry globally and hurt the U.S. auto industry.”