The Five Key Trends Driving China's 2026 Energy Strategy

China’s meteoric rise to become the world’s first ‘electrostate’ is poised to shake up the entire global economy and the future of energy markets. The country is breaking away from the rest of the world both in terms of what it's investing in and how much it’s investing. China, the world’s second-largest economy after the United States, spent more than USD 625 billion on renewable energy in 2024, a national and global record, while spending plateaued in the United States and declined in the European Union and the United Kingdom. 

While Beijing remains a huge importer of foreign oil and gas, Beijing is dead-set on weaning itself off of its dependence on foreign energy imports. And it’s going all-in on the effort. The scale of China’s clean energy spending is hard to overstate – it’s poised to change the way that the entire world generates and sources energy, and to penetrate supply chains at every level and in virtually every corner of the globe. Global powers in the West are resisting this sea change by dragging their feet on the clean energy transition and – in the case of the United States – actively pivoting back toward fossil fuels development. But the sheer momentum of the rise of the Chinese electrostate is set to dwarf any inertia coming out of the West. 

However, the Chinese economy is slowing down and there are some significant uncertainties as to how 2026 will unfold for Beijing. Indeed, this could be a pivotal year for China, and therefore for the rest of the world as well. A recent Forbes article calls out five trends that could be particularly important to watch as the year unfolds to give us an idea of where global energy markets and geopolitics are heading. 

The first of these is AI integration across the Chinese energy sector. China is already vying for dominance in the AI sector as well as the energy sector, so it stands to reason that there is considerable overlap in those agendas. China aims to achieve widespread AI integration by 2027 and global AI leadership by 2030. In November, Nvidia president and CEO Jensen Huang publicly stated that "China is going to win the AI race" thanks to its abundant and cheap energy paired with looser regulations. Forbes goes on to warn that China’s ambitious AI roadmap “poses the risk of wresting the future of energy out of Washington’s hands, attracting an increasingly large customer base of energy-hungry states.”

The second trend is greater governmental involvement in the energy sector. The Chinese government is not known for being hands-off to begin with, but Beijing has allowed for a large amount of “market-driven experimentation” in recent years, with great results. However, this is set to change. New reforms in China are ushering in a new era of “stronger state oversight, including government-set price bands, limits on provincial volatility, and centrally supervised pilot programs for capacity markets,” according to Forbes. 

Third, critical minerals will continue to be an increasingly important piece of geopolitical leverage. On a global scale, the geopolitical climate is becoming increasingly frenzied around the topic of critical minerals and other valuable manufacturing materials, as evidenced by Trump’s newly refreshed obsession with Greenland. China already wields global dominance in a wide range of critical minerals supply chains, and has historically showed that it’s not above leveraging that dominance for political will. With Trump at the helm of China’s largest competitor, Beijing is sure to double down on its effort to maintain this leverage.

Fourth, China will be looking to ramp up its clean energy exports. With the domestic economy slowing down, China is in danger of seriously overproducing, and needs new markets to sell its abundant clean energy resources to. Plus, this helps China increase its presence in emerging markets and in the global economy as a whole – a win-win for Beijing. It’s also a major lifeline for poor countries that otherwise would not be able to afford to transition toward clean energy, even as climate change poses an existential threat to local livelihoods, as is already the case in many sub-Saharan African nations, among other hotspots in the Global South. 

Finally, Forbes says to watch China’s liquefied natural gas deals in the new year. “As China is balancing its clean-energy commitments with the need for reliable baseload supply, gas remains a key piece of the puzzle,” Forbes summarizes. This need could become critically exacerbated by the United States’ new military involvement in Venezuela, a major supplier of oil to Chinese markets. 

The upshot is that China is moving out of a build, baby, build phase and into a more strategic phase of energy policy. In 2026, China will focus more on stabilizing its control over domestic energy systems while simultaneously cementing its global energy influence.

Source: Oilprice