Global oil prices swing sharply up and down—how does China maintain stability?

The global energy landscape is undergoing profound restructuring: oil prices fluctuate wildly, geopolitical supply risks continue to rise, and global supply chains are fragmenting further… This year, frequent geopolitical shocks have weighed on the world economy—and simultaneously made the world increasingly aware of the profound contemporary significance and far-reaching strategic value behind China’s steadfast principle: “The energy bowl must be held firmly in our own hands.” At a press conference held on July 31, Jiang Yi, spokesperson for the National Development and Reform Commission (NDRC), stated that in the first half of this year, despite a complex and severe external environment, China has consistently ensured stable and secure energy supply. While meeting domestic energy demand, China has also made important contributions to stabilizing global energy markets and industrial and supply chains. The strong resilience demonstrated by China’s energy system—and its ability to withstand immense pressure—stems fundamentally from the Party Central Committee’s holistic, science-based strategic planning. All relevant parties have rigorously implemented these plans, systematically establishing “four layers of insurance.” First, securing the supply base. According to data from the National Energy Administration, China continues advancing upstream oil and gas production and reserve expansion. In the first half of this year, large- and medium-sized industrial enterprises produced 109.43 million tons of crude oil and 133 billion cubic meters of natural gas—both record highs for the same period in history. By the end of May, China’s total installed power generation capacity surpassed 4 billion kilowatts for the first time—exceeding the combined installed capacity of the United States, the European Union, India, Japan, and Russia. China has built the world’s largest clean coal-fired power supply system; crude oil output has risen above 200 million tons annually; natural gas output has increased by over 10 billion cubic meters per year for nine consecutive years—equivalent to adding one “large gas field” annually. Meanwhile, China has established the world’s largest and fastest-growing renewable energy system: nearly four out of every ten kilowatt-hours consumed nationwide now come from green electricity. Second, accelerating the energy transition and optimizing the energy mix. On the foundation of safeguarding energy security, China steadily advances its green, low-carbon energy transition; new growth drivers are rapidly replacing traditional ones, and structural optimization has yielded remarkable results. According to NDRC data, since the 18th National Congress of the Communist Party of China, China has sustained an average annual GDP growth of approximately 6%, supported by only about 3.3% average annual growth in energy consumption. The penetration rate of new energy vehicles rose from 5% at the end of the 13th Five-Year Plan period to 48% at the end of the 14th Five-Year Plan period. Last year, non-fossil energy accounted for over half of China’s total petroleum consumption for the first time. Third, infrastructure construction provides hard support. NDRC data shows that China has woven a tightly integrated national oil-and-gas pipeline network—the total length of long-distance oil and gas pipelines equals five circumferences of Earth’s equator. China has built the world’s largest and most technologically complex AC/DC hybrid interconnected power grid, and has preliminarily established a unified national electricity market, enabling efficient allocation of electricity resources across the country.

China weathered the Strait of Hormuz shock. Clean energy can sustain this resilience.

The disruption of oil flows through the Strait of Hormuz severely tested China’s energy security. Crude oil imports dropped significantly, while oil prices and shipping risks surged. Yet, according to analysis by CREA, this import decline did not trigger the economic or social turbulence typically expected in China. In fact, the growth of non-fossil power generation protected the country from economic costs more than any other nation. Key findings: • Temporary adjustments buffered the crude oil import shock. A drawdown in crude oil inventories accounted for 47% of the year-on-year decline in imports between March and August 2026. • Clean electricity and transport electrification provided structural buffers. Between March and August 2026, China’s electric vehicle (EV) fleet displaced an estimated 38 million tons of oil equivalent—approximately 13% of China’s crude oil imports during the same period in 2025. • Growth in non-fossil power generation reduced demand for coal and natural gas, saving an estimated USD 9.1 billion in fossil fuel import costs since 2020—the largest such savings among all countries. • Reduced imports of oil and natural gas were not accompanied by widespread acceleration in coal use. Coal supply contracted by 3.4% in the third quarter, and steam coal consumption fell sharply. Contrary to some expectations, growth in coal-based chemicals slowed after the crisis began. • Further growth in clean energy and electrification can meet rising demand while lowering fuel supply risks. By 2030, non-fossil sources could account for 54% of electricity generation; if they also offset an annualized coal supply shortfall equivalent to that seen between March and August 2026, the share would reach 58%—both exceeding China’s 50% target. • Moreover, deploying an additional 40 million EVs annually could save 45 million tons of oil per year, while cleaner petrochemical feedstocks could further reduce dependence on oil. Temporary relief versus structural transformation China’s immediate response combined inventory adjustments, refinery operations changes, and trade shifts. Changes in implied crude oil inventory levels accounted for about 47% of the net year-on-year decline in crude oil imports over the first six months of the crisis (March–August 2026). Meanwhile, refinery throughput declined by approximately 9.6%. Reduced exports offset roughly 29% of the domestic production declines in gasoline, diesel, and jet fuel. These measures redistributed the shock—they did not necessarily eliminate the fundamental demand for oil. Accelerated transport electrification provided structural buffering. In the first six months following the Hormuz crisis, China’s EV fleet displaced an estimated 38 million tons of oil equivalent—a 52% increase over the same period in 2025. This amounted to about 13% of China’s crude oil imports between March and August 2025. Clean energy provided complementary buffering: since 2020, growth in non-fossil power generation has avoided an estimated USD 9.1 billion in fossil fuel import costs—by far the largest such savings globally—primarily through reduced demand for coal and natural gas. As transport electrification expands, continued growth in clean power can meet additional electricity demand without increasing reliance on fossil fuels. China’s seaborne imports of coal and natural gas for power generation primarily serve coastal demand centers—including the Yangtze River Delta, Guangdong, Fujian, Hebei, and Shandong provinces.

Li Junfeng: China's Energy System Fully Demonstrates Supply Resilience

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At the 17th Caixin Summit, Li Junfeng stated that China's expanding new energy capacity strengthens supply security against geopolitical and climate shocks. He emphasized that building a resilient energy system is essential for long-term national development.

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Li Junfeng: China's Energy System Fully Demonstrates Supply Resilience

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