CHINA MONTHLY ENERGY UPDATE AUGUST 2025

Authored by Caroline Wang, China Lead, Climate Energy Finance 

Previous CEF monthly updates here. 

Got questions or feedback? Please reach out: caroline@climateenergyfinance.org     

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SNAPSHOT – CHINA ENERGY, ECONOMICS, INDUSTRY UPDATE, JULY 2025 

🌡️ Hottest July on record: National average temperature hit 23.6°C, driving +7.5% electricity demand 
☀️ Solar generation +42% y-o-y in July; 🌬️ wind +15.2%, 🔥 thermal -0.8% – renewables now meeting structural demand growth 
⚡ 42% of electricity from zero-emissions sources (Jan–Jul 2025); non-fossil capacity >60% 
🏭 35.2% of large-scale industrial power from clean sources 
🧱 Coal use continues structural decline: coal plant utilisation 44.8%, raw coal output down 3.8% 
🔋 Energy storage surges: 94.9GW / 222GWh installed by mid-2025 – +29% vs end-2024; lithium-ion tech makes up 96.4% 
🌧️ Beijing floods displace 300,000+; 44 dead – central govt allocates US$76.7m for recovery 
🌍 China trade resilient: $US586bn trade surplus in H1 2025; ASEAN remains top partner 
📉 Iron ore imports -2.3%, average price down 16% y-o-y; major risk to Australia’s economy 
📜 New policy mandates renewable energy quotas for steel, cement, polysilicon, and data centres 
📉 China’s CO₂ emissions -1% in H1 2025; record solar growth supports trend 
🎓 New STEM visa scheme: China targets global talent to drive innovation-led development 
🎥 CGTN documentary follows Norway’s Erik Solheim through China’s environmental restoration journey 
📰 Foreign Affairs article by Dan Wang & Arthur Kroeber argues the US is underestimating China’s industrial power and must rethink its playbook to compete.  

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SECTION 1: 3 CHARTS OF THE MONTH 

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SECTION 2: CHINA POWER STATISTICS – JULY 2025 

Hottest July on record drives massive uptick in electricity consumption  

July was a month of extreme weather, including extreme high temperatures, heavy rains and floods.  

July 2025 saw record-breaking temperatures across China, with the national average reaching a record 23.6°C. As a result, electricity consumption by urban and rural residents skyrocketed by a whopping 18% y-o-y, according to NEA, while national electricity demand reached a record high, increasing by 8.6%* year-on-year.   

Year to date to July 2025 solar and wind power generation rose 42% and 15.2% year-on-year respectively, while thermal power generation dropped by 0.8% (Figure 1). This confirms the trend that new clean power capacity deployments in China has reached a level where it can meet the structural growth in China’s electricity demand. 

*Note The NEA’s 8.6% growth figure differs from the 7.5% figure in Figure 1 which is taken from Ember’s monthly data set. This is because Ember monthly data is taken from NBS data which reports generation from corporations with annual revenue above RMB 20m, while the NEA data reports total electricity consumption by the whole of society. 

Figure 1 

Clean energy generation rises to 35% in large-scale industries 

China has built the world's largest clean energy power generation system, with clean energy sources such as hydropower, nuclear power, wind power, and solar power rising to account for 35.2% of large-scale industrial power generation in the first half of the year, an increase of 2.1 percentage points over the same period last year, according to NBS.  

Notably, thermal power and hydropower generation at industrial scale declined by 2.4% and 2.9% respectively, while nuclear power, wind power, and solar power generation at industrial scale increased by 11.3% 10.6%, and 20.0% respectively.  

Clean energy investment continued to grow rapidly. Specifically, investment in solar power generation, wind power generation, nuclear power generation, and hydropower generation increased by a combined 21.9%. Investment in power grid upgrades reached US$46 bn in January-July 2025, up 13% year-on-year (Figure 2).  

Coal continues structural decline in China’s energy system 

Under China’s dual carbon goals (carbon peaking by 2030 and carbon neutrality by 2060), the role of coal in China's energy system is transforming from main supplier to security guarantor to provide the balance to ever-higher share of intermittent renewable energy.  

In July, raw coal production in large-scale industries declined by 3.8% (see Figure 2 below). 

Source: National Bureau of Statistics: Energy Production in July 2025 

At a recent roundtable in Sydney on China's energy system transformation and climate policy, experts from the Institute of Energy, Environment and Economy at Tsinghua University and from Fudan University informed us that China’s ongoing low-carbon transition will see coal power capacity peak after 2025 and that by 2060, approximately 90% of China’s electricity will come from nuclear and renewables.  

👉See Caroline’s LinkedIn post for a summary of key takeaways from the roundtable.  

In the first seven months of 2025, zero-emissions sources generated a record 42% of China’s electricity, up from 39% in the same period last year (see Figure 1 above).  

In terms of newly added power generation capacity in January-July 2025, renewables made up 87% driven by solar (up 81% year-on-year), while thermal comprised 13% (see Figure 3 below).  

Following the historic surpassing of thermal power capacity by wind and solar at the end of March 2025, the proportion of non-fossil power generation capacity exceeded 60% for the first time at the end of May 2025.  

For existing coal plants, the policy is “Halt but do not demolish, Prepare but do not use"  (停而不拆、备而不用). Indeed, in the first half of 2025, China’s coal plant utilisation rate decreased to record low, averaging 44.8%. 

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SECTION 3: CHINA CLIMATE NEWS 

Flood disaster in Beijing affected more than 300,000 people and caused 44 deaths 

From 23-29 July, Beijing and neighbouring provinces experienced extremely heavy rainfall and flash floods, causing significant casualties and property losses. 44 people lost their lives in the disaster and 9 were missing.  

In a press conference held on 31 July by the Standing Committee of the Beijing Municipal Party Committee, it was reported that the floods affected over 300,000 people and damaged 24,000 houses. 

550 million yuan (US$76.7 million) was allocated by the central government to flood-hit regions for disaster relief, with 200 million yuan directed to Beijing’s response to the floods. 

👉See epic BBC news video capturing the extent of the disaster.  

Photo: Beijing Municipal People's Government Information Office observing a minute of silence for the victims, 31 July 2025. Source: Xinhua News Agency 

Extreme weather and climate events in China are increasing and intensifying, according to the China Meteorological Administration’s China Climate Change Blue Book (2025). China’s climate risk index is now significantly higher since the mid-1990s – in 2024, it was the highest since 1961, with rainfall and flood risks and high temperature risks being particularly prominent.  

From 1961 to 2024, China's average annual temperature showed a significant upward trend, increasing by an average of 0.31°C per decade, higher than the global average. China’s annual average temperature, loss of glaciers and sea level rise all hit record highs in 2024.   

Globally, 2024 was the warmest year on record since meteorological records began in 1850, making the past decade (2015-2024) the warmest on record (see Figure 8 below). Global temperatures are expected to continue at or near record levels in the next five years, according to the World Meteorological Organisation’s Global Annual to Decadal Climate Update (2025–2029). Every additional fraction of a degree of warming drives more harmful heatwaves, extreme rainfall events, intense droughts, melting of ice sheets, sea ice, and glaciers, heating of the ocean, and rising sea levels. 

Recognising the urgent and existential threat of climate change facing the world, the International Court of Justice (ICJ) issued a landmark advisory opinion on 23 July stating that nations can be held legally accountable for their greenhouse gas emissions.  

👉See Carbon Brief’s comprehensive explainer of the ICJ opinion.  

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SECTION 4: CHINA CLEAN ENERGY INDUSTRY UPDATES

China accounts for 40% of global new energy storage capacity 

By the end of 2024, 73.76 GW / 167 GWh of new energy storage had been completed and put into operation, accounting for over 40% of the global installed capacity. 

In the first half of 2025, new energy storage maintained steady and rapid development. In terms of installed capacity, the nation's new energy storage capacity reached 94.91 GW / 222GWh, representing an increase of approximately 29% from the end of 2024. 

According to preliminary statistics from CNESA, the scale of new energy storage under construction on the source and grid side exceeded 23GW in the first half of the year. New installed capacity on the grid side is expected to exceed 43GW throughout the year. 

Lithium-ion battery energy storage dominates among various new energy storage technology routes, accounting for approximately 96.4% of installed capacity, according to the NEA’s China New Energy Storage Development Report 2025. 

China’s exports remain strong in Jan-Jul 2025 despite the age of tariffs  

Despite tariff-driven headwinds through the first half of the year, China’s exports have held up well. China’s trade surplus reached $US586 bn in 1H25, a new record high for any semi-annual period, according to an ING analysis on China’s export resilience.  

According to customs statistics, in the first seven months of 2025, the total value of China’s exports reached 15.3 trillion yuan (US$1.2 trillion), up 7.3% y-o-y. In July, China’s exports reached 2.3 trillion yuan, up 8%, and imports reached 1.6 trillion yuan, up 4.8%, marking two consecutive months of growth. 

ASEAN remains China’s largest trading partner; China-BRI trade up 5.5%  

ASEAN was China's largest trading partner, with total trade between the two countries reaching 4.3 trillion yuan (US$600bn), a 9.4% increase, accounting for 16.7% of China's total foreign trade. 

Second was the EU with total trade reaching 3.4 trillion yuan, a 3.9% increase, accounting for 13% of China's total foreign trade.  

Third was the United States, with total trade between the two countries reaching 2.4 trillion yuan, a 11.1% decrease, accounting for 9.4% of China's total foreign trade.  

As a proportion of China’s total exports, the US has fallen from 14.6% in 2024 to 11.9% in the first half of 2025, due to the tariff war initiated by the Trump Administration. This is a sharp drop. Yet this trend has been in place since the first trade war in 2018, when the US’ share of China’s exports began falling after peaking at 19% in 2017. 

During the same period, China’s total imports and exports with countries participating in the Belt and Road Initiative (approx. 150 countries) reached 13.29 trillion yuan ($US1.8 trillion), an increase of 5.5% year-on-year. This is over 16 times more than the size of Australia-China bilateral trade.   

Chinese green energy and hydropower investment in BRI countries increased to US$3.1 billion in H12025, up from US$1.3 billion in H12024, according to the Griffith Asia Institute’s China BRI Investment Report H12025.  

China’s industrial production continues to outpace demand as central government cracks down on disorderly price war 

As a result, we’ve seen industrial production in China maintain rapid growth. In July, the added value of industrial enterprises above designated size* increased by 5.7% year-on-year, according to latest data from China’s National Bureau of Statistics.  

From January to July, the added value of industrial enterprises above designated size* nationwide increased by 6.3%. The robotics industry flourished, driving output increases of 48%, 24%, and 12.8% for robot reducers, industrial robots, and service robots respectively. Watch this epic video about the world’s first robot store that opened in Shenzhen last month.  

In terms of green economy, the output of new energy vehicles, lithium-ion batteries, and solar cells increased by 17.1%, 29.4% and 16% in July.  

*China’s National Bureau of Statistics looks at all industrial enterprises with a minimum annual revenue of 20 million yuan. They call this ‘industries above designated size’. They also look at something they call ‘added value’ – which means actual growth rate excluding price factors. 

Central Government continues to crack down on disorderly and excessive competition 

Structural overcapacity in many industries including solar PV, batteries and EVs persists due to weak domestic demand and misaligned local-national incentives, resulting in vicious price wars and deflation. 

The Central Government is taking measures to address "involutionary" competition, a term best summarised by the Ministry of Industry and Information Technology as “a vicious competitive phenomenon in which economic entities continuously invest significant energy and resources to maintain their market position or compete for limited market share, yet this does not lead to overall profit growth”. 

During this year's National People's Congress and the Chinese People's Political Consultative Conference, President Xi Jinping explicitly called for the active elimination of local protectionism, market segmentation and involutionary competition. This year's Government Work Report made relevant arrangements for “comprehensive steps to address this “rat race competition”, including a recently revised Anti-Unfair Competition Law, in the context of its broad policy rebalancing toward expanding domestic demand 

Recently, China is planning to amend a decades-old pricing law as part of an ongoing campaign to curb the vicious price wars plaguing several industries, as SCMP reports.  

The solar PV and EV industries are particularly affected – on 19 August, six central government departments led by the Ministry of Industry and Information Technology held a PV industry symposium to further regulate disorderly low-priced competition.  

If you are interested to learn more about how the Chinese Government is thinking about tackling involutionary competition, please have a read of the National Development and Reform Commission’s Expert View – Comprehensively rectify “involutionary” competition.  

Iron ore import price down 16% as China’s steel production falls  

Iron ore prices continue to trend downwards as China’s crude steel and pig iron output fell by 4% and 1.4% year-on-year respectively in July. Cement production also fell by 5.6% in July, reaching its lowest level for the month since 2019, according to CREA’s analysis. 

From January to July 2025, China imported 697 million tons of iron ore, a year-on-year decrease of 2.3%, according to data released by the General Administration of Customs. The import value was US$67.26 billion, a year-on-year decrease of 17.9%. Based on this, the average import price of iron ore from January to July was US$96.6 per ton, a year-on-year decrease of 15.9%, correlating with a decrease of 15.2% in the value of China’s overall imports from Australia in the same period – this is the largest percentage decrease registered among all of China’s trading partners.  

In July, China's iron ore imports were 100 million tons, down 1.3% month-on-month and up 1.8% year-on-year; the import value was US$9.56 billion, down 2.8% month-on-month and down 12.0% year-on-year; the average import price of iron ore in July was US$91.4 per ton, down 1.6% month-on-month and down 13.5% year-on-year.  

The pullback in iron ore imports in early 2025 is due to both short-term cyclical factors, including contracting domestic demand and inventory reduction, while also revealing a new landscape of competition for high-grade ore sources and the progressively lower overall level of steel demand in China. 

China’s declining iron ore imports a major threat to the Australian economy 

This downward trend in China’s iron ore imports is a significant threat to Australia’s economy, as iron ore is Australia’s single largest commodity export. As the ABC reported last year, the “decline could see $3 billion wiped from the federal budget due to reduced tax receipts from iron ore exports”.  

China, as the world's largest iron ore importer, accounts for approximately 74.4% of global imports. Iron ore is Australia’s largest and most valuable commodity export. About 85% of Australia's iron ore exports go to China, which is the world’s largest producer and exporter of steel, while Australia accounts for about 60% of China's iron ore imports.   

China’s steel output has plateaued at ~1 billion tonnes for five years, and new policies to cut overcapacity point to weaker demand ahead. At the same time, Beijing is securing alternative supply through equity stakes in projects like Simandou in Guinea, which will help it to sharply reduce reliance on Australian ore.  

The Simandou mine in Guinea is the world’s largest known undeveloped reserve of high-grade iron ore. It is expected to produce an annual output of 120 million tons, accounting for 10% of global seaborne iron ore trade and positioning Guinea as the third largest iron ore exporter around the globe. Construction is expected to be completed by the end of 2025, with the first ore shipments expected in 2026.  

For a small economy so exposed to this single commodity, and with China set on reducing reliance on Australian iron ore, the shock to Australia’s economy and prosperity could well be severe. This is an urgent signal to diversify Australia’s economy, and identify and invest in building globally competitive, value-adding industries.  

The imperative for economic diversification in Australia could not be more pressing. Australia’s economic complexity has been declining since 1995. In particular, investment in R&D has declined over 15 years to 1.66% of GDP – now only 60% of the OECD area’s R&D intensity of 2.73%, according to the Australian Government’s Strategic Examination of R&D discussion paper. Australian manufacturing has dropped to a multi-decade record low of just 5.1% of GDP. 

New policy sets renewable energy consumption ratios for steel, cement and polysilicon industries, and some data centres 

A new policy – published in July – requires for the first time that steel, cement and polysilicon factories, as well as some new data centres, meet a certain percentage of their electricity demand using renewable electricity. 

Previously, such requirements were only applied to provinces, power distribution companies and the aluminium industry. Their mandated renewable energy shares have also now been increased. 

As CREA’s Lauri Myllyvirta puts it in a recent Carbon Brief analysis, these changes boost demand for contracts with renewable electricity suppliers, just as new solar and wind plants are having to secure contracts directly with buyers, under their new pricing policy. 

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SECTION 5: ROUND-UP OF NEWS AND PERSPECTIVES

Record solar growth keeps China’s CO2 emissions falling in first half of 2025 

A new Carbon Brief study shows that clean-energy growth helped China’s carbon dioxide (CO2) emissions fall by 1% year-on-year in the first half of 2025, extending a declining trend that started in March 2024. 

Tracking China’s green steel transition, CREA study  

A new study by CREA spotlights how China’s green steel transition is tracking against the government’s target of raising the share of electric arc furnace (EAF) steel to 15% of total crude steel production by 2025. It found that as “of mid-2025, China’s progress toward its green steel targets remains underwhelming. Despite setting a 15% EAF share target in 2022, the actual share has remained stagnant at around 10%, a level that has barely shied over the past decade. This shortfall reflects not just implementation delays but entrenched structural headwinds” 

China’s exports and investments to Global South surge in ‘age of tariffs’ 

China now exports about US$1.6 trillion to the Global South, more than 50% higher than its combined exports to the US and western Europe at US$1 trillion, as the SCMP reports.  

“High uncertainties under US tariffs and China’s slowdown will continue to motivate Chinese firms to head to the Global South,” said the SCMP quoting S&P analysts. 

“The result could be a new order of global commerce where South-South trade becomes the new centre of gravity and Chinese multinationals emerge as the new key players.” 

China turns to attracting global STEM talent as part of innovation-driven economic agenda  

China has launched a new visa category for young professionals in science, technology, engineering, and mathematics as part of its national push for technological innovation and self-reliance, as SCMP reports.  

In view of the US’ attack on science and STEM professionals, China and Europe (are seizing the opportunity to attract global talent in the race to lead in priority technologies, with the EU allocating €500 million between 2025 and 2027. The European initiative also includes a target for member states to allocate 3% of their GDP to R&D projects by 2030. 

New CGTN documentary on China’s journey to protect its environment 

On 10 August, CGTN released a new 26-minute documentary on China’s remarkable journey to restore its natural environment through the eyes of Erik Solheim, Norwegian diplomat, former Minister of the Environment and Under-Secretary-General of the United Nations.  

Foreign Affairs piece by Dan Wang and Arthur Kroeber on “The Real China Model” and why it is a mistake to underestimate China 

Dan Wang and Arthur Kroeber wrote an insightful piece published in Foreign Affairs drawing out the ingredients of China’s transformation into the world’s foremost industrial powerhouse, including its 70-million strong industrial workforce with decades of “process-knowledge” about how to make things and how to make them better. 

“China’s industrial and technological strength is now a permanent feature of the world economy. The United States should compete with China to keep its overall technological leadership and sustain the industries needed for broad-based prosperity and national security. But American policymakers must recognize that their current playbook—export controls, tariffs, and scattershot industrial policy—is ineffective. Simply trying to slow China down will not work. Washington must instead focus on building up its own systems of industrial strength by making patient, long-term investments not just in select, key industries but in energy, information, and transportation infrastructure. If it doesn’t, the United States will face more deindustrialization and lose its technological leadership.” 

The piece builds on a provocative piece in Bloomberg featuring Dan Wang’s new book, Breakneck: China’s Quest to Engineer the Future (cover below), in which he argues that the key differences between China and the United States is that China is run by engineers whereas the US is run by lawyers. He suggests that if the US is going to outcompete China, “we need to understand it first”. That means letting go of simplistic stories peddled by Washington and Silicon Valley.  

Lessons for Australia  

Canberra has been conceptually and strategically hampered by subscribing to such stories for far too long. Our binary framing of China – economic partner or security threat –  is no longer fit for purpose in a multipolar world. It inhibits Australian policymakers from seeing and harnessing the enormous opportunities for win-win partnership to help Australia meet our urgent national priorities of decarbonisation, productivity and reindustrialisation. 

If Australia is serious about moving its economy up the value chain to secure our prosperity for present and future generations, it should be making urgent and serious efforts to understand China, learn and adapt lessons from its industrial playbook, and partner strategically with leading Chinese firms to leverage world-class technology and industrial know-how.  

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