China’s prolonged economic slowdown is reshaping the country’s energy consumption patterns, with major implications for both domestic industries and global commodity markets.

As growth decelerates, traditional demand drivers such as construction and heavy industry are weakening, prompting a shift not only in how much energy China consumes, but also in what types of energy it prioritizes.

These structural changes are being felt throughout global energy markets, from coal and oil to renewables and critical minerals.

Slowing Growth, Softer Energy Demand

China’s post-pandemic recovery has underperformed, hampered by a crisis in the real estate sector, weak consumer confidence, rising youth unemployment, and cautious government spending.

The construction sector — once a cornerstone of energy demand — has seen substantial contraction.

With steel production, cement output, and heavy manufacturing all declining, so too has demand for energy-intensive commodities like coal, diesel, and natural gas.

In 2024, China’s overall energy demand growth fell below 2%, a marked decline from the high single-digit growth rates typical of the 2010s.

Coal consumption, which still accounts for around 55% of China’s energy mix, is levelling off.

Oil demand, while still rising modestly due to transport and petrochemical needs, is being offset by efficiency improvements and the rapid adoption of electric vehicles.

A Strategic Shift in Energy Sources

While overall energy demand is softening, the type of energy China consumes is undergoing a transformation.

The government has reaffirmed its commitment to peak carbon emissions before 2030 and reach carbon neutrality by 2060.

These goals, combined with economic pressures, are accelerating the pivot away from fossil fuels toward renewables and electrification.

• Renewables boom: China added record-breaking solar and wind capacity in 2023 and 2024, and this trend is set to continue. Falling equipment costs and state support have made solar power especially attractive as a long-term investment.
• Electric vehicles (EVs): China leads the world in EV production and adoption. This shift reduces oil demand from road transport and increases the importance of electricity — ideally from clean sources.
• Nuclear and hydro: These low-carbon baseload energy sources are also being expanded, especially in inland provinces, to improve energy security and reduce dependence on imported fuel.

Domestic and Global Commodity Implications

The shift in China’s energy landscape is altering global commodity demand in significant ways:

• Coal and oil exporters (like Indonesia, Australia, Russia, and Middle Eastern countries) are seeing reduced long-term demand from China, their largest customer.
• Natural gas trade is becoming more volatile. While liquefied natural gas (LNG) imports grew during periods of industrial recovery, high prices and weak demand have led to fluctuations.
• Metals for clean energy — such as lithium, copper, nickel, and rare earths — are increasingly in demand as China expands its renewables, EV, and battery sectors. This supports export opportunities for countries like Chile, Indonesia, and the Democratic Republic of the Congo.

Domestically, state-owned energy companies are being pushed to modernize grids, cut emissions, and increase flexibility, which may reshape employment and investment within China’s vast commodity sectors.

Outlook: A Cleaner, Slower, More Strategic Future

China’s energy consumption is unlikely to return to the breakneck pace of the 2000s and early 2010s.

Instead, the country is entering a phase of slower, more sustainable energy demand, driven by decarbonization goals, economic restructuring, and geopolitical caution.

This transformation poses risks for traditional energy exporters but creates new opportunities in the green economy.

As China’s economic model evolves, so too will the global energy trade — with profound consequences for commodity producers, investors, and policymakers worldwide.