China’s Energy Independence in Preparation for Oil War: Coal Technology Instead of Oil ‘Succeeds’​

China’s Energy Independence in Preparation for Oil War: Coal Technology Instead of Oil ‘Succeeds’

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The New York Times reported that China has long prepared for the upcoming oil war by strengthening its petrochemical supply chains and replacing oil with coal through an energy independence policy, and that this strategy has been strategically successful.

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China used 155 million tons of standard coal equivalent for chemical production in 2020, but this figure surged to 276 million tons in 2024, and increased by another 15% in 2025, surpassing the total U.S. coal consumption of 230 million tons.

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The New York Times reported on the 6th, “Chinese officials stated that coal use was a stopgap measure to increase reliance on renewable energy and that they had invested in technology to use electricity in petrochemical manufacturing; however, as prices skyrocket due to actual oil and gas shortages, using coal instead of oil is proving effective.”

The report added, “Regarding nitrogen fertilizer, China produces 80% of its production using coal instead of oil, accounting for one-third of the global supply. Thanks to this, since the start of the Middle East war, the international price of urea, a key chemical in fertilizers, has surged by more than 40%, while China’s domestic equivalent has remained at less than half the global price.”

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The NYT stated, “The energy shock caused by the Middle East war surprised China, the world’s largest oil buyer, but Beijing has been preparing for this crisis for years.” It further noted, “China is stockpiling increasingly larger amounts of oil and has utilized technology to reduce dependence on foreign raw materials for large-scale factory production, as it has so aggressively pursued renewable energy sources such as solar, wind, and hydroelectric power that demand for refined oil, diesel, and gasoline has decreased.”

Under the title "China’s Energy Resilience Bears Fruit Amidst Crisis," a joint article by two NYT Hong Kong correspondents reported that “China’s ruling Communist Party has long regarded domestic industry as the foundation of its national security strategy.”

The article noted that “since President Trump’s first term, that approach has been sharpened and expanded, and China has further intensified its policies to strengthen local industries, thereby consequently reinforcing its global dominance over resources and supply chains.”

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Tang Hei-wai, Director of the Asia Global Institute at the University of Hong Kong, told the NYT, “There has been more guidance from the central government to develop strategic sectors that China believes it must strengthen to prevent control by Western powers.”

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China’s core energy strategy has undergone a rapid transformation over the past decade, shifting from the world’s largest market for internal combustion engine vehicles to the current largest market for electric vehicles. It has also transformed its structure from one of being the largest buyer of foreign petrochemicals—using plastics, metals, and rubber parts as key raw materials for domestic factory production—to one that currently produces specific chemicals, such as methanol and synthetic ammonia, using mostly domestic coal.

The New York Times reported that “the Chinese government’s plans and investments were decisive in this development,” noting that “with the Strait of Hormuz, the passage for almost all oil flowing into Asia, largely blocked, China has proven to be more resilient than most countries in the world.”

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China has significantly reduced its dependence on oil, now able to power many cars and trains, and has also honed its ability to utilize coal, rather than oil, for its own petrochemical production.

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The NYT continued, “The technology for chemical production using coal was developed by Germany and used to sustain the economy during World War II; now, China provides an alternative to oil to produce the raw materials needed for factories,” adding that “Vietnam and the Philippines, facing severe shortages of oil and other energy, requested assistance from China last month.”

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In response, a spokesperson for the Chinese Ministry of Foreign Affairs stated, “China is ready to strengthen cooperation with Southeast Asian countries and jointly resolve energy security issues.”

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The New York Times Regarding China’s strategy to prepare for a long-term oil war, the New York Times reported, “Beijing has long been obsessed with resolving its dependence on foreign energy and resources.” The article noted, “At the turn of the century, Chinese officials were concerned about the Strait of Malacca, which separates Indonesia, Malaysia, and Singapore, another narrow passage for oil to reach China. As early as 2004, China established emergency oil reserves to address this concern and has rapidly expanded its stockpiles in recent months.”

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Since the late 1990s, as China emerged as a manufacturing powerhouse in the global manufacturing sector, foreign chemical companies such as DuPont, Shell, and BASF were compelled to establish factories in China to supply the chemicals needed for their plants. This created a structure in which Chinese companies have come to dominate a significant portion of the global chemical supply in recent years, and currently, three-quarters of the world’s polyester and nylon is produced in China.

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China remains the world’s largest buyer of oil and gas, while importing three-quarters of its oil.

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The New York Times reported, “According to the Chinese government, crude oil imports in 2025 increased by 4.4% year-over-year, while consumption rose by 3.6%.” The article continued, “On the other hand, following billions of dollars in direct subsidies to electric vehicle manufacturers and hundreds of billions of dollars in investments in renewable energy, China’s efforts have borne fruit. Now, with demand for refined oil, gasoline, and diesel declining for two consecutive years, experts predict that China’s oil and gas consumption has peaked.”

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Jörg Buttke, who served as the head of BASF’s China office for 27 years, told the NYT, “Oil consumption is increasing in China’s petrochemical industry due to supply chain strengthening strategies.” He added, “China’s industrial structure has grown rapidly based on massive government investment and the provision of low-cost loans, encouraging Chinese universities to focus on chemical engineering.”

He continued by stating, “These efforts accelerated under Xi Jinping and during President Trump’s first term, and inwardly, everything Trump does further strengthens Beijing’s self-reliance,” attributing the success of China’s energy independence strategy to the “backlash of the Trump administration’s confrontational approach to China.”

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He is currently a partner at the consulting firm DGA-Albright Stonebridge Group.

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During his first term as a hardline conservative, President Trump confronted China over economic and business issues, which triggered trade wars and a technology showdown.

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The New York Times cited the Chinese government’s development of “coal technology” to reduce its dependence on oil as a prime example.

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In response to President Trump’s warnings regarding his confrontational approach to China, Chinese leaders began sending signals; in 2019, then-Premier Li Keqiang urged China to use coal for electricity and chemical production to reduce its reliance on offshore oil.

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This marked a departure from the Chinese government’s energy policy, which had focused on eliminating coal. The New York Times reported, “In late 2020, as the pandemic raged, causing significant disruption to shipping and global trade and tensions with the United States reached their peak, China released an official roadmap known to be the work of President Xi Jinping.” The article continued, “They were instructed to develop technology faster than their overseas competitors to achieve self-reliance and protect China from supply chain disruptions.”

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Surprisingly, this ‘instruction’ demanded that “Chinese industries must step back” and switch to “coal instead of oil” through an article published in *Chushi*, the Communist Party’s leading theoretical journal. Lauri Myllyvirta, co-founder of the independent research institute Center for Research on Energy and Clean Air and a tracker of the increasing use of coal in China's petrochemical production, told the NYT, "The first Trump administration was a very clear break that changed China's geopolitical calculations and rekindled old fears," adding, "Xi Jinping himself has spoken about supply chain resilience, and all of this has enabled the acceleration of the petrochemical boom."

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Signals from the highest echelons of the Chinese Communist Party indicate that the strategy adopted in policies to expand industry is to "build factories that use coal instead of petrochemicals."

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Johanna Krebs, an analyst at the Mercator Institute for China, a German think tank, told the NYT, "China held a dominant position even before U.S. and Israeli forces began fighting Iran, threatening the resources that power one of the world's most important regions."

She added, "The Chinese people will likely view this as encouragement for a path toward self-sufficiency."