The escalating conflict involving the United States, Israel and Iran has transcended the boundaries of a localized geopolitical skirmish: The physical destruction of infrastructure has triggered a deep crisis in the global energy supply chain, leading to a sustained and painful surge in energy prices. This, in turn, has catalyzed a broader industrial competitiveness crisis, as manufacturing costs and logistics expenses skyrocket across nearly every sector. Furthermore, the disruption in the trade of critical derivatives — such as petrochemicals, helium and fertilizers — is now actively destabilizing the supply chains of essential commodities worldwide. As countries scramble to predict impacts and devise countermeasures, China’s two-pronged strategic response offers significant insights into modern economic resilience and industrial dominance.
China’s primary response focuses on achieving energy independence to mitigate the inherent volatility of the global supply chain. While China remains a major importer of crude oil, its overall energy self-sufficiency rate now exceeds 80 percent. This high degree of self-reliance is not a fortuitous accident but the culmination of a deliberate, decade-long policy initiative. Ten years ago, Beijing established rigorous long-term goals to mobilize domestic resources, integrating coal, nuclear power and renewable energy into a robust national grid, while aggressively pursuing an energy transition in the transportation sector via electric vehicles (EVs).
In the realm of renewables, China’s scale is unprecedented. By the end of 2025, the country is projected to install 440GW of new renewable capacity, accounting for approximately two-thirds of all new global installations. Renewables now generate nearly 40 percent of China’s total electricity. Because the vast majority of its power generation relies on domestic sources, the Chinese economy remains partially insulated from the global electricity price hikes triggered by the Middle East conflict. Additionally, with one out of every two new cars sold in China now being an EV, the nation’s dependence on imported crude oil is poised for a structural decline. By diversifying its energy mix, electrifying transport and localizing production, China has built a formidable level of resilience against geopolitical tremors.
China’s second response moves beyond mere defense. Instead of simply suppressing energy prices to provide cheap power to its domestic manufacturers, China is leveraging the crisis to sharpen its export competitiveness in energy transition technologies. As the shock waves of high energy prices and supply chain disruptions hit rival nations, China is positioned to capitalize on its massive domestic track record to dominate global markets. The Middle East crisis has underscored a global need for energy independence, which has, in turn, accelerated the demand for EVs, energy storage systems (ESS) and renewable energy infrastructure.
The impact on the automotive sector is particularly telling. The "oil shock" resulting from the conflict has driven gasoline prices to levels that alter consumer behavior fundamentally. For instance, the average gasoline price in the United States recently surpassed the $4 per gallon threshold for the first time since the Russia-Ukraine war. This represents a psychological tipping point for consumers, stimulating an urgent desire for cost savings and being able to accelerate the pivot from internal combustion engine vehicles to battery-powered EVs.
Simultaneously, the ESS market is emerging as a critical component of national power stability. According to Bloomberg NEF (BNEF), the global ESS installation market is expected to grow by 30 percent this year, driven by falling costs and rising demand. BNEF compares this trend to the solar power boom from five years ago, where increased supply led to a virtuous cycle of lower prices and wider adoption. Since China already controlled the lion’s share of these technologies prior to the Middle East crisis, the surge in global demand only serves to solidify its market hegemony. Data from the energy think tank Ember confirms this trend: In March, immediately after hostilities broke out in the Middle East, China’s exports of solar panels, EVs and batteries reached $21.9 billion, a staggering 70 percent increase compared to the same period last year.
China’s strategic maneuvers provide a sobering template for countries like Korea. Korea remains highly vulnerable, importing nearly all its oil and liquefied natural gas, which together account for 55 percent of its total energy consumption. However, this vulnerability also implies a massive latent market for energy transition. Korea possesses a sophisticated industrial ecosystem, ranging from globally competitive car portfolios and high-density battery to nuclear, renewable and power equipment sectors.
In the energy and electricity markets, the primary currencies are price and trust. Energy infrastructure requires long-term reliability, which plays to Korea’s strengths in quality, speed and reliability. Yet, as the Chinese example demonstrates, technical prowess is insufficient without consistent, long-term government support.
To compete globally, a nation must first nurture its energy transition technologies within its own borders. It is nearly impossible to export a technology that has not been battle-tested or fostered in the domestic market. Therefore, it is imperative for governments to implement comprehensive, long-term industrial policies that link domestic energy self-sufficiency goals with export-driven growth strategies. Considering that geopolitical risks like the current Middle East crisis are likely to recur, the integration of energy security and industrial policy is no longer a luxury — it is a prerequisite for national survival in an era of permanent volatility.
Success will require a holistic approach that effectively bridges the gap between domestic energy security and international market leadership. Through consistent and unwavering support, nations can turn these global energy challenges into sustainable and profitable economic opportunities for future generations.
Source: Korea Times News
