China’s growth engine is shifting. “Old-economy” drivers like heavy industry and real estate are giving way to advanced manufacturing, clean energy supply chains, and modern services. That structural shift from the old economy to the new is rewriting the country’s energy mix.
As a result, oil demand in China appears to have peaked in 2023, and coal is increasingly seen as a chemical feedstock, not a fuel. At the same time, electricity demand is growing rapidly — not just from electrification of transport and industry, but from a surge in AI and data centre infrastructure. These trends are only accelerating, with increasing demand leading to more ambitious new-energy targets. It is a dramatic example of how industry trends and economic growth are reshaping global energy systems.
This brief was developed in partnership with Institut de l’énergie Trottier (IET) for the Global Energy Outlook Forum, a gathering of international energy leaders diving into the most pressing issues facing Canada in the global energy transition.
Key Insights
- China is moving from an economy built on resource extraction and heavy industry to one built on services, innovation, and advanced manufacturing — with electricity and natural gas displacing coal and oil.
- Wind and solar keep expanding as manufacturing scale drives down cost and supportive policy mechanisms take hold.
- Coal’s future lies in chemical feedstock, not fuel. Its role as a combustion source is shrinking.
- Oil demand in China appears to have peaked in 2023, driven by electrification of passenger vehicles and a fast-growing fleet of electric and Liquified Natural Gas (LNG) heavy trucks.
- AI and high-tech manufacturing are now the primary drivers of grid expansion, with high-tech electricity demand growing nearly twice as fast as overall industrial consumption.
- Natural gas is entering a lower-growth, more selective phase: steady in homes and transport, rising as backup power for renewables, but losing ground to coal and biomass in industry.
