Global Energy Disruption Tilts Markets Toward Beijing
The Iran war, which began in late February, has triggered a global energy crisis that is reshaping competitive advantages in clean technology—and China is positioned to be the primary beneficiary. As disruptions to Middle Eastern oil and gas supplies roil global markets, demand for renewable energy and battery technology is accelerating, sectors where Chinese manufacturers already command dominant market share. The shift underscores how geopolitical shocks can dramatically alter the trajectory of international competition and technology adoption, with profound implications for American industrial competitiveness and energy security.
Most of the oil and gas from the now mostly shut Strait of Hormuz was Asia-bound, and Asian nations are scrambling to conserve energy and bolster dwindling reserves. Gasoline prices in the U.S. and Europe are spiking as a temporary ceasefire teeters. While most of Asia is hit hard, China will likely benefit from the fossil fuel disruptions despite being the biggest purchaser of Iranian oil. China leads the world in battery, solar and electric vehicle exports, and its industries are forecast to face a rise in demand for renewable products.
The Competitive Landscape Shifts
Before the start of the Iran war in late February, China's lead in clean technologies was already lengthening. The U.S. under President Donald Trump scaled back on renewable energy and leaned on its vast oil and gas resources, promoting energy exports to achieve what Trump described as "energy dominance." Now Chinese industry giants like vehicle-maker BYD and battery-producer CATL are well-positioned to capitalize on growing interest in low-emissions energy products as the world confronts the fragility of fossil fuels.
Sam Reynolds with the U.S.-based Institute for Energy Economics and Financial Analysis said, "China's approach to energy sector development and geopolitics has been completely validated by the Iran conflict." Markets were witnessing a "bifurcation" before the war, Reynolds said, with the superpowers pushing very different energy futures, leaving other countries with complex choices on which approach to back.
The Iran war is driving demand for Chinese technology. Exports of items such as solar panels, batteries and electric cars hit a record of almost $22.3 billion in December, up about 47% from the year before, with much going to Southeast Asia and Europe, according to the think tank Ember. Investment in renewable power and battery storage is expected to increase in nations heavily dependent on energy imports, including European countries, according to the credit rating firm Fitch Ratings.
Market Response and Financial Gains
Investors are betting the war will boost demand for renewables. In March, CATL and BYD's Hong Kong traded shares rose roughly 24% and 11%, respectively. Over the past few years, Chinese automakers were already expanding EV development and production while growing exports faster than American or European rivals, offering cheaper models and gaining ground in regions like Southeast Asia. These trends are expected to accelerate.
Amy Myers Jaffe of New York University's Center for Global Affairs said, "The energy shock is going to help the Chinese industry globally and hurt the American car industry globally." Meanwhile, high U.S. tariffs have largely shut Chinese EVs out of the American market. Chris Liu with the research and advisory firm Omdia said rising fuel prices also may boost BYD growth in China.
Households facing higher energy costs are likely to move to clean power, said James Bowen of the Australia-based consultancy ReMap Research. Pakistan offers an early example. Its renewable rollout in 2017 led to more than 50 gigawatts of Chinese solar panels imported by December 2025. Pakistan still imports a third of its energy. About 80% of its oil flowed through the Strait of Hormuz, and Qatar had been supplying a quarter of its LNG. Nabiya Imran of Renewables First said, "the shock isn't as big as it would have been without solar." If prices remain high, solar could save Pakistan $6.3 billion in fossil fuel imports over the next year, according to think tanks Renewables First and the Centre for Research on Energy and Clean Air.
Global Demand Surge
In the United Kingdom, EV leasing demand jumped by more than a third in the first three weeks of March compared to a similar period in February before the war, according to Octopus Energy, a renewable group. Octopus also reported increases in rooftop solar sales and solar-related inquiries. In Southeast Asia, Vietnamese EV maker VinFast is offering discounts to offset fuel price shocks. Prolonged fuel spikes may act as a future catalyst for EVs, but it will take time to see the trend reflected in purchases, partly because customers are likely waiting to see how the conflict plays out, said Patrick Tan, with the energy consultancy Aurora Research.
Even Indonesia, the world's largest coal exporter, is recalibrating in ways that could make it a bigger customer for China's clean energy technology. In March, Indonesian President Prabowo Subianto announced a push into EVs, including plans to produce electric cars and expand charging infrastructure. Putra Adhiguna of the Jakarta-based think tank Energy Shift Institute said, "The dream of electrified transportation is gaining renewed attention." Chinese firms play a major role in Indonesia's clean energy supply chain. They signed more than $54 billion dollars' worth of deals with the state utility in 2023 and added a $10 billion pledge during Prabowo's visit to Beijing in 2024.
Sam Reynolds said, "There will be direct financial benefits to Chinese companies."
Why This Matters:
The Iran war has accelerated a structural shift in global energy markets that favors Chinese manufacturers and disadvantages American industrial interests. While the Trump administration pursued energy dominance through fossil fuel exports and scaled back renewable energy commitments, geopolitical disruption has validated China's long-term investment in clean-tech manufacturing and export networks. The resulting surge in demand for Chinese solar panels, batteries, and electric vehicles—combined with record export volumes and rising equity valuations—represents a significant transfer of technological and economic advantage away from American competitors. For policymakers concerned with U.S. competitiveness and energy security, the crisis demonstrates how policy choices made before disruption occurs can determine which nation captures the gains when markets shift. The convergence of higher fuel costs, supply chain vulnerability, and Chinese manufacturing dominance is creating a self-reinforcing cycle that will likely persist unless American policy and industry can respond with comparable scale and cost competitiveness.