China is set to increase its dominance in renewable energy markets in developing Asian countries as it moves away from financing coal-fired power projects abroad, according to a report by energy consultancy Wood Mackenzie.
- Chinese companies have made significant investments in energy projects across developing Asian countries, with a focus on coal and gas projects, but a recent trend shows the shelving and cancellation of many planned coal projects in Southeast Asia.
- China’s decision to stop funding new coal projects overseas and move away from exporting coal technology has led to a shift towards renewable power markets, with Chinese companies becoming increasingly influential in providing green-power technology and equipment to developing countries.
- Developing countries in the Belt and Road Initiative heavily rely on affordable Chinese equipment and technology for renewable energy projects, as other countries cannot provide the same low-cost options, resulting in better cooperation between these markets and Chinese technology providers.
Chinese companies have made significant progress in the energy sector, installing 128 gigawatts of power abroad, with three-quarters of that in Asia. However, in the past three years, many coal projects in Southeast Asia that were originally planned by Chinese companies have been canceled or shelved. China announced plans to stop funding new coal projects overseas in 2021.
As a result, China is expected to become more influential in renewable power markets, with the export of green-power technology and equipment booming. Chinese companies are improving their foreign investment strategies and forming partnerships with local firms in developing countries. These countries can afford renewables due to the low costs of Chinese equipment and technology, which are not available from other countries.
The influence of the Belt and Road Initiative (BRI) on power markets is projected to expand, as there are already 80 GW of additional capacity either under construction or in the planning stage. In order to enhance its overall approach, China is expected to shift its focus towards direct investment, moving away from the previous emphasis on bilateral lending that characterized the early years of the BRI. As a responsible lender, China is mindful of the risks associated with debt defaults, particularly when borrowers struggle to repay loans with higher interest rates.
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Li Zhong is a tech journalist who covers the latest developments in artificial intelligence, robotics, and biotechnology. Li is passionate about exploring the ethical and social implications of emerging technologies.