China Briefing 17 April 2025: US-China tariff war; AI and data centres; Coal construction ‘till 2027’
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§ Key developments
US-China tariff war
ESCALATED RATES: The US-China trade war deepened, with, as of today, US tariffs on China standing at 145% (with some products facing up to 245% tariffs) and China responding with 125% tariffs. Huang Runqiu, head of the Ministry of Ecology and Environment, “emphasised that unilateral trade measures such as…imposing tariffs on new-energy products have undermined global efforts to address climate change”, reported China Environment News.
LIMITED IMPACT: Currently, most Chinese low-carbon products are not significantly impacted. Financial outlet Yicai said high tariffs from the Biden administration had ensured Chinese electric vehicle (EV) manufacturers “have virtually no presence in the US market”. The wind industry, facing a similar situation, has worked on “minimising” the negative impacts since 2018, reported industry outlet BJX News. Carbon Brief confirmed that solar products were not included in a subsequent US tariffs exemption. Chinese solar manufacturers told Jiemian that they were “psychologically prepared” for the tariffs and were not keen to expand business in the US. Semafor said Chinese clean-energy technology producers may “emerge stronger as a result of increased isolation from the US market”, as a “narrowing export market may actually force China’s clean-tech companies to do some long-overdue housecleaning” which could improve their business models and China’s climate action. Nevertheless, the Chinese new-energy storage sector faces “major challenges” amid the trade war, as the high global demand makes overseas expansion a “must” for producers, said Chinese outlet Outlook Weekly.
CRITICAL MINERALS: Following Beijing’s announcement on export restrictions on critical minerals, shipments of minerals were also “halted” at ports, said the New York Times. The Chinese government is drafting a “new regulatory system”, which “could permanently prevent” those minerals from reaching “certain companies”, added the newspaper. Yicai reported that China recently registered newly discovered “deposits” of “high-purity quartz” – a material mainly produced in the US and Norway for making solar silicon wafers – on its list of domestically available minerals, in a development which could “cut the country’s dependence on imports of the key material”. Meanwhile, US president Donald Trump ordered a “probe into potential new tariffs on all US critical minerals imports”, most of which are from China, said Reuters.
Changing attitude in Europe
WORRIED EU: The US tariffs has the EU “increasingly panicked” over a potential flood of Chinese products originally destined for the US market, said the Hong Kong-based South China Morning Post (SCMP). EU leaders will likely “travel to Beijing” in July to “re-engage” with Chinese president Xi Jinping, according to another SCMP report. It added that the EU and China have agreed to “immediately start negotiations” on setting minimum prices for Chinese-made EVs and to “monitor the trade diversion effects stemming from” the US tariffs. Reuters said Europe is likely to “produce only a small portion of rare earths it needs for EVs and wind turbines by 2030, mainly due to cheap competition” from China.
HAWKISH UK: The UK government has been “urged to phase out Chinese ownership of UK oil, nuclear power and renewable energy infrastructure after claims of attempted ‘sabotage’ at British Steel”, said the i newspaper. The Times said “sources” told it that plans for China’s state-owned nuclear company to operate UK nuclear site Bradwell B will likely be abandoned. Instead, the UK will “take a more skeptical approach to future Chinese investment in sensitive sectors…business secretary Jonathan Reynolds said”, reported Bloomberg, adding that “he also said that a lot of UK-Chinese trade is in non-contentious areas such as…the automotive industry.” The Guardian reported China denied Jingye, the owner of British Steel, “an arm of the Chinese government”, saying that “the UK should ‘avoid politicising trade cooperation or linking it to security issues’.” The Times also ran a frontpage story with the headline: “[UK climate secretary Ed] Miliband signed up to close ties with China on energy.”
Coal build-up up to 2027
CONSTRUCTIONS CONTINUE: China issued a new policy to allow coal-fired power plants to be “built through [to] at least 2027” in places that “lack existing capacity, or the ability to balance electricity supply from wind and solar projects”, reported Bloomberg. The policy “raise[s] questions about China’s commitment to phasing down coal use during the 2026-2030 period”, said Reuters. The China National Coal Association said that “coal consumption is expected to peak around 2028”, according to state-run newspaper China Daily. It added that this deadline “does not automatically signify an immediate decline in coal consumption afterward”, but, instead, a “transitional phase”. China’s thermal power generation – mainly coal – fell 4.7% year-on-year in the first quarter of this year, according to official data, reported Reuters. However, government data shows that the raw coal production grew 8.1% year-on-year and coking coal grew 2.4% in the first quarter.
‘LOW-CARBON UPGRADING’: The new coal policy reinforces calls for the power system to “upgrade” the “next generation” of coal plants, with a focus on “clean-carbon reduction”, reported BJX News, although it added that the plan “does not mandate all [coal-fired] units to implement low-carbon transformation”. Bloomberg explained that, under the plan, new coal plants must “burn coal more efficiently and their carbon intensity should fall 10% to 20% from [current] levels”.
Other policy round-up
GRID MANAGEMENT: China issued a guideline on “accelerating the development of virtual power plants” – a management system that helps regulate the flexibility of the electricity grid – to “ensure the security of electricity supply” and “promote the uptake” of renewable power, said BJX News. According to International Energy Net, the capacity of virtual power plants nationwide should reach more than 50 gigawatts (GW) by 2030 under the plan.
ETS EXPANSION: A new government notice on China’s national emissions trading system (ETS) set out key dates for the opening of accounts, data monitoring and verification, plus compliance obligations, reported BJX News. Yan Qin, carbon analyst at consultancy firm ClearBlue Markets, wrote on Twitter that, as well as covering existing power-sector participants, the document also covers the newly added aluminium, cement and steel industries, “confirm[ing] the recent work plan to expand [the] national ETS”. Meanwhile, “mismatched supply and demand” continues to affect the pricing of Green Electricity Certificates (GECs), according to state-managed newspaper China Reform Daily.
HEAT-PUMP EFFICIENCY: A new policy by the National Development and Reform Commission (NDRC) aims to promote heat-pump adoption by setting a target of “increasing the energy-efficiency level of key products by more than 20%” by 2030, reported Dialogue Earth.
§ 47.1%
The year-on-year sales growth of “new-energy vehicles” in China across the first quarter of this year, as reported by state news agency Xinhua.
§ Spotlight
The rising electricity demand in China’s data centres
The rise of artificial intelligence (AI) and other technologies has driven the “surging” growth of data centres in China, with associated increases in energy demand and emissions.
There were 449 data centres in China at the end of 2023, the most in the Asia-Pacific region. While estimates differ, some reports suggest data centre electricity demand could increase from around 100–200 terawatt-hours (TWh) in 2025 to as much as 600TWh by 2030, with associated emissions of 200m tonnes of carbon dioxide equivalent (MtCO2e).
In this issue, Carbon Brief explains China’s efforts to build “green data centres” and the hurdles faced in meeting their growing electricity demands with low-carbon resources.
In common with other countries, China expects the electricity consumption of its data centres to grow rapidly over the next few years, partly as a result of the rise of AI. However, the scale of current demand – and any future increase – is uncertain.
A government report said electricity demand from China’s data centres was 77TWh in 2022, rising to 150-200TWh in 2025 and 400TWh by 2030.
In early 2025, Bloomberg reported even higher estimates from Goldman Sachs, saying that data centre electricity demand in China was “expected to more than triple to almost 600TWh by the end of the decade”.
The IEA said data centres accounted for just 3% of new demand since 2022 – and perhaps 6% out to 2027.
Still, the amount of CO2 associated with data centres could reach 1% of the country’s emissions by the end of 2025, according to a report by the Development Research Centre of the State Council.
Building ‘green data centres’
In 2021, China announced a three-year action plan to construct “new data centres” that are “efficient, clean, optimised and circular”.
The three-year action plan included measures to enhance data centres’ power usage effectiveness (PUE), the most widely used metric for gauging their energy efficiency. By the end of the action plan, the average PUE had been reduced to 1.48, down from 1.54 in the previous year. In other words, data centres in the country are, on average, becoming more efficient.
The new goal, announced in 2024, was to cut the PUE of large data centres down to 1.25 by 2025. In comparison, Germany, which hosts the highest number of data centres in Europe, requires its existing data centres to reach an average PUE level of 1.5 from 2027.
Meanwhile, in 2022 China launched a long-awaited national project named “east data west computing” (东数西算), which aimed at processing data produced in the more populous eastern provinces in the west of China.
This encourages new data centres to be built in the west, where large solar and windfarms are based, in order to assist the busy metropolis centres in the east.
Since 2020, the Chinese government has tracked a range of information on data centres’ energy transitions. The latest update from 2024 said more than 50 data centres nationwide have met a standard for “green” energy requirement.
Facing renewable challenges
By 2030, China’s data centres are projected to consume anything from 400TWh to 600TWh of electricity, with associated emissions of perhaps 200MtCO2e.
Currently, renewable resources in China are primarily distributed in the northern part of the country, while demand is still concentrated in the south-eastern coastal areas, where coal is still the dominant power source. This means that data centres often rely on long-distance transmission to use renewable power, even with efforts from the “east data west computing” programme.
“Green electricity has broad application prospects in the data centre industry, but it still faces many challenges,” said Lü Xin, project lead at Beijing-based thinktank Greenpeace East Asia.
“It’s still very difficult to complete interprovincial trading of green power,” she told Carbon Brief, pointing to the variable output of renewables as well as the high operational cost of long-distance transmission lines.
Another challenge is data centre water demand for cooling, which could exacerbate water stress in the country’s already arid western and northern regions.
Governments in Beijing, Ningxia and Gansu are mandating higher water use efficiency for data centres, as well as phasing out the ones with low efficiency of power and water use.
The IEA estimated that both renewables and nuclear power will “together make up 60% of China’s data centre electricity supply” by 2035.
This Spotlight was written by freelance climate journalist Yuan Ye. The full version is available on Carbon Brief’s website.
§ Watch, read, listen
LIU SPEECH: The Shanghai-based Paper published Chinese climate envoy Liu Zhenmin’s speech at the opening ceremony of an environmental conference in China. Liu said: “Climate change is a challenge, but also an opportunity [for the ‘environmental protection industry’].”
ELECTRICITY PRICING: The Communist party-affiliated People’s Daily interviewed leading experts about the “negative price” of electricity in China, which, according to the interview, relates to the “oversupply of ‘new energy’”.
CLIMATE JUSTICE: Deaf British and Chinese artists presented art works in Suzhou to raise the “sense” of “responsibility in climate change“, reported Sixth Tone.
FARMING IMPACTED: A new Greenpeace East Asia report analysed climate change’s impact on farming communities in China.
§ New science
Nature Food
New research found that around two-thirds of the greenhouse gas (GHG) “footprint” of salt marshes converted into aquaculture farms in China stemmed from the destruction of the original habitat’s capacity to absorb GHG emissions. This conversion generated 20.3 tonnes of CO2-equivalent emissions per hectare per year in China’s coastal regions, the study authors calculated. Feed, fertiliser and energy emissions comprised around 20% of the footprint, while direct emissions from the pond made up just 10%.
Springer Nature
A study investigating “if consuming spicy food can help improve people’s adaptability to [a] hot environment” found that eating hotpot – a popular dish in the study area – can “improve thermal adaptation, thereby underscoring the significant influence of dietary habits on thermal adaptability” based on more than 1200 surveys for people aged between 18-30 years old.
China Briefing is compiled by Wanyuan Song and Anika Patel. It is edited by Wanyuan Song and Dr Simon Evans. Please send tips and feedback to [email protected]