While the world assumes that China’s energy transition is based exclusively on solar panels and electric vehicles — and, in part, it is, consolidating as the first great ‘electrostate’—, reality hides a much darker side. Faced with the outbreak of the Third Gulf War, Beijing has not even flinched. Beyond its immense strategic oil reserves, the secret of its resistance lies in an even more daring maneuver: the resurrection of German technology from World War II.
An old German technology. Faced with the instability of oil imports, China has perfected the use of coal to produce petrochemical products. This synthesis technology (historically known as the process of fischer–Tropsch) was originally developed by Germany to sustain its military economy during World War II. Although it is widely known in the chemical industry, its main defect has always been the enormous pollution it generated.
China has improved it. Far from settling for an outdated process, Chinese researchers have radically improved it. According to the state agency Xinhuaa team from Peking University has achieved a historic breakthrough by adding a minimal amount of methyl bromide (five parts per million) to the catalytic process. This surgically “turns off” the pathway that forms carbon dioxide as a byproduct, reducing these emissions from 30% to less than 1% and opening the door to near-green manufacturing to convert coal-derived synthesis gas (syngas) into olefins, the building blocks of plastics.
At an industrial level, expansion is already a fact. As detailed South China Morning Postin Turpan prefecture (Xinjiang), construction has just begun on the world’s largest coal-to-ethylene glycol (a toxic compound used for plastics and antifreeze) project, with an astonishing capacity of 2.4 million tons per year. Even, as the magazine highlighted ACS Sustainable Chemistry & Engineeringresearch is being carried out on how to integrate this process (called PFTO) to chemically recycle tons of plastic waste, converting it into syngas and then back into light olefins.
Did you see it coming? It is not the first time that China decides to take sides and prevent rather than cure. The Asian giant has decided to completely decouple its industry from maritime vulnerabilities and Western influence. “This is not China’s war, but Beijing began preparing for it years ago,” points out The New York Times. Everything accelerated during Donald Trump’s first term, prompting President Xi Jinping to demand complete “self-sufficiency” that would insulate China from any disruption to foreign supply chains.
Time has proven them right. The war in Iran has brutally increased the price of crude oil, suffocating international petrochemical competitors that depend on black gold. In contrast, local Chinese coal has only gotten cheaper. According to Reutersthis has been a financial triumph: shares of companies such as Ningxia Baofeng Energy, which produces millions of tons of chemicals from coal, have risen 30% since the start of the conflict, while traditional Asian refiners such as Rongsheng Petrochemical have lost up to 27% of their stock market value.
Furthermore, the Chinese media analyzed by Carbon Brief They insist on a unanimous nationalist message: in the face of a real emergency, coal is the only resource that the nation truly controls, acting as the great “ballast” guarantor of its national security.
A change to other sectors. The change is undeniable. As revealed Bloombergthe country’s main coal miner, China Shenhua Energy, has cut its overall budget by 16%, but has almost doubled its investment in coal-to-chemical conversion, from 2.5 billion to 4.1 billion yuan by 2026. But at a devouring pace, as The New York Times provides information that measures the phenomenon: in 2020, China used 155 million tons of coal to manufacture chemicals; by 2024, the figure jumped to 276 million, and in 2025 it grew another 15%, single-handedly exceeding the total annual coal consumption of the entire United States.
The research center CREATE confirms this trend in its reportconfirming that the use of coal in the chemical industry grew by 20% year-on-year only in the first half of 2025. Added to this is that, as the American media explains80% of Chinese nitrogen fertilizer (a third of the world’s supply) is already made with coal rather than oil or gas, allowing Beijing to keep its product at less than half the global market price.
Behind it there is a very high cost. All this bold industrial maneuver has a severe climate cost that is already setting off international alarms. China’s draft 15th Five-Year Plan (2026-2030) has set extremely cautious climate goals. As the experts explain CREATE and collect Financial Timesthe set goal of reducing carbon intensity by only 17% is “disappointing” and leaves room for the country’s emissions to continue growing between 3% and 6% in real terms over the next five years.
This new government plan de facto reverses the international promise to “phase down” coal consumption, replacing it with a consumption “plateau” and explicitly protecting the large-scale expansion of the coal-based petrochemical industry. Only chemical projects already planned to be built between now and 2029 could increase China’s annual carbon dioxide emissions by an additional 2%.
The forecasts are resounding. According to Bloomberg, By 2030, China’s chemical roadmap will massively stop using oil as a primary fuel (thanks to the adoption of its electric vehicles) and will take advantage of its modernized facilities to seek 85% self-sufficiency in all advanced materials and chemicals, displacing traditional giants.
A feared crisis of overcapacity. The European ideas laboratory MERICS warns of collateral consequences: The Chinese domestic economy, with consumer confidence stagnant since the pandemic, has no way to absorb all this gigantic new production of materials and plastics. As a direct result, Chinese factories are forced to export their immense surpluses to the rest of the world at fire sale prices.
This aggressive price war propelled China’s trade surplus to a stratospheric record of $1.2 trillion in 2025. According to the complaint MERICSthese massive exports are cannibalizing the industrial base of other nations; In the European Union alone, up to 500 manufacturing jobs are being lost daily due to the total inability to compete against this “dumping” of prices. In the end, Chinese firms can sustain huge losses because they operate thanks to credit shields and subsidies from local and central authorities.
An ‘electrostate’, but… China has managed to consolidate one of the most fascinating and contradictory strategic dualities of the modern era. On the one hand, it maintains its external image as a leader in the global green transition, reaching unprecedented records in the installation of renewable energy and flooding the planet with millions of electric vehicles. On the other hand, it has reinforced its unbreakable manufacturing hegemony by resurrecting and perfecting the darkest fossil technology in history: squeezing chemicals, fabrics and plastics directly from coal.
As analysts explain, the outbreak of the Third Gulf War and the growing suffocation of the trade and tariff war with Washington have only proven the Chinese president’s geostrategic paranoia right. The rest of the world may suffer and be paralyzed by the end of oil, but the great global factory has already found in the land of its own mines the master formula to survive and continue dominating the future.
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