The Energy Behind China’s Strong Start to the First Quarter

On April 16, the National Bureau of Statistics released first-quarter economic performance data, showing that China’s GDP grew by 5.0% year on year, accelerating by 0.5 percentage points from the fourth quarter of the previous year, indicating a strong start and a promising beginning.

In the first quarter, production of raw coal, crude oil, natural gas, and electricity all reached record highs for the same period on record, while the share of non-fossil energy consumption continued to rise. Against the backdrop of ongoing geopolitical tensions and volatile global energy markets, energy—acting as a stabilizing anchor for the national economy—has reinforced the foundation for steady economic improvement through robust supply resilience and structural optimization.

Hu Hanzhou, Director of the Energy Statistics Department of the National Bureau of Statistics, stated in his analysis that the energy sector has balanced high-quality development with a high level of safety, resulting in steady growth in energy production, continuous improvement in the energy reserve system, steadily enhanced capabilities for new-energy substitution and mutual support among power grids, and increasingly robust energy security resilience.

The composure amid “storms” stems from the stable output of upstream production, the two-way flow of energy products in international trade, and the synchronized resonance between industrial production and energy consumption.

Energy Stability Underpins Operational Progress

According to data from the National Bureau of Statistics, in the first quarter, raw coal output from industries above designated size reached 1.2 billion tonnes, up 0.1% year on year; crude oil output totaled 54.8 million tonnes, up 1.3%; and natural gas output amounted to 68.07 billion cubic meters, up 3.0%. Output of all three major traditional energy sources hit record highs for the same period, providing a stable supply of essential inputs for industrial production and residential consumption.

In contrast to the stable domestic supply, ongoing geopolitical tensions have driven a rapid rise in crude oil prices, placing sustained pressure on the international energy market. Against this backdrop, the resilience and self-reliance of China’s energy industry chain have become even more pronounced. “Residential living and business operations have remained unaffected, with ample and reliably secured energy supplies for both daily life and production—thanks to our forward-looking, long-term efforts to develop the new-energy sector and build a diversified energy-supply system, which has significantly enhanced the autonomy and stability of China’s economy,” said Mao Shengyong, Deputy Director of the National Bureau of Statistics.

Hu Hanzhou pointed out that by advancing the transformation of the energy structure, China has strengthened its energy security resilience at the source. In the first quarter, clean energy generation—including hydropower, nuclear power, wind power, and solar power—by industrial enterprises above designated size reached 700 billion kilowatt-hours, up 2.8% year on year and accounting for 33.2% of total power generation by such enterprises. As of the end of February, the nation’s installed capacity for renewable energy power generation had reached 2.38 billion kilowatts, representing 60.3% of the country’s total power-generation capacity. Optimizing the energy supply structure has further enhanced China’s self-reliance in energy security.

“In the first quarter, China’s energy sector ensured stable supply, provided robust support, and facilitated transformation, thereby delivering critical assurance for a strong economic start. By safeguarding energy supply and stabilizing prices, the sector has built a solid foundation: supply remains ample and well-organized, effectively hedging against international energy market volatility and keeping production costs for enterprises and energy expenses for households stable,” said Dong Xiucheng, a professor at the University of International Business and Economics.

Stable supply-side output hinges on sustained investment momentum.

Since the beginning of this year, driven by policies aimed at expanding domestic demand and improving supply, nationwide fixed-asset investment recorded a 1.7% increase in the first quarter. Notably, investment in energy-sector projects performed exceptionally well, emerging as a key driver of overall investment growth. On a sector-wide basis, investment in the electricity, heat, gas, and water production and supply industry rose by 9.0% in the first quarter—significantly outpacing the national average for fixed-asset investment. Within this sector, the electricity and heat production and supply subsector posted an even stronger growth rate of 9.2%, firmly establishing itself as the central engine propelling infrastructure investment.

In the area of energy infrastructure, total investment in the power grid exceeded RMB 167.45 billion in the first quarter. Specifically, State Grid Corporation of China completed nearly RMB 130 billion in fixed-asset investment during the quarter, up about 37% year on year, thereby spurring over RMB 250 billion in investment across the upstream and downstream segments of the industry chain. Meanwhile, China Southern Power Grid invested RMB 38.45 billion in fixed assets in the first quarter, representing a year-on-year increase of approximately 50%.

Dong Xiucheng believes that energy investment in the first quarter delivered strong performance, with grid investment accelerating markedly. Major projects such as ultra-high-voltage transmission, pumped-storage hydropower, and new-energy bases are being rolled out at an accelerated pace, effectively boosting development across the upstream and downstream segments of the industry chain.

The influx of fresh capital has also injected greater dynamism into the energy economy. For instance, the Fujian Zhongsha Gulei Ethylene Project, a flagship initiative under China–Saudi Arabia cooperation in energy and chemical industries, has now achieved mechanical completion of several key units and systems. Meanwhile, BASF’s Guangdong Integrated Site—the largest wholly foreign-owned single project by a German company in China, with a total investment of approximately €8.7 billion—has been fully commissioned in Zhanjiang, Guangdong Province.

Diversified and stable imports bolster foreign trade momentum.

Foreign trade growth has reached a nearly five-year high, and diversified channels for energy imports have strengthened supply-chain security.

China’s imports and exports posted robust growth in the first quarter, underpinned by a stable foundation, strong vitality, and robust momentum in foreign trade. According to Wang Jun, Deputy Director-General of the General Administration of Customs, China’s oil and gas imports are sourced from numerous countries and regions, creating an import pattern characterized by “land–sea coordination and parallel multi-channel access,” which has effectively enhanced the security and stability of the energy supply chain.

The diversified arrangement of energy import channels has provided support for the relatively rapid growth of China’s foreign trade in the first quarter. According to data from the General Administration of Customs, China imported 291 million tonnes of energy products in the first quarter, up 4.4% year on year; crude oil imports reached 150 million tonnes, an increase of 8.9% over the same period last year, marking a new record for the corresponding period on record.

While imports remain stable, exports of green products are emerging as a new bright spot in China’s foreign trade. So far this year, the most impressive growth in exports has come from high-value-added electromechanical products, which now account for more than 60% of total exports. Lithium-ion batteries and transformers, among other electromechanical goods, have become best-selling export items. In the first quarter, electric vehicle exports surged by 77.5%, lithium-ion battery exports increased by 50.4%, and exports of wind turbine generators and their components rose by 45.2%. For instance, CATL’s first-quarter report shows that, for the first time, the share of its energy-storage battery production earmarked for high-margin overseas markets such as large-scale storage systems in Europe and North America has exceeded 40%.

The new economy and new drivers of growth are expanding rapidly, spurring the upgrading of China’s industrial structure. “After more than a decade of intensive cultivation and development, the new-energy vehicle industry has now achieved world-leading production and sales volumes as well as world-class quality, establishing itself as a benchmark for industry-wide advancement. In addition, in the first quarter of this year, the value added of the equipment-manufacturing sector increased by 8.9% year on year—significantly faster than the overall growth rate of industries above designated size—and accounted for 35.1% of the total value added of such industries, a share that continues to rise, contributing nearly 50% to overall industrial economic growth. Moreover, during January–February, the equipment-manufacturing sector contributed 43.7% to the profit growth of all industries above designated size,” said Mao Shengyong.

“In the energy sector, imports and exports have moved in opposite directions—one rising and the other stabilizing—thereby strengthening China’s position as the ‘world’s factory’ while expanding its role as the ‘global market,’ thus highlighting the benefits of both openness and resilience as well as the dividends of green transformation,” analyzed Dong Xiucheng.

The synchronized recovery of the energy and industrial sectors underscores robust economic activity.

In the first quarter, the rebound in energy consumption and the growth in industrial production were “in perfect sync.”

The value added of industries above designated size nationwide increased by 6.1% year on year, accelerating by 1.1 percentage points from the fourth quarter of the previous year. The accelerated recovery in industrial production directly boosted energy consumption. According to Hu Hanzhou’s preliminary estimates, total energy consumption in the first quarter rose by 3.9% year on year, with the growth rate picking up by 0.4 percentage points compared with the full-year figure for the previous year.

During the same period, power generation by industrial enterprises above designated size reached 2.3782 trillion kilowatt-hours, up 3.4% year on year, reflecting synchronized growth in electricity consumption and industrial output and underscoring the overall dynamism of the economy.

Lin Boqiang, Distinguished Chair Professor at the School of Management of Xiamen University and Director of the China Institute for Energy Policy, believes that this “synchronous resonance” sends two key signals. First, the real economy has genuinely become more dynamic, with no divergence between increased production and unchanged energy consumption. Second, the structure of energy consumption continues to improve: the share of non-fossil energy in total energy consumption rose by 0.4 percentage points compared with the same period last year, indicating that the economic recovery has not come at the expense of high carbon emissions.

Dong Xiucheng also noted that the synchronized rebound in energy consumption and industrial production sends a positive signal. First, industrial production is steadily recovering, with genuine growth in electricity demand reflecting higher operating rates among enterprises and continuously improving market expectations. Second, the coordination of economic performance has strengthened, leading to better alignment between energy supply and demand and providing solid support for expanding industrial capacity and enhancing efficiency.

“The transition from old to new growth drivers is accelerating, with electricity consumption in high-tech manufacturing and equipment manufacturing expanding at an even faster pace, reflecting the tangible results of the industry’s shift toward higher-end, greener, and smarter operations. Moreover, energy consumption is becoming more closely aligned with industrial growth, further solidifying the foundation for economic recovery and underscoring the resilience of China’s industrial rebound and the dynamism of its high-quality development,” said Dong Xiucheng.

The safeguarding role of traditional energy has stabilized the fundamentals, the large-scale substitution by clean energy has opened up new avenues, and the diversified development of import channels has reduced exposure to external risks. The combined structural advantages arising from these three factors are now being translated into a solid foundation for macroeconomic performance. As the global energy landscape continues to adjust and seek a new equilibrium, an energy system that is independently controllable and supported by multiple sources is accelerating its formation, thereby laying a robust foundation for building a new-type energy system and providing strong confidence for China’s economy to achieve steady and sustainable growth.

Source: China Energy News