China is a both solution to–and a constraint on–global energy transition

Credit: ChatGPT

By: Azhar Azam

China’s rise as the world’s leading producer of clean-energy technologies is one of the most contentious issues in global trade. The United States and European Union (EU) in particular regard Beijing’s dominance in solar panels, batteries and electric vehicles (EVs) as a source of industrial vulnerability and strategic dependence.

Yet the overcapacity triggering these concerns is also accelerating the global clean-energy transition by making these technologies cheaper and more widely available as reflected in global trade of clean-tech products that reached an estimated $479 billion in 2025.

Much of this trade has been driven by China's production surplus. In sectors such as EVs, Beijing’s manufacturing has outstripped domestic demand, putting downward pressure on global prices. These cost declines have, in turn, supported faster electrification the world over.

The impact of falling costs is reciprocated in affordability – one of the main constraints on decarbonization. For many emerging and developing economies, limited fiscal space is the major barrier to energy transition. As prices drop, lower-cost imports have expanded their access to clean technologies.

Trade restrictions have a little effect. Rather than curbing China’s clean-energy exports, tariffs and industrial-policy tools introduced by the United States and Europe appear to have redirected a growing share of trade flows toward developing markets.

In many cases, this transition is enabled by Chinese manufacturing capacity. From EVs in Ethiopia to discounted solar panels in Pakistan, China’s industrial scale and overcapacity have lowered costs across many developing economies, contributing to global emissions reductions.

At the same time, volatility in global fossil-fuel markets could add momentum to electrification, prompting import-dependent countries across Africa and Asia-Pacific to diversify their energy mix and increase investment in renewable energy resources.

The International Energy Agency expects energy-sector investment to rise by around 5% to about $3.4 trillion in 2026, despite geopolitical and economic uncertainty. Roughly two-thirds of this capital is projected to go into renewables, nuclear power, grids, storage, low-emission fuels and energy-efficiency technologies.

Looking further ahead, it forecasts total energy investment to reach $3.7 trillion by 2035, with much of the growth concentrated in emerging and developing economies outside China. This indicates that clean energy is seen as a climate imperative as well as a means to bolster economic resilience and supporting development.

As clean-energy investment expands, China's dominance is perceived differently across regions. Advanced economies associate Beijing’s scale with industrial overcapacity; many developing economies view it as an opportunity to gain access to clean technologies at lower costs.

For instance, solar deployment in the EU has grown strongly in recent years, but the bloc still relies heavily on China for solar panels and key upstream inputs.

The same pattern is emerging in EV batteries. The EU efforts to restructure and localize production have eased some overcapacity risks; they have increased reliance on Chinese battery suppliers. As China continues to advance technologically, pressure is building on Brussels to amplify production in strategically important sectors while maintaining affordability.

This creates a policy trade-off for Europe. Greater industrial autonomy would strengthen long-term supply-chain resilience but is likely to raise costs and slow the pace of decarbonization. By contrast, continued reliance on China sustains faster deployment, yet leaves Europe exposed to ongoing dependencies.

The United States faces a similar challenge. Despite tax credits under the Inflation Reduction Act and industrial-policy support for clean-tech production, China accounts for the majority of global clean-tech manufacturing capacity. Washington is scaling deployment in areas such as battery storage, emerging as second to Beijing. Still, as CSIS analysis highlights, expansion in downstream segments does not resolve upstream constraints such as limited domestic reserves and critical mineral processing capacity, limiting the scope of full self-sufficiency.

India follows a different but related trajectory. Its renewable energy installed capacity has expanded quickly. However, the scale gap with China is substantial. This is further evident in deployment where Beijing added 315.1 gigawatt (GW) of solar capacity versus New Delhi's 37 GW.

China’s clean-tech overcapacity has become an essential feature of the global energy transition. While criticized as trade distortion, it has contributed to significant cost reductions in solar, battery and EV technologies, accelerating their adoption across developing, emerging and advanced economies.

Yet, the same concentration that drives lower costs in clean technologies also generates structural vulnerabilities, increasing exposure of importing economies to supply-chain disruption, geopolitical friction, and industrial dependence, as reflected in policy responses from Brussels and Washington.

As demand for clean technologies surges globally, their supply remains highly concentrated in China, with advanced economies seeking to reduce reliance through industrial policy whereas developing and emerging economies prioritizing affordability and deployment.

Beijing’s role in the global energy transition is unlikely to diminish in the near term. For Western policymakers, the challenge is not simply to reduce reliance on Chinese clean technologies, but to strengthen energy security without undermining the pace of electrification.

The limits of Kazakhstan’s Middle Corridor push

By: Azhar Azam

Central Asia is emerging as a critical hinge in the Eurasian trade and energy architecture. As Russia’s war in Ukraine has disrupted northern routes and instability in the Middle East exposes vulnerabilities in maritime chokepoints such as the Strait of Hormuz, demand for overland alternatives has accelerated.

Once considered secondary to the North Corridor, the Trans-Caspian International Transport Route or the Middle Corridor – linking China and Europe via Central Asia, the Caspian Sea and the South Caucasus – has become a crucial artery. It is now widely viewed as a diversification pathway by countries seeking to reduce exposure to geopolitical risks.

For Kazakhstan, the Middle Corridor presents both an opportunity and a test. If managed effectively, the route can diversify the country’s economy beyond hydrocarbons and cement its role as a regional logistics hub. Otherwise, Astana may remain merely a transit passage for bigger markets without substantial economic and development gains.

A 2023 World Bank report found the Corridor was unlikely to replace the northern route as a land connectivity option, acknowledging the transport link had already captured a limited share of transcontinental trade and could expand further if key bottlenecks were addressed. The study also highlighted its developmental relevance for Kazakhstan, Azerbaijan, and Georgia by helping them to reduce reliance on a narrow set of export partners and low-value complexity commodities.

This paper gains a renewed importance as global trade navigates a complex global environment, where infrastructure isn’t solely a means of moving goods efficiently; it’s a tool to strengthen economic resilience and competitiveness.

Despite its potential, the Corridor’s performance is constrained by infrastructure gaps, non-harmonized border procedures and uneven logistics capacity across participating states. These factors curtail its ability to function as an integrated alternative to northern and maritime routes.

To overcome these obstacles, development finance institutions have stepped in with significant financing, including World Bank-backed investments in rail connectivity in Türkiye, greenfield railway line between Mointy and Kyzylzhar, and highway reconstruction in Kazakhstan. These investments reflect institutional confidence in the Corridor’s ability to boost regional connectivity and sustain economic diversification.

Momentum is already building. Freight volumes along the corridor have tripled over the past five years, supported by investments in ports, railways and logistics infrastructure. By upgrading east-west transport capacity and modernizing logistics systems, Astana is positioning itself at the center of this transformation both as a transit state and a strategic Eurasian logistics hub.

The success of this strategy depends not only on rising freight volumes but also on whether infrastructure investment generates inclusive and sustainable economic benefits, contributing to domestic and regional development.

Backed by the World Bank and the Asian Infrastructure Investment Bank, modernization of Kazakhstan Temir Zholy – the national railway operator – focuses on tariff reform, institutional restructuring, divestment of non-core assets, separation of infrastructure from freight and passenger operations and greater private participation in rail transport.

Yet without consistent implementation by policymakers, growing transit volumes may not produce lasting economic benefits, leaving Kazakhstan primarily a transit passage than a more integrated part of regional supply chains.

Astana is simultaneously diversifying its external partnerships. It is pursuing a close engagement with the US across energy, transport and investment alongside deepening ties with China and continued cooperation with Europe to avoid dependence on a single bloc. While this multi-vector approach elevates Kazakhstan’s strategic relevance; it could turn Central Asia into a theater of great-power rivalry, with implications for its own and regional development agenda.

China’s economic footprint reinforces this trend. Trade between Beijing and Central Asia has reached record levels, supported by investment in transport infrastructure, logistics nodes and industrial capacity. This helps bolster regional connectivity and economic integration, yet also intensifies competition over transit routes and strategic leverage in the region.

Meanwhile, Kazakhstan’s status as a key Eurasian oil exporter further highlights the importance of non-Gulf supply routes as tensions around the Strait of Hormuz surge. However, diversification remains limited: roughly 80% of the country’s crude exports still move through the Russia-linked Caspian Pipeline Consortium pipeline, underscoring the need to develop additional corridors.

Globally, trade is being organized around overlapping corridors rather than a single integrated network. As the UN Trade and Development noted earlier this year, geopolitical fragmentation and rising regulatory and logistical pressures are altering supply chains across regions. Its recent assessment warns that non-tariff measures such as regulations, standards and compliance requirements impose higher export costs than tariffs in most economies.

These observations indicate that strategic and national security considerations – not just cost and efficiency – are driving external intervention in the region. For Central Asia, these factors compound existing economic and security challenges as fragmented standards, inconsistent customs procedures and uneven regulatory alignment continue to slow transit and raise costs despite infrastructure investment.

As global uncertainty deepens amid growing US-China competition, efforts are intensifying across the region to establish alternative trade and energy corridors, even as landlocked geography continues to constrain connectivity. Kazakhstan’s role in the Eurasian trade is likely to expand as these shifts take hold. Yet the real question is whether the country can translate this connectivity into genuine economic development for itself and the region or remain just a passage between bigger economies.