This superpower is building its competitive advantage on cheap coal. Prices are lower than elsewhere in the world.

• The authorities in Beijing are aware that energy costs significantly affect competitiveness, including international competitiveness.
• While other major economies struggle with higher energy prices, China's access to cheap coal provides economic benefits.
• Decision-makers do not want to give them up, especially in periods of economic uncertainty and geopolitical turmoil.

Cheap Chinese coal offers economic benefits that Beijing finds difficult to sacrifice for long-term climate goals, creating challenges for the decarbonization primarily pursued by the EU.

In the case of China, the climate ambitions raised by environmentalists clash with the issue of economic competitiveness.

Cheap coal provides economic benefits to Chinese industry

As Reuters points out, Chinese domestic coal prices generally remain lower than international reference prices, providing economic benefits to the Chinese industry.

This price difference largely reflects China's massive coal production. Ensuring a stable supply of affordable energy remains a priority, so coal is being produced at a massive rate.

China's coal production in the January-July 2025 period reached 2.78 billion tons, representing a 3.8% increase compared to the same period last year. During the January-July 2025 period, China imported 257.31 million tons of coal, including 185.56 million tons of thermal coal. This represents a 13% decrease in imports compared to the January-July 2024 period.

Despite recent production controls and a slight decline in coal production in recent months, China's mining industry remains on track to achieve another production record in 2025. It's worth noting that China produced approximately 4.7 billion tons of coal in 2024. Estimates suggest that China could produce approximately 4.8 billion tons of coal in 2025.

Continued high production levels put constant downward pressure on prices as supply consistently meets or exceeds demand.

Low coal prices create economic barriers to renewable energy, keeping coal-fired electricity price competitive.

China is taking a two-track approach: adding coal-fired capacity and investing in renewable energy and nuclear power.

Nevertheless, the development of renewable energy sources is progressing rapidly in China. China is pursuing a dual approach: adding coal-fired capacity and investing in renewable energy and nuclear power. Market analysts note that renewable energy sources are meeting growing electricity demand, allowing China to reduce coal consumption while maintaining its generating capacity as a strategic hedge. This dual approach ensures energy security.

"China, India, and the US still have virgin coal deposits. They often allow for extraction from shallow depths, often using open-pit mining. Coal seams there aren't as deep as those in the European Union or Ukraine," Jacek Korski, former head of Kompania Węglowa and a mining expert, noted in a recent interview with WNP .

"Besides, these great powers don't care about the greenhouse effect. They prioritize economic development and improving the standard of living of their citizens over combating global warming," emphasized Jacek Korski.

He also pointed out that this may also be the result of their research into global warming and the human impact on this warming.

"I don't know if that's true. I just wonder if these coal-burning powers deny the fact of global warming. And if so, on what basis," said Jacek Korski.

Chinese coal prices are trending downward in 2025, likely ending the year at a moderate level, in contrast to the price spikes seen in previous years. Bloomberg points out that after briefly exceeding 700 yuan ($98) per tonne in August, during peak air conditioning demand, prices have fallen. They are expected to remain relatively stable through the winter.

The numerous benefits provide Beijing with a strong incentive to maintain a significant role for coal in its energy mix.

Globally , where many countries struggle with energy insecurity and high energy costs, China's access to cheap coal provides significant economic benefits:

• lower production costs for industry;
• reduced inflationary pressure from energy prices;
• increased energy independence and energy security;
• growing competitive advantage in energy-intensive industries.

These benefits provide a strong incentive to maintain coal's significant role in the energy mix. Furthermore, coal is also an extremely important raw material in the production of chemicals. Its role is important in both the energy and industrial sectors.

- In the world, outside the European Union, coal is treated as a resource, not a burden - emphasizes Jerzy Markowski, former deputy minister of economy, in an interview with WNP.PL.

The development of the chemical industry is creating new, promising sources of demand. Increasing amounts of coal are being processed into a wide range of chemicals, including ammonia-based fertilizers and olefins, which are the building blocks of many plastic products and adhesives.

Production capacity of the coal-to-chemicals sector in China could increase by up to 40 percent.

According to estimates, the coal-to-chemicals sector's production capacity could increase by as much as 40 percent over the next four years. Reducing dependence on oil and gas imports remains a priority for Beijing.

"China imports oil and gas, so it wants to become less dependent on external supplies of key energy resources. Hence, it is developing coal processing," Jakub Szkopek, an analyst at Erste Securities, noted in an interview with WNP.

The growing role of coal in Chinese industry, including the chemical industry, is making coal consumption more stable than anticipated. This poses additional challenges in terms of CO2 emissions. Coal-based chemical production emits significantly more CO2 than petrochemical production—based on crude oil or natural gas.