By Federico FUBINI
One of the objectives of the war on Iran attributed to Donald Trump was to bypass China in terms of strategic resources. In January, the US president, with the capture of Nicolás Maduro, had taken control of Venezuelan oil, cutting off supplies to the rival superpower. Regime change in Iran should have multiplied that effect, in theory. But now a role reversal is beginning to emerge: the energy shock that followed the blockade of Hormuz is causing international demand for green technologies produced in China to explode.
The fight against climate change has not returned to the top of the list of objectives of most governments around the world. Instead, the race for strategic autonomy has risen to the top, with a reduction in dependence on imported oil and gas. Thus, data on the export of Chinese solar panels to the rest of the world in March, the first month of the war between the United States and Iran, show a doubling of sales of finished modules: from a capacity of 16 gigawatts to 31, according to the research center Ember, which is based on Chinese customs data. If we also consider the components of the panels, such as cells and wafers, China sold to the world in March the equivalent of the installed photovoltaic power of all of Spain: 68 gigawatts, a level 50% higher than any previous historical record.
The People’s Republic is not just a leader in the photovoltaic industry: it is practically its undisputed master. According to the Center for Strategic and International Studies, it controls well over nine-tenths of global production of silicon wafers and photovoltaic cells, while its share of finished panels reaches around 86%.
For any country, boosting renewable energy production means, to a large extent, buying from China. Italy is doing this, much more than before. Between February and March, Italian purchases of panels from China more than doubled, to historic highs, from a capacity of 0.28 gigawatts to 0.61 gigawatts.
The same Hormuz effect is also seen in cars. In the European Union, in March, the share of new electric models sold, another sector dominated by Chinese manufacturers, almost equaled that of petrol cars for the first time. In Germany (24% of new registrations) and France (28%), this overtaking is already a reality. At the European level, also in March, the growth in sales of electric models is around 50% higher compared to the previous year. Italy is recording the strongest growth, but from levels still well below the European average and driven by specific public incentives. In the 70s, two oil shocks accelerated an industrial transition that favored manufacturers such as Fiat: consumers switched from large sedans to small cars with low consumption. Today, the blow associated with Hormuz is rewarding almost exclusively China.
According to its customs data, the growth of the People’s Republic’s exports to Italy and Germany, in dollars, is more than a quarter compared to a year ago. Thus is the heterogeneity of Donald Trump’s goals being consumed. He should have denied Beijing access to strategic resources. Instead, he has given Xi Jinping one of the most incredible and fortunate assists in industrial history.
It should have pursued a policy of “drill, baby, drill.” Instead, it has reduced the world’s appetite for oil.