China’s command economy and climate growth: centralization, decarbonization, and global implications

Policy architecture and implementation

Two structural features underpin China’s decarbonization drive.

1. Centralized mandate: China’s decarbonization efforts are driven by a hierarchical legal and regulatory framework. Announced by President Xi Jinping in 2020, China has set “Dual Carbon” goals—peaking carbon emissions by 2030 and achieving carbon neutrality by 2060. Its “1+N” policy architecture operationalizes these goals. The “1” refers to the central guiding document outlining the strategic vision and core principles, while the “N” comprises sector-specific and regional policies that support implementation. These policies are embedded into national Five-Year Plans and cascade through all levels of government and industry, transforming macro climate goals into coordinated and enforceable actions at the micro level.
2. Standardized procurement: In parallel, the nation’s centralized procurement system for clean energy equipment (e.g., solar panels, wind turbines, and battery cells) streamlines what would otherwise risk being a fragmented procurement picture. By aggregating demand from across regions and industries into large-scale, unified tenders, this approach has kept costs down, ensured consistent quality standards, and reduced the inefficiencies associated with scattered, small-batch purchases by diverse market operators.

Together, these pillars have served as key touchpoints in China’s energy policies (including China’s Energy Law, detailed below), and are expected to continue shaping implementation in and beyond 2026.

A new reality for 2026

Complementing standardized procurement, China’s unified grid rules eliminate a major barrier to clean energy adoption: unlike the patchwork of regional grid regulations in some western countries, which often hinders renewables integration, China’s unified rules facilitate the seamless connection of wind and solar farms to the grid, allowing for the efficient distribution of green electricity. This ensures clean power can be transmitted and absorbed nationwide without either technical or regulatory friction.

2025 developments and China's role at COP 30

Effective from January 1, 2025, China’s first-ever Energy Law exemplifies China’s distinctive policy architecture. The law prioritizes emissions reduction alongside energy security. The 2025 Energy Law is a structural turn, consolidating market order and integration, and signaling a continued emphasis on optimizing systems—in particular, grid readiness, storage, and digitalization—to support high renewables penetration. Key pillars of the legislation include the establishment of a unified energy market system and the regulation of market order. The legislation is also designed to strengthen grid infrastructure in order to support a renewables-dominated power system, with specific policies promoting the coordinated development of generation and grid assets, intelligent grid upgrades, and the construction of smart microgrids.

In this context, China is reaffirming its role as a pivotal force in global climate governance at COP 30. As the world’s largest investor in renewable energy, China is advocating for the accelerated deployment of clean power and smart grid infrastructure. It continues to uphold the principle of “common but differentiated responsibilities”, calling for a transparent climate finance roadmap and robust technology transfer frameworks. Earlier bilateral engagements on methane and other non-CO₂ greenhouse gases underscore China’s pragmatic, system-level approach to decarbonization—prioritizing reliability, affordability, and industrial competitiveness through solutions such as energy storage, flexible generation, and digitalized grids. These priorities align closely with China’s domestic energy legislation and long-term industrial strategy, positioning COP 30 as a platform to connect domestic execution credibility with global ambition on scale, finance, and systems integration.

What to expect over the short, medium, and long term

In the short term (6–12 months), the focus for global businesses is to understand China’s new Energy Law and associated measures. Businesses should closely track the rollout of implementing policies (e.g., tax incentives for clean tech, subsidies for smart grid upgrades, and details of standardized procurement programs) and assess their relevance to core operations—this will be highly relevant to businesses built around equipment supply or technology solutions. Engaging local legal or industry advisory firms can help businesses to navigate these requirements.

In the medium term (12–18 months), as the policy landscape matures, businesses should deepen local collaboration and leverage the Energy Law’s focus on innovation and market integration. Tech-focused multinationals can pursue joint R&D initiatives with Chinese academia or enterprises in priority areas such as smart grid integration, large-scale energy storage, and digital energy management systems—though they should be aware of western political and regulatory sensitivities about competition and information sharing with Chinese entities when doing so. Manufacturers can tap into China’s procurement system by certifying products to national standards, positioning themselves as qualified suppliers for state-backed renewable projects. Energy-intensive firms should proactively adopt China’s low-carbon requirements, such as renewable energy consumption guarantees, by investing in on-site solar or wind facilities or purchasing green electricity via the unified grid, enhancing local brand credibility.

Over the long term (18 months–5 years), global firms should position to align with China’s vision for a “clean, low-carbon, safe, and efficient” energy system while exploring spillover opportunities for growth. There will be opportunities for infrastructure and tech businesses to participate at scale in projects throughout the value chain, whether by investing in cross-regional wind and solar farms aligned with unified grid rules or by supplying high-tech components for the new power system. There is also potential for global businesses active in the projects space to collaborate with Chinese firms on overseas green energy projects, combining global expertise with China’s technological and execution strengths.