Chinese President Xi Jinping has called for the accelerated construction of a new energy system, directly linking this push to the severe oil shock caused by the war in Iran and the closure of the Strait of Hormuz.
The urgency behind this announcement stems from a critical vulnerability: China's dependence on imported oil. With imports accounting for about 70% of its needs and the Middle East supplying over half of those imports, a significant portion of China's energy supply is at risk. Calculations show that roughly 18-27% of the country's total oil consumption is directly exposed to the Hormuz chokepoint. The recent blockade turned this statistical risk into a tangible economic threat, validating Beijing's long-held concerns about energy security.
This crisis acts as a powerful catalyst. The chain of events began with the start of the war in late February, followed by the effective closure of the Strait of Hormuz in early March. This action caused Brent crude oil prices to surge by over 50% in a single month, soaring past $110 per barrel. Even a historic emergency release of 400 million barrels from the International Energy Agency (IEA) couldn't tame the market, highlighting the limits of policy intervention against physical supply disruptions. Xi's call is a direct response to this market failure and geopolitical stress.
However, it's important to understand this is an acceleration, not a pivot. The foundation for this policy was laid years ago. The 'new electricity system' action plan of 2024 and priorities set at the 2025 Central Economic Work Conference already pointed toward modernizing the grid, expanding energy storage, and boosting clean energy. The current crisis has simply injected a new level of urgency into executing this pre-existing blueprint.
China does have some buffers, such as a strategic petroleum reserve of around 1.2 billion barrels, enough to cover over 100 days of imports. But this is a temporary fix. Long-term solutions like new gas pipelines from Russia, such as Power of Siberia-2, will take many years to complete. Therefore, the core of China's strategy is to build resilience from within. This involves rapidly expanding 'new-type' energy storage (like batteries), which soared by 85% in 2025 alone, to better integrate its massive wind and solar capacity into a more flexible and robust national grid.
- Strait of Hormuz: A narrow waterway between the Persian Gulf and the Gulf of Oman. It is the world's most important oil chokepoint, with a significant volume of global oil trade passing through it.
- Brent Crude: A major benchmark price for oil purchases worldwide. It is sourced from the North Sea and is used to price two-thirds of the world's internationally traded crude oil supplies.
- New-type Energy System: A Chinese policy concept focused on creating a modern energy infrastructure centered on a flexible grid, large-scale energy storage, and high penetration of renewable energy sources like wind and solar, while using coal and nuclear for stability.