On his first day back in office, President Donald Trump, as expected, ordered the withdrawal of the United States from the Paris Agreement. He also ordered the elimination of government support for electric vehicle targets and reinstated policies favouring domestic oil and gas production.
The previous Biden administration made climate change a cornerstone of its domestic agenda and foreign policy, seeking to re-establish the US as a global climate leader. The major shift in US climate and energy policy under Trump will create challenges and opportunities for China’s climate diplomacy, as well as its broader economic and security strategies.
One of the biggest challenges is the loss of climate change as a key platform in US-China diplomacy. Under Biden, climate cooperation was one of the few areas of engagement in an otherwise tense relationship. Maintaining an approach to China that was “competitive when it should be, collaborative when it can be, and adversarial when it must be”, as former secretary of state Antony Blinken put it in a speech in 2021, climate envoy John Kerry made multiple visits to China, even during heightened tensions.
China, however, took the stance that climate cooperation could not be isolated from the broader relationship. In high-level meetings, Chinese officials linked climate negotiations to broader diplomatic concerns, demanding the US ease pressure on China in other areas in exchange.
Under Trump, climate cooperation is no longer likely to serve as China’s bargaining chip. Despite this, the US withdrawal from climate leadership presents significant opportunities for China.
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Trump’s rollback of Biden-era climate policies is likely to lead to the stagnation, even dismantling, of several climate initiatives, including US climate and energy bilateral partnerships with Germany, India, Japan and Brazil. Similarly, major US banks are withdrawing from climate finance initiatives such as the Net-Zero Banking Alliance, under pressure from Republican lawmakers to distance themselves from industry groups that support carbon cuts.
This creates a leadership vacuum that China can step up to, particularly as Chinese support for global climate action has become more crucial.
The US U-turn may also reduce international climate pressure on China. Biden’s climate diplomacy was equally a tool to strengthen alliances. For example, both the Trade and Technology Council (with the European Union) and the Quadrilateral Security Dialogue (with Australia, India and Japan) established climate working groups. With Trump likely to deprioritise these initiatives, China may face less international pressure on climate-related issues and gain greater strategic flexibility.
Additionally, China’s overseas fossil fuel projects, particularly those under the Belt and Road Initiative, were frequent targets of concern during Biden’s administration. The US-led Build Back Better World initiative was widely seen as a countermeasure. With Trump less focused on climate cooperation, China may face fewer obstacles in advancing its infrastructure and energy strategies.
If China decides to take up a global climate leadership role, it could significantly enhance the competitiveness of its clean energy technologies and standards. It already controls over 80 per cent of the supply chain for solar panels and at least 60 per cent for wind turbines. It also accounts for 75 per cent of the global battery cell manufacturing capacity, and makes about 80 per cent of the world’s electric vehicles.
China’s dominance in clean energy stems from its cost efficiency and manufacturing scale. Becoming a recognised leader in climate governance would provide additional legitimacy and diplomatic influence, facilitating the global adoption of Chinese technologies and standards.
While Trump will continue to prioritise America’s technological competition with China, his administration’s approach may differ. Under Biden, clean energy technologies were explicitly targeted in trade restrictions against China. A Trump administration could pursue a more generalised trade decoupling, applying broad-based tariffs instead. This could give China more flexibility to expand its clean energy exports.
China has the potential to capitalise on Trump’s reversal of climate and clean energy policies. To fully seize them, China should take at least three key steps.
First, China should lead by example. Domestically, it needs to accelerate its energy transition and curb the increasing rate of carbon emissions, particularly from coal consumption in recent years. Internationally, China should adopt a more flexible stance in climate negotiations.
While China’s long-standing principle of “common but differentiated responsibilities” is unlikely to change, it can strengthen its climate commitments. For example, pressure is growing from both developed and developing nations for China to make greater contributions to climate finance.
Some small island nations have even called for China to contribute to a climate compensation fund to support the most vulnerable countries. Taking steps in this direction could enhance China’s climate leadership credibility.
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Second, China should determine how it wants to shape global climate governance. Strategic options range from joining frameworks to seeking greater authority within them, reforming global rules or even establishing alternative institutions. A constructive approach would be for China to play a more active role in strengthening the effectiveness of the UN Framework Convention on Climate Change (UNFCCC).
Finally, rather than over-relying on government-led initiatives, China should more effectively engage the private sector – within China and internationally – in climate-related trade, investment and technology transfers.
Some of Biden’s initiatives, such as the First Movers Coalition, which encouraged multinational corporations to adopt ambitious climate commitments, could serve as useful models. If China fosters similar initiatives, it could leverage corporate leadership to drive the global adoption of clean energy.
With the US retreating from climate leadership, China has a rare opportunity to take the lead. But this requires decisive action. Committing to stronger climate policies, shaping international governance and engaging corporations will be key to establishing its leadership.
