China’s Role in Financing the Energy Transition in the Global South - Asia Society
Published February 07, 2026
China’s Role in Financing the Energy Transition in the Global South
As the world strives to combat climate change and transition to renewable energy sources, China has emerged as a pivotal player in financing the energy transition in the Global South. The Asian nation has made significant investments in various renewable energy projects across developing countries, contributing to a shift away from fossil fuels and towards sustainable energy solutions.
China's involvement in the energy transition is particularly crucial for countries in the Global South, where access to clean energy remains a significant challenge. Many of these nations grapple with energy poverty, limited infrastructure, and financial constraints, making it difficult to invest in renewable energy technologies. In this context, China’s financial support and technology transfer can play a vital role in helping these countries achieve their energy goals.
In recent years, Chinese investments in renewable energy have surged. According to a report by the International Renewable Energy Agency (IRENA), China accounted for more than 30% of global renewable energy investments in 2020, demonstrating its commitment to expanding its renewable energy footprint. This trend is expected to continue, with the country aiming to peak carbon emissions before 2030 and achieve carbon neutrality by 2060.
China's Belt and Road Initiative (BRI) has been instrumental in financing renewable energy projects in the Global South. Launched in 2013, the BRI aims to enhance global trade and stimulate economic growth by developing infrastructure and boosting connectivity across Asia, Europe, and Africa. As part of this initiative, China has invested heavily in renewable energy projects, including solar, wind, and hydropower plants, in various developing countries.
For instance, in Africa, Chinese companies have been involved in numerous solar energy projects. One notable example is the 1,000 MW Noor Ouarzazate Solar Complex in Morocco, which is one of the largest solar power plants in the world. Funded in part by Chinese investments, the complex is expected to provide clean energy to over a million people and significantly reduce carbon emissions in the region.
In addition to solar energy, China has also played a crucial role in financing wind energy projects in countries like Pakistan and Kenya. The 1,000 MW Jhimpir Wind Power Project in Pakistan, which was developed with Chinese financing, is expected to generate approximately 1,600 GWh of electricity annually, providing a substantial boost to the country's renewable energy capacity.
Moreover, China’s investments in hydropower projects have also made a significant impact in the Global South. The country has financed several large-scale hydropower projects in countries such as Ethiopia, where the Grand Ethiopian Renaissance Dam, funded by Chinese investments, aims to generate over 6,000 MW of electricity. This project is expected to provide much-needed energy to support Ethiopia's economic development while also promoting regional energy cooperation.
China's financial support for renewable energy projects in the Global South is not limited to traditional financing methods. The Chinese government has also established various funding mechanisms to facilitate investments in clean energy. One such mechanism is the China-ASEAN Cooperation Fund, which aims to promote sustainable development in Southeast Asian countries through investments in renewable energy and infrastructure projects.
In addition to government-led initiatives, Chinese private companies have also been active in financing renewable energy projects in developing countries. For example, companies like China Energy Investment Corporation and China Three Gorges Corporation have made significant investments in solar and wind energy projects across Africa and Southeast Asia. These investments not only help to improve energy access in these regions but also create job opportunities and stimulate local economies.
Despite the positive impact of Chinese investments in renewable energy, challenges remain. Critics argue that some Chinese-funded projects may not always align with the sustainable development goals of host countries. Concerns have been raised regarding the environmental and social impacts of certain projects, particularly in sensitive ecosystems. As a result, it is essential for both Chinese investors and host countries to ensure that projects are developed with due consideration for environmental sustainability and community engagement.
Furthermore, the financing landscape for renewable energy in the Global South is evolving. As countries increasingly recognize the importance of clean energy, there is a growing demand for innovative financing solutions. China has the opportunity to play a leading role in developing new financing models that can address the unique challenges faced by developing countries in their energy transition journeys.
One such model is the concept of blended finance, which combines public and private funding to support renewable energy projects. By leveraging its financial resources and expertise, China can help mobilize additional investments from international financial institutions and private investors, thereby increasing the overall funding available for clean energy projects in the Global South.
In conclusion, China's role in financing the energy transition in the Global South is significant and multifaceted. Through its investments in renewable energy projects, China is helping to address energy poverty, promote sustainable development, and contribute to global efforts to combat climate change. As the world continues to navigate the challenges of the energy transition, it is crucial for China and its partners to work collaboratively to ensure that investments in renewable energy are sustainable, equitable, and aligned with the long-term goals of host countries.
As the Global South seeks to enhance its renewable energy capacity, China's financial support and technological expertise will remain critical. By fostering partnerships and promoting innovative financing solutions, the potential for a successful energy transition in developing countries can be realized, paving the way for a more sustainable and resilient future.
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