Gauging China’s power rebound potential after trade truce: Maguire

The share of clean power sources within China’s overall electricity generation mix will take a hit as factory production picks up across the country.
| Photo Credit: THOMAS PETER

On paper, the trade truce is only a temporary measure that could be reversed if either side feels unfairly treated during negotiations.

But the sharp lowering in tariffs for the truce’s duration marks a significant de-escalation in trade tensions between the world’s two largest economies, and should spur a recovery in sentiment and output among Chinese manufacturers.

Below are some key metrics that can be used to track how the reduction in trade tensions may impact power generation, emissions, manufacturing output and trade volumes in China over the coming months.

Clean start

The share of clean power sources within China’s overall electricity generation mix will take a hit as factory production picks up across the country.

Clean power sources accounted for a record 39% of China’s electricity supplies during the first quarter of 2025, data from Ember shows, helped by an 18% jump in clean electricity output from the same period in 2024 to 950 TWh.

In part, clean energy’s greater share of the generation mix was due to Beijing’s ongoing push to reduce dependence on fossil fuels for power, which has resulted in steady increases in clean power generation capacity.

However, the subdued tone of China’s manufacturing sector during the January to March window also contributed to the higher clean power share.

Scores of Chinese factories and industrial plants reduced output since the start of the year as Trump’s tariffs were threatened or went into effect, reducing their collective power consumption.

As a result, utilities were able to curb use of fossil fuel plants in power generation. Fossil fuel-fired electricity production during January to March was down 4% from the year before, to 1,494 TWh, Ember data shows.

Going forward, however, fossil fuel use within China’s power mix is primed to climb, and will likely get an additional boost from any sustained pick-up in factory output and industrial activity.

Summer peak

The impending factory output rebound looks set to emerge during China’s traditional peak in power consumption, and so could trigger record power generation and use over the coming summer regardless of the durability of the trade truce.

China’s power demand peaks during the summer due to greater use of air conditioners from June through August, when temperatures in Beijing can average more than 85 degrees Fahrenheit (30 degrees Celsius).

To ensure power supplies meet those elevated demand levels, power firms tend to become heavily reliant on fossil fuel generation sources, especially during the evenings when air conditioner use rises just as generation from solar farms falls.

If China’s mammoth manufacturing sector also dials up collective output during the summer months, China’s power firms may have to throttle up fossil fuel-fired generation even more than normal.

Higher fossil fuel reliance could in turn reverse the gains made by clean power sources in China’s power mix during the opening quarter of the year.

Elevated fossil fuel use could also trigger a fresh rise in power sector emissions, which tend to peak during the summer months anyway, and could hit a record in 2025 if fossil fuel output also hits new highs.

Output monitoring

While the trade truce will likely spark a widespread rise in factory production, some materials may see a steeper climb in production and use than others as the country’s broader manufacturing sector steps up a gear.

Output of materials used by factories – such as resins, plastics and copper wires – will likely gain an outsized boost as assembly lines crank up and replenish stockpiles.

Exports of China-made goods and products should also rise in the coming months now that tariffs have been reduced.

Shipments of items not easily manufactured at scale in other locations – such as solar cells, furniture and toys – should be particularly quick to respond to the lower tariffs, and can offer a read on the broader health of China’s manufacturers.

Finally, the traffic through key Chinese container ports could also offer a gauge on the health of Chinese manufacturers, with shipments of finished and semi-finished products now set to rise in the months ahead.

(The opinions expressed here are those of the author, a columnist for Reuters.)