China’s coal industry is undergoing a significant shift, driven by a confluence of economic and environmental factors. The country’s slowing economy, coupled with the rapid expansion of wind and solar power, has led to a decline in domestic coal demand. This has prompted coal producers to increasingly look towards overseas markets.
Exports of Chinese coal have risen by 13 percent in the first five months of 2025 compared to the same period last year, with Japan, Indonesia, and South Korea emerging as the primary buyers. Simultaneously, coal imports have been shrinking, a notable trend given that China typically stockpiles coal during the early summer months to meet peak power demand.
The Chinese economy is currently grappling with several challenges, including high U.S. tariffs, weak consumer spending, and a downturn in the property market. The slowdown in construction has reduced demand for steel, consequently decreasing the use of coal in steelmaking. In the power sector, the rapid growth of wind and solar energy has curbed the expansion of fossil fuels. Coal prices have subsequently dropped to a four-year low.
A pivotal moment occurred in April when wind and solar power generated more than a quarter of China’s electricity for the first time, according to energy think tank Ember. Analysts suggest that the era of “more renewables, more coal” is over, with solar and wind now poised to displace coal rather than supplement it. Under conservative estimates, coal generation in China could soon peak and enter a phase of structural decline.
For the agriculture sector, the shift away from coal could have several implications. Agriculture is a significant consumer of energy, and a transition to renewable energy sources could lead to lower energy costs for farmers in the long run. Additionally, the reduction in coal use could mitigate some of the environmental impacts on agricultural lands, such as air and water pollution. However, the short-term economic slowdown and reduced demand for steel could affect the supply of agricultural machinery and infrastructure, potentially impacting productivity.
For investors, the decline in coal demand presents both risks and opportunities. Investments in coal-related industries may become less viable as the market shifts. Conversely, the growth of renewable energy sectors, such as wind and solar, offers new investment opportunities. The structural decline in coal generation could also drive innovation and investment in clean energy technologies, creating new markets and business models.
As China continues to navigate its economic challenges and energy transition, the implications for the agriculture sector and investors will likely evolve. The shift away from coal underscores the broader global trend towards renewable energy and the need for sustainable economic growth.