Data Spotlight: The Strait of Hormuz Crisis and Chinese-Financed Power Plants in Asia
Chinese Funded Power Plants in Asia, 2020–2023: Source: China’s Global Power Database, Boston University Global Development Policy Center (2025).
The Strait of Hormuz crisis, causing the largest ever disruption to global oil markets, has created an unprecedented challenge to Asia’s energy security. Most oil and gas exports passing through the Strait are bound for Asian markets. Countries like Singapore, Bangladesh and Thailand, for example, rely on oil and gas for over 50 percent of their total power generation. As one of many results to adapt, several Asian countries have instituted four-day work weeks as governments are rushing to save energy.
This is not the first major shock to global oil markets this year. In January, the capture of Venezuelan president Nicolás Maduro by US forces destabilized a major oil exporter. China, however, had already reduced its dependence on oil from Venezuela by unwinding oil-backed financial entanglements and widening involvement to the rest of Latin America.
China demonstrates similar flexibility during the Strait of Hormuz crisis, which has limited impact on the country’s power generation. Yet China’s economy remains deeply integrated with the rest of Asia, especially through trade, giving it a strong interest in the region’s broader energy security. In the years leading up to the Strait of Hormuz crisis, how did China increase energy production capacity in Asia?
The China Global Power (CGP) Database, developed by the Boston University Global Development Policy Center, tracks global power plants funded by China’s foreign direct investment (FDI) and China’s two main development finance institutions (DFIs)––the Export-Import Bank of China and the China Development Bank ––with data from 2000 to 2023.
The database shows that, before Chinese leader Xi Jinping’s 2021 pledge to end support for overseas coal power, China heavily invested in coal projects across Asia. While the Strait of Hormuz crisis more directly affects oil and gas, coal prices are also vulnerable to these shocks due to changes in supply. In June 2025, coal was $110 per ton. In 2026, coal peaked in June at $151 per ton with price increase heavily associated with the crisis. This is due to the immediate effects on the supply of oil and gas causing countries to shift towards coal-powered energy production. For countries like Bangladesh that heavily rely on oil, gas and coal imports for energy production, this crisis incurs heavy costs such as an estimated $4.8 billion increase cost of fossil fuel imports. Green energy projects, on the other hand, do not have the same supply chain vulnerability.
Since 2020, China has shifted much of its financing in Asia toward green energy generation. The majority funding type is Greenfield investments, in which a Chinese company would make equity investment to build entirely new power plant unit, increasing power generation capacity.
However, data shows that this green energy trend is imbalanced within the region. Although 38 percent of the 2020-2023 portfolio is in renewable energy, over half of these renewable energy projects are located on the Arabian Peninsula, and more than a quarter are in Central Asia.
Among the countries most dependent on oil and gas imports through the Strait of Hormuz––Pakistan, Bangladesh, Myanmar and Japan––a total of 384 MW of generation capacity will be spread across these countries.
For example, Pakistan received one investment for a 50 MW wind farm. For scale, since 2001, China has invested 8.9 GW in coal plants and 1.3 GW in renewable technologies.
Bangladesh received the largest share of renewable investment among these four countries during 2020–2023, with five projects totaling 276 MW. However, since 2001, it has received Chinese financing for 7.3 GW of coal capacity, compared with just 381 MW of renewable energy.
In Myanmar, the 30 MW Sedawgyi Solar Plant, financed between 2020 and 2023, is the first Chinese-backed solar project, following earlier investments totaling 7.1 GW of hydropower and 1.6 GW of gas-fired generation. Japan received 28 MW, nearly its entire history of Chinese energy financing.
Although China’s energy portfolio in Asia shifts to renewable technologies, it has not yet brought a dramatic shift in total renewable energy generation to the countries most affected by the crisis. All but one of these power plants derive from FDI, not development finance lending through Chinese DFIs.
In other words, these projects have largely followed commercial incentives, rather than strategic policy objectives. They do not yet reflect fully the broad international cooperation toward the kind of energy security envisioned by China’s response to its own “Malacca Dilemma” in 2003, highlighting the concern that oil and gas passing through the narrow Strait of Malacca on the South China Sea presented vulnerabilities in energy security.
The ongoing crisis underscores the urgent need for more ambitious efforts to strengthen Asia’s energy resilience. While market incentives have driven a new wave of Chinese FDI in renewable energy sectors, the region requires a more proactive approach in response to the policy imperative of energy security.
Through direct, coordinated cooperation with multilateral institutions such as the Association of Southeast Asian Nations, Chinese private companies with expertise in renewable energy development could receive greater financing that prioritizes long-term energy security over immediate commercial returns. By integrating its development finance with its foreign direct investment, China could help Asia better capitalize on its vast solar and wind potential to strengthen energy resilience and support continued growth.
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