China is something, but 'efficient' isn't quite it
The world’s biggest clean-power buildout is also wasting more of it than ever. Look at the grid, not the installed-capacity chart, and a different word comes to mind.
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In today’s Daily Dragon: China’s clean-power sector wasted more electricity than its entire growth in demand this year. Also: a look back at the FT’s tax-crackdown scoop, a story we underplayed and want to correct. Also worth your time: idle European car plants are filling up with Chinese partners on three continents, Goldman says China needs a stronger yuan and more fiscal spending, Beijing’s sustainable-jet-fuel buildout is squeezing a feedstock European airlines depend on, the Hormuz standoff has triggered a solar rush across Southeast Asia, Washington bans exports of recycled battery metals, DeepSeek is about to raise prices for the first time, Seoul resists calls to redistribute its chipmakers’ record profits, and Taiwan’s president can cut taxes and the deficit at once thanks largely to TSMC.
THE PHRASE “TWO-SPEED ECONOMY” has become the standard shorthand for China’s current state: a fast lane of high-tech manufacturing, EVs, batteries and now AI, running alongside a slow lane of property, local-government finance and consumer confidence. The framing is useful and mostly right. But it carries an assumption seldom examined: that the fast lane is, among other things, efficient. Look closely at what commentators mean by that word and it usually collapses into something narrower: prodigious. China produces enormous quantities of the goods in question, cheaply. That is a real and consequential fact. It is not the same as efficiency, which describes how well inputs convert into useful output, not merely how much output there is.
The country’s energy sector is the clearest place to see the difference between these two concepts. It is also the most important, because it sits behind every other industry the fast lane depends on. Consider this, then: China wasted an estimated 360 TWh of wind and solar generation in the first half of this year, up 49% on the same period last year, according to a CREA/Global Energy Monitor report. That wasted power alone exceeds the entire 258 TWh by which national electricity demand grew over the same months. In other words: China’s growth in energy demand could, in principle, have been met without adding a single new turbine, simply by using capacity that went unused. And here is another dirty secret: coal-fired output rose 3.4% over the same window regardless, propping up the grid with the fuel the clean build-out was meant to displace.