Beyond US Retreat: China, Australia and the New Balance of Climate Power

However, the Paris Agreement has faced criticism, much of it warranted. First, due to the institutional structure of NDCs, many states have made rather weak commitments to reducing carbon emissions and, in many cases, even those minimal commitments are not being met. Second, the agreement appears to leave much room for a state to simultaneously improve on renewable energy whilst still being a leading consumer of fossil fuels. Third, there are no accountability or compliance mechanisms for parties that do not meet their NDCs. As such, state parties can violate their NDCs with little or no accountability. More recently, the Paris Agreement has faced a setback with the United States’ opposition and vocal criticism of green technologies, including calling renewable energy a “joke” and “too expensive” – despite these claims being factually inaccurate.

Despite these criticisms, the Paris Agreement remains the most inclusive and viable international framework for mitigating the existential challenge of climate change. Its success, however, is completely dependent on the actions and intentions of its member states, which need to make significant changes to their industries and energy consumption – global leadership and tangible motivations are needed for such an undertaking.

China and the Paris Agreement

With the return of the Trump administration, the United States has once again withdrawn from the Paris Agreement. This has left China to fill the vacuum left by its transatlantic counterpart, taking on a new kind of leadership role in global climate governance.

Even before Trump’s decision to exit the Paris Agreement again, China had already taken a leading role within the negotiating working groups by advocating for the Global South. This has taken numerous forms, but most notably in prioritising climate adaptation, ensuring that obligations do not undermine economic growth, and upholding the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC Principle).

Climate Financing

While China has invested heavily in climate mitigation technologies, it has also devoted significant diplomatic effort to advocating for increased financial support for climate adaptation in the Global South. This public stance and emphasis in negotiations seem to reflect China’s strategic goal of strengthening ties with the developing nations of the Global South. As other scholars have noted, China has a long-term strategy of maintaining strong links with the Global South in a leadership role that advocates for their interests – even when China does not directly benefit.

Climate financing has long been a contentious issue in global climate governance, as the Global North has struggled to meet its commitments since pledging USD $100 billion annually in 2009 at the Copenhagen Conference – a goal later reaffirmed in the 2015 Paris Agreement. It was only in 2022 that climate finance finally exceeded USD $100 billion. That year, the 27 members of the European Union collectively provided over EUR €28 billion (approx USD $30 billion) in climate financing to the Global South, while the US reached USD $11 billion per year in climate financing by the end of the Biden presidency.

Furthermore, at the 29^th Conference of the Parties (COP29) in 2024 in Baku, Azerbaijan, it was agreed that climate financing would triple to USD $300 billion annually by 2035. China played a key role in securing these commitments and in emphasising the necessity of climate finance strategies for meeting Paris Agreement targets.

Despite this global pledge to increase climate financing to USD $300 billion, the US has repealed its own contributions under the Trump presidency. It has withdrawn from the “loss and damage” fund, which supports countries vulnerable to the worst effects of climate change, and exited the Just Energy Transition Partnership (JETP), which assists Global South states in their transition to clean energy. As a result, climate finance from the Global North faces a significant shortfall in the absence of US support.  

On the other hand, China alone has provided billions in climate financing through South-South Cooperation, contributing approximately USD $24.6 billion since 2016 to support renewable energy projects across the Global South. It has been estimated that China provides, on average, USD $3 billion in climate finance annually, despite having no legal obligations to do so.

China has also used the Belt and Road Initiative (BRI) to support several renewable energy infrastructure projects. A Griffith University report found that in the first half of 2025, China’s BRI invested USD $9.7 billion in renewable energy projects such as wind, solar and waste-to-energy facilities, which have the capacity to generate 11.9 GW of energy. Since 2023, Chinese green corporations have secured 180 deals across the globe worth USD $141 billion. These projects underscore China’s strategy of integrating climate mitigation with economic growth.

Such an approach does have inherent benefits – especially for Chinese businesses in green industries – yet there are growing questions about whether it can effectively reduce carbon emissions and mitigate the threat of climate change. That is, is China exercising leadership through a model focused on economic growth that does not necessarily prioritise reductions in greenhouse gas emissions? With the US’s abrupt departure from global climate leadership, and a steep decline in its contributions to global climate financing, it seems that China’s economic growth-centred approach has only gained further legitimacy.

Climate Governance, China and Multilateral Leadership

Since Trump’s exit, China seems to have scaled up and diplomatically expanded its role in global climate governance. In April this year, China’s President Xi spoke directly at the closed-door Leaders Meeting on Climate and the Just Transition, where he stated, “we will overcome the headwinds and steadily move forward global climate governance and all progressive endeavours of the world.” His approach to this form of leadership is more collaborative or multilateral compared to the primacy approach of the United States of old. In the same meeting, it was noted by Xi that “It is important for all countries to champion the rule of law, honour commitments, prioritize green and low-carbon development, and jointly respond to the climate crisis through multilateral governance.”

Such messaging has been followed by joint meetings with key actors. This includes the European Union (EU), where a joint statement was released in July this year, reinforcing a commitment to cooperation and the sharing of leadership responsibilities in climate governance. Diplomatically, China worked to ensure the goals of the Global South were incorporated into the joint statement with the EU, including adhering to the CBDR-RC principle, provision of green technologies to developing countries, and prioritisation of adaptation efforts.   

China’s shared role in BRICS leadership has seen the international organisation reinforce the importance of multilateralism and international obligations in climate governance. The BRICS Environment Ministers issued a joint statement where they stressed “the importance of enhancing cooperation and synergies among related multilateral conventions, organizations and instruments” and called for “environmental multilateralism”. Scholars such as Professor Lucas Carlos Lima argue that the BRICS has pivoted to a more proactive leadership, especially in the field of climate governance, notably after the exit of the Trump administration.

This was reinforced by President Xi’s speech to the UN Climate Summit, the day after Trump spoke at the UN General Assembly last month. Xi noted that despite one country “acting against it [the Paris Agreement]” that the international community should “stay focused on the right direction, remain unwavering in confidence, unremitting in actions, and unrelenting in intensity, and push for formulation and delivery on NDCs, with a view to providing more positive energy to the cooperation on global climate governance.”

China’s stance on the Paris Agreement was a clear rebuttal to Trump’s attempt to reposition the world’s perspective on addressing climate change. With the vast majority of the world already in the Paris Agreement camp, it was not a hard sell but was a necessary public commitment to continuing the path towards a green transition. Xi’s speech also reinforced China’s focus on a multilateral approach to global climate governance, a necessary precondition for addressing a global crisis with wide-reaching implications.    

Ultimately, what we have witnessed is possibly an early blueprint of China’s approach to global leadership through multilateral platforms for addressing global challenges – a cooperative approach shaped by key agenda items important to China’s interests, without positioning itself as a dominant player.

Economic Benefits of Climate Leadership

Trump’s public dismissal of climate change as a “con job” and renewables as a “joke” at this year’s UN General Assembly was a calculated attempt to derail the expansion of clean tech as an alternative energy source. This is perhaps unsurprising, given that the United States remains the largest producer of oil and gas in the world, with vast swathes of American communities dependent on the fossil fuel industries for employment, investments and the funding of essential public services. It has been reported that the fossil fuel industry in the US is propped up by subsidises at an estimated USD $34.8 billion annually which includes the Trump administration’s increase of USD $4 billion this year.

While China still relies heavily on fossil fuels, its latest NDCs set a target to reduce carbon emissions by 7% to 10% by 2035. In 2024, China invested about RMB ¥6.8 trillion (USD $940 billion) in clean energy, nearly matching global fossil fuel investment. China’s clean energy sector accounted for 26% of its GDP growth in 2024. 

Several studies have also shown that aligning an economy with the Paris Agreement framework is not only environmentally responsible – it is also economically strategic:

• According to the International Energy Agency, clean electricity represented 80% of the world’s new capacity additions to electricity systems and clean energy added USD $320 billion to the world’s economy.

• The International Labour Organisation (ILO) projects that implementing the commitments of the Paris Agreement could lead to a net gain of 18 million jobs globally by 2030. The ILO also notes that 1.2 billion existing jobs worldwide depend on a healthy and stable environment, which will increasingly be at risk if climate change continues to advance.

• According to Carbon Brief, clean energy contributed 10% of China’s GDP in 2024 (USD $1.9 trillion) and without this contribution, the government would have missed its 5% target of economic growth.

Australia and China – A New Climate Opportunity?

A new Memorandum of Understanding (MoU) was signed between the governments of Australia and China in June 2024, expressing a shared “common desire to strengthen bilateral cooperation, both domestically and internationally, and in multilateral forums to combat climate change”. The MoU included an annual Ministerial Dialogue on Climate Change and plans to “implement a program of cooperative activities designed to deliver practical outcomes of mutual benefit”. Indeed, responding to climate change through mutually beneficial projects has significant potential between China and Australia.

In June this year, the inaugural roundtable on the Australia-China Sustainable Finance Taxonomy Roadmap took place in Canberra. The dialogue included the prospects for green trade and “low-carbon supply chains” between Australia and China through sustainable finance mechanisms.

Meetings such as these serve to increase economic opportunities for green technologies and trade between Australia and China. Subsequently, China’s transition to a green economy holds substantial opportunities for Australian businesses in energy, finance and green technologies.

Paris Agreement: Where Do We Stand?

As has been noted by other scholars, China’s technocratic and pragmatic approach to addressing climate change has influenced the Global South, where clean tech investment has been prioritised while retaining economic development.

Such approaches have led to dramatic growth in climate technologies, especially in the fields of renewable energy generation and electric vehicles (as discussed extensively by two members of the AustChina Institute). However, such investments and technological advancements in the leading states of the Global South have occurred simultaneously with ongoing large-scale consumption of fossil fuels.

When we look at a review of China’s response to the Paris Agreement through the independent Climate Action Tracker, we can see that they have labelled China’s activities as being “Highly Insufficient”. This assessment is based on policies and actions, as well as their NDC target. The overall conclusion of the report states that China’s energy transition is caught in “opposing trends”, in that there is heavy investment in renewables whilst consuming incredibly high levels of coal and gas. As the Climate Action Tracker notes, “China is significantly off track in meeting its emission-intensity reduction targets under both its 14th Five-Year Plan for 2025 and its 2030 NDC commitment under the Paris Agreement.”

China is not alone in having a sub-par report card from Climate Action Tracker. Australia’s assessment has been reported as “Insufficient” and the United States is the worst overall with “Critically Insufficient”. The ultimate difference is that China is the only state of the three that is heavily investing and transitioning to a green economy.

Many experts have predicted that China may, in fact, be close to reaching its peak or may have already peaked in its fossil fuel use. Such a scenario is consistent with China’s major advances in clean technologies and related exports across the world. China’s latest NDC outlines its transition to a greener economy and pledges that by 2035, it will:

• Reduce net greenhouse gas emissions by 7% to 10% from peak levels

• Increase the share of non-fossil fuels in total energy consumption to over 30%

• Expand the installed capacity of wind and solar power to over six times the 2020 levels, aiming to reach a total of 3,600 gigawatts

• Scale up the total forest stock volume to over 24 billion cubic metres

• Make new energy vehicles the mainstream in the sales of new vehicles

• Expand the National Carbon Emissions Trading Market to cover major high-emission sectors

Most experts agree that this NDC is conservative and does not live up to the requirements of the Paris Agreement, which ideally calls for a 30% cut in greenhouse gas emissions by 2035. However, a closer look reveals that these modest pledges reflect a broader strategy. For instance, Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, noted in his op-ed in The New York Times that China has positioned clean technology at the centre of its economic future, which could drive major reductions in carbon emissions. As Li notes that “China has aligned decarbonization with its economic growth strategy. In practice, that means systematically building infrastructure, sophisticated supply chains and a predictable domestic market for clean energy.”

China’s NDC will be quite consequential, as other Global South countries’ ambitions are likely to be shaped by China’s example. As such, we may witness other Global South states continuing to support the Paris Agreement (despite Trump’s remarks at the UN General Assembly), yet pledging conservative NDCs that fall short of the Paris Agreement’s aim of keeping below 1.5°C warming.

Such a scenario is not as dire as it seems, as China remains the key factor. If China continues on its investment path in clean technology, this will create expansionary trade opportunities for the Global South and beyond. Since 2022, foreign direct investment (FDI) in clean tech from China has reached between USD $227 billion and USD $250 billion. This figure will most likely continue to grow, and will inevitably have a positive knock-on effect on reducing carbon emissions for those recipient countries. Consequently, despite China’s modest NDCs, when we consider the systemic change being led by China through clean tech combined with a collaborative approach to leadership in climate governance, we could be witnessing a pivotal moment as the world economy turns green.

What this all leads to is that the next ten years are critical. What we are witnessing is a global economic transition driven by clean technologies. The United States, under the current president, has made it known on the global stage that it is doubling down on fossil fuels while disregarding climate science. Conversely, China is progressing with a long-term plan for a green transition and is using its platform to reinforce the principles of the Paris Agreement whilst not ceding commitments to economic growth.

Australia has improved on its climate leadership since the Morrison era. Last month, Australia pledged to reduce carbon emissions by 62–70% below 2005 levels by 2035. And its recent bid to host COP31 with Pacific nations reinforces Australia’s commitment to climate governance. These are significant shifts in climate leadership, but according to the Climate Council, they remain modest compared to what is required to address the climate crisis. The Albanese government’s climate ambitions are severely undermined by its continued support for fossil fuel projects, including the approval of 31 new or expanded coal, gas, and oil projects since 2022. Furthermore, its bid to host COP31 has been questioned by its Pacific partners after the approval to extend the North West Shelf liquefied gas project until 2070.

The future of the Paris Agreement is not yet in doubt, but how well it is implemented by nations will be analysed and subjected to much debate. So far, no other country has followed Trump’s lead in either questioning the rationale for moving towards a green economy or the science of climate change. However, countries with economies centred on fossil fuels may indeed feel more confident to resist these seismic changes. Such countries are in an ever-dwindling minority. Conversely, China has doubled down on its green transition and has modelled a path for economic growth that many in the Global South see as a trajectory that they could follow. It might not follow the linear path laid out by the Paris Agreement, but it could still get us to the endpoint that the world needs.  

Concluding Thoughts

Like much of the international legal framework, the Paris Agreement is flawed as its utility depends solely on the commitments and actions of its member states. The withdrawal and oppositional politics of Trump’s America has posed a serious challenge to the relevancy of the agreement. However, the absence of the US has largely meant that the balance of climate leadership has shifted eastwards. China has taken a leading role in the manufacture and export of clean tech, advocated for and provided climate finance, and encouraged a multilateral approach to global climate governance. However, such assessments must be tempered by China’s economic growth model based on continuing consumption and reliance on fossil fuels, resulting in rather conservative NDCs and underscoring the complex and uneven progress inherent in the path to decarbonisation.

Similarly, Australia adopts a contradictory approach to addressing climate change – rhetorically supporting action on climate change, investing in green projects, and making pledges to reduce carbon emissions, while continuing to approve and expand fossil fuel projects across the country. 

Australia’s memorandum of understanding with China indicates a shared desire to work together to address climate change and build mutually beneficial partnerships in the future. Such green industry partnerships with China have been repeated across the world, indicating that the vast majority perceive a green economic transition as not only necessary but economically beneficial too. Prime Minister, Anthony Albanese’s speech to the UN General Assembly acknowledged as much stating: “Clean energy can carry the world beyond the false choice between economic growth and environmental responsibility. Because clean energy enables the rapidly growing economies of the Indo-Pacific to industrialise and decarbonise at the same time.”

According to Dr Liwen Guo’s recent research paper, there are significant opportunities for trilateral cooperation between Australia, China and Pacific nations that require support for this transition. The Albanese government could be a bridge-builder between industrialised and emerging economies. This collaborative model – based on co-funding and delivering shared projects – could advance much-needed climate adaptation and mitigation initiatives, such as resilient infrastructure and water security projects.    

Indeed, it is reported that between now and 2050, the climate economy represents a USD $270 trillion opportunity for transition. With the United States’ exit, the Middle Kingdom will take centre stage not only in providing a model for the green transition, but also in encouraging the world to remain committed to upholding the spirit and objectives of the Paris Agreement. Accomplishing such a task while maintaining economic growth could be a difficult balancing act.  

The next decade is critical. The Paris Agreement holds the fundamental framework to turn commitments into a sustainable future. Its prospects have been bolstered by China, which has demonstrated a new form of leadership distinct from its American counterpart. The Paris Agreement’s true viability, however, will ultimately depend on the collective actions and commitments of the global community, including Australia. As more nations recognise that this transition offers as many opportunities as responsibilities, the path toward a green future will become increasingly clear.