Top economist Paul Krugman warns the Iran war will help China dominate the growing renewable power market

• Paul Krugman thinks the Iran war will help China dominate the clean energy market.
• The economist wrote that oil volatility is sparking a rush toward other power sources.
• In his view, China is in an ideal position to meet the growing demand for renewable power.

Nobel economist Paul Krugman sees the Iran war reshaping the energy market in a way that benefits America's chief geopolitical rival: China.

Krugman has been bearish on the economic outlook amid the Iran war, highlighting the increased risk of stagflation if the conflict persists. But more recently, he revealed on his Substack that he thinks America's largest economic rival will benefit significantly from the conflict.

"The big geopolitical winner from Trump's hostility to the energy revolution will be China, which dominates the production of renewable-energy infrastructure," Krugman wrote. "Furthermore, the China-led energy future will arrive ahead of schedule thanks to the debacle in Iran."

The war has sent oil prices surging, as the Strait of Hormuz remains closed, with pundits predicting that the chaos will prompt a rapid acceleration of the clean energy shift as countries rush to renewable power.

Krugman highlighted this new focus on "electrotech," with
areas such as solar power, wind, and batteries geared toward energy storage. He sees China as being perfectly positioned to keep supplying countries scrambling to diversify away from fossil fuels, thanks to industrial policies that have made China a manufacturing powerhouse.

"While China is strong in many industries, it is utterly dominant in electrotech, the cluster of industries — solar panels, wind turbines, batteries and electric vehicles — at the heart of the renewables revolution," he added.

Krugman also noted that the country has proven adept at accelerating the adoption of clean energy technologies, giving its companies a strong advantage that extends into international markets.

He addressed what he says is a myth that China only builds and sells renewable energy equipment but doesn't use it itself. Trump recently made this claim at the World Economic Forum, but Krugman disputed it, noting that China's domestic clean energy use is surging.

"By dominating electrotech now, China is gaining experience and know-how that no other country can match," he said. "It is also creating an industrial ecosystem of specialized suppliers that, again, no other nation will be able to rival."

President Donald Trump has repeatedly emphasized that he wants the US to dominate China as the preeminent global economic superpower. But according to Krugman, the Iran war could have the opposite effect, as it erodes trust in the US and continues to international partners to China's markets.

"By the time America frees itself from Trump's fossil fuel obsession, if it ever does, China's lead in the manufacture of renewables will probably be insurmountable," he added.