West Virginia is the United States’ second largest coal producing state. [Image: railfan 44 / Wikimedia Commons]

China's Investment in West Virginia’s Coal Highlights Economic Linkages

China Asia

Coal has been one of West Virginia’s most important industries for over a century. In fact, West Virginia is the United States’ second largest coal producing state, right behind Wyoming. As the United States and the European Union increasingly turn to renewables and natural gas for power, the future of West Virginia’s coal industry is uncertain. However, China is one of the few countries still purchasing coal in large quantities and the largest single country investing in coal production abroadthough China has recently begun stepping up investment in renewable energy projects. This is partly due to China’s Belt and Road Initiative (BRI), and partly to help feed its domestic appetite for coal. Thus, China’s willingness to invest in coal abroad paired with West Virginia’s struggling coal industry seems like the perfect match. In September 2021, President Biden’s special envoy for climate change, John Kerry, urged Chinese officials to halt their investment in coal abroad during a visit to Tianjin, China, followed later that month by Xi Jinping’s announcement at the United Nations General Assembly that China would “not build new coal-fired power projects abroad.”

Although John Kerry’s urging and Xi’s announcement were mainly in the context of China’s BRI elsewhere, could they have implications for West Virginia as well? Although China suspended public overseas investment in coal in 2019 and 2020, Chinese investment banks and development institutions have continued to invest in coal projects abroad, and it isn’t clear if Xi’s announcement applies to private Chinese investors. West Virginia has been in negotiations with China Energy Investment Corporation since 2017 to invest $83 billion over 3 years to develop the state’s shale gas fields. This investment would exceed West Virginia’s annual gross economic output of $78 billion, and would be a critical lifeline for the industry. However, rising tensions between the United States and China have altered the relationship between West Virginia’s coal and Chinese investment over the past few years.

The first move that began to change this relationship was the trade war former President Trump declared on China in July 2018. Then, in 2019, West Virginia senator Joe Manchin expressed distrust of the investment at a Senate Committee hearing on Energy and Natural Resources. Next was the Coronavirus outbreak, which halted the $83 billion deal and ratcheted up anti-China sentiment from many politicians, including the Attorney General of West Virginia, Patrick Morissey. Most recently was John Kerry’s visit to China and President Xi’s announcement at the United Nations.

In 2020, China accounted for $1.8 billion of investment capital in West Virginia. Additionally, coal and natural gas are West Virginia’s largest export to Asia, with China the second top export destination behind India. Thus, Chinese investments in coal abroad affect not only the countries officially included in the BRI, but have also affected places closer to home, like West Virginia.

Kimery Lynch is a Research Intern at the East-West Center in Washington. She recently graduated from the University of Hawai'i-Mānoa with her MA in Asian Studies.