While Trump is in denial about renewable energy, China is surging ahead

US President Donald Trump is tilting at a veritable whirl of windmills. This includes not just his campaigns against America’s universities, its press corps, its statisticians, its central bankers, its art institutions, its legal fraternity and its scientific community.

No, in his attack on renewable energy, he is quite literally tilting at windmills: one of his claims is that “windmills drive whales crazy”!

Thomas Friedman, writing in the New York Times, summed up this campaign against renewable energy thus: “Can you hear it — that roar coming from the East? It’s the sound of 1.4 billion Chinese laughing at us.

“The Chinese simply can’t believe their luck: that at the dawn of the electricity-guzzling era of artificial intelligence, the US president and his party have decided to engage in one of the greatest acts of strategic self-harm imaginable. They have passed a giant bill that, among other craziness, deliberately undermines America’s ability to renewably generate and store electricity — through solar, wind and batteries, in particular.”

Is our modern-day Don channelling his inner Don Quixote? The latter was the protagonist in Miguel de Cervantes’ literary masterpiece who, atop his decrepit nag Rocinante and with lance in hand, charged at windmills, believing them to be giants. (On a visit to Turnberry, Scotland, the president called windmills “monsters”.)

Today, we use the phrase “to tilt at windmills” as an idiom to portray how someone attempts to face down problems or adversaries that are mostly imagined. Time proves that these targets are almost impossible to defeat. Relatedly, again from Cervantes, we get the term “quixotic”, which is used to describe someone who has ideas that are unrealistic and impractical, applied in the pursuit of naive and unattainable goals.

Readers of my previous pieces will know that I try to focus my commentary on the realm of geoeconomics; I try to leave the province of politics to others.  (This is not always easy!) Today’s piece is a fact-heavy focus on the current state of world energy and where it is heading. I compare and contrast the present-day energy sectors of China and the US. I will show how their two differing approaches are radically reordering the structure of their economies. This may yet determine who wins not just the Great AI Race, but whose century the 21st will be.

Energy underpins everything. As Physics 101 teaches us, work is energy transferred. Without energy — be it that which was exerted by Homo Erectus with his club or that used by Elon Musk with his rockets — work is not done, and no economic activity is possible. From early mankind, there has generally been one energy source that has been dominant even if — as now — many sources will still overlap. From muscle to fire, water to wind, wood to coal, oil to gas, biomass to nuclear, the world is now entering — even as some tilt at its windmills — the age of renewables.

One “family” that runs in tandem to the energies being generated are the modes of transport that employ them. For example, until the first decade of the 20th century, humans predominantly used coal-fired trains and ships, especially for longer distance travel, and horse-drawn carriages for shorter distances, often urban journeys. The arrival of the age of oil radically transformed global landscapes: in less than 20 years, motor cars had almost entirely replaced horses and oil supplanted coal in maritime transport.

Next evolutionary iteration

The world is in the foothills of the next iteration of this evolutionary process. Especially in China, battery-powered electric vehicles are rapidly displacing the internal combustion engine-driven car.

Not every nation is embracing this advance. Most notably, as Friedman noted, in the US — which more than any nation popularised the motor car — the preference of today’s US administration is to shun wind and solar power, instead championing oil and gas.

That the US is the world’s largest source of oil — producing nearly 21 million barrels of oil per year, almost twice as much as Saudi Arabia’s 11 million barrels — plus the fact that the oil lobby has a powerful grip on the Trump Administration, may have resulted in the US visibly falling behind in the technologies underlying not just the transport systems of tomorrow, but also the industrial and service sectors that will depend upon the supply of electricity flowing from renewable energy sources.

When one considers the rapid adoption of renewable energy in China and the rapid growth of the electricity output that has resulted, every day the US looks more like a technophobic laggard, a 21st century Luddite. To most informed observers, consensus is that the electro-state will soon replace the petro-state. Yet Trump still urges the oil lobby to “Drill, Baby, Drill”. Was his alter ego Quixote of more than a century ago naively advocating “Breed More Horses… or Rocinantes”?

The transformation of China’s energy mix since 2008’s Global Financial Crisis has been nothing short of astonishing. (Recall Napoleon’s prediction? “When China wakes, she will astonish the world.”) The scale of what has happened is not widely appreciated, particularly in the US. Perhaps this is because of the “cover” offered by the performance of the US stock market, with the S&P 500 index up over nine times since its March 2009 lows.

Add to this the unconstrained euphoria over the promise of AI, and many Wall Street types simply cannot believe that another nation might — despite the US’s glossy exterior — be doing better than they are.

Yet over the period since 2008, China’s GDP has risen 4.4 times, while that of the US has only just doubled. In 2008, China’s economy was 31% the size of that of the US; today it is 69%. None of China’s growth could have been achieved without the harnessing of vast new supplies of energy. After all, at the risk of repetition, work is energy transferred.

And this growth is writ large in the numbers. In 2008, China’s total energy consumption was 84 exajoules; in 2025, it will be 176 exajoules. By comparison, US total energy consumption has remained broadly flat at 105 exajoules… and this despite the much ballyhooed second coming of oil in the guise of the shale gas revolution. By 2028, China’s energy consumption is forecast to be twice that of the US.

National debt

Another metric worth comparing is the evolution of the national debt for both countries since 2008. The US is up four times (against a doubling of its GDP). On the face of it, China has done “worse” than the US: its consolidated national debt is up 7.5 times (against a more than quadrupling of its GDP).

What is not often understood in this comparison is that China’s debt was largely incurred to re-engineer its energy base as well as to grow its associated infrastructure. All told, China has a lot — in bricks, mortar, steel and copper — to show for its higher debt as it has been investing in its future, whereas the US has barely done the same.  

(China also — infamously — added to its housing stock and, in pursuing the latter priority, a massive residential property glut resulted. But then it must have been almost impossible to gauge new housing needs in the wake of a 370 million rise in China’s urban population since 2008, an increase of 62%, and a number greater than the 340 million population of the US.)

Sometimes when dealing with an entrenched narrative that cannot grasp the sheer scale of China’s transformation since 2008, one has no option but to use the battering ram of overwhelming hard data. So here goes.

Let us start with chapter and verse of what has transformed China’s energy production profile; US equivalents are shown for comparison. In the period from 2008 to the present day:

• China’s solar capacity has grown from 50MW to 1,080,000MW, an increase of 21,000 times. The US’ has risen 16-fold.
• China’s wind capacity has grown from 12,000MW to 470,000MW, an increase of 39 times. The US’ has risen eight-fold.
• China’s nuclear energy production has grown from 9,000MW to 63,000MW, an increase of seven times.  The US has seen a 2.6% decline.
• China’s hydroelectric capacity has grown from 172,000MW to 436,000MW, an increase of 2.7 times. The US’ has risen 1.3-fold.
• China’s domestic coal production has risen from 2.7 billion tons to 4.7 billion tons today, an increase of 1.7 times. The US has seen a 45% decline.
• Only in one sphere — and it is a telling sphere — has the US outdone China. China’s daily domestic oil production has grown from 3.8 million barrels to 4.6 million barrels, an increase of 1.2 times. The US’ has risen 2.6-fold.

The net result of the above was that total Chinese electricity production has risen from 3,482TWh in 2008 to 10,087TWh today. In 2008, coal (81%) and hydro (16%) made up 97% of Chinese power generated; nuclear power was 2% and all other sources were less than 1%.

Today renewable energy makes up 39%, of which wind and solar are 24%, hydro 15% and nuclear 5%. Coal has fallen from 81% to 58%.

By contrast, US electricity production has fallen from 4,119TWh in 2008 to 4,097TWh today. In 2008, its electric energy mix was petroleum 40%, gas 24% and coal 22%. Renewables and nuclear accounted equally for the other 14%. Coal has since fallen from 22% to 9%, oil from 40% to 38%. The big gainer has been gas (from shale), up from 24% to 36%. Renewables and nuclear contribute 8% each.

China’s renewable energy supply growth story is not slowing down. In 2025, Gartner forecast that $425-billion would be invested in US AI data centres. China will spend almost twice that — about $818-billion — on energy transition.

China is building 66% of all new solar and wind capacity worldwide. It is constructing almost as many nuclear reactors as the rest of the world combined: 30 vs 35, whereas the US is building only one. China is constructing the world’s largest hydroelectric dam — the Medog — with a capacity of 60,000MW. Nearly three times the size of the world’s current largest dam — China’s Three Gorges Dam — Medog’s capacity will be 60% of the US’s total current hydroelectric output.

The higher levels of energy resulting have been utilised across every sector of the Chinese economy. Necessarily, they have also facilitated the growth of China’s transport and logistics networks. Since 2008:

• The ultra-high voltage network has grown from a pilot scheme of 654km to one of 40,000km today.
• The National Trunk Highway System has increased from 54,000km to 184,000km today. (In 1990, this total was 271km — no typo!).
• The rail network has grown from 80,000km to 162,000km today. Of this, the high-speed rail component has gone from a pilot scheme of 162km to 50,000km today.
• Port capacity has risen from a total cargo throughput of seven billion tons to 11 billion tons today. Of this capacity, container traffic is up from 110 TEU to 239 TEU today.
• There was no 5G network in China in 2008; it was 3G back then. Today China has 4.5 million 5G stations (the US has 270,000) with 99% nationwide coverage (the US: 85%). 6G is coming: to date, China has filed 40% of the 6G patent applications versus the US’ 35%. China’s pilot 6G network hints at the step change it will entail, achieving a tenfold improvement in network capacity, coverage and energy efficiency.

Given this level of investment in China’s energy landscape as well as the infrastructure upgrade that has accompanied it, it is hardly surprising that the industries supporting the latter have grown in size as well as technological complexity. They can be divided into four broad categories:

• Those providing equipment required for those energy installations.
• Those sectors involved in the distribution of the electricity generated.
• The transport sectors that have dramatically improved China’s logistical interconnectivity.
• Those new industries that are benefiting from a plentiful supply of cheap electricity, industries often defined as New Quality Productive Forces such as automated factories and AI.

Given the size of China’s domestic market demand, energy equipment-related industries have, by virtue of volume gearing and benefitting from year-on-year falls in the real price of electricity, exhibited cutthroat competition.

Unit costs have fallen sharply even as the embedded technology has risen: solar panels are down 90% in price; wind turbines are down 50%; in both cases, technological improvements have more than tripled productivity. The result is that many Chinese producers of energy, industrial and transport equipment are almost always the lowest cost suppliers worldwide… and by a wide margin.

Aggregate market share of Chinese suppliers frequently dwarfs non-Chinese producers. China’s share of global output of:

• Solar panels is 85% (China’s LONGi, Jinko, Trina, JA and Tongwei are the five largest players globally).
• Wind turbines is 70% (China’s Goldwind, Envision, Windey and Mingyang are the four largest players globally).
• Electricity cables is 35% (led by Zhongtian and Hengtong).
• Rail equipment is 60% (of which CSRC and sister company CRRC are by far the largest suppliers).
• Port handling equipment is 54% (of which ZPMC produces 38%).
• Lithium-ion batteries is 76% (of which CATL produces 38%).
• Drones is 80% (of which DJI produces 70%).
• Shipbuilding tonnage of current orders is 65% (of which the newly enlarged CSSC accounts for 21%).

Downstream industries that are thriving in this electro-state ecosystem include electric vehicles and smartphones: China’s share of global production is 60% for both. Increasingly, production is automated, reinforced by the fact that China accounted for 54% of global industrial robot installations in 2024.

Automation is allowing BYD’s mega car plant in Zhengzhou to make one million cars annually, or about two a minute, while Xiaomi’s no-employee “Dark Factory” in Beijing is manufacturing 10 million smartphones annually, or 20 a minute. (This focus on automation has had another downstream consequence: at the recent 26-event, 15-nation Beijing Robot Olympics, Chinese companies — particularly Unitree and X-Humanoid — now lead the humanoid robot race.)

If you listen to Bloomberg and CNBC, the battle royale developing between the US and China today centres on the field of AI. Yes, the US remains ahead, but not by much: its advantage lies in proprietary models like GPT, Claude and Gemini, whereas China probably leads in the Open Source applications like DeepSeek, Qwen and Kimi. Each country has strengths and weaknesses. 

In a nutshell, the US still has the best chips, but is facing a growing squeeze on the outsized electricity demand arising from its rapidly growing data centre network.

By contrast, China is behind on chip design (though the gap is rapidly narrowing) but has no shortage of electricity. At a recent Shanghai AI conference, not one Chinese participant cited electricity supply as a constraining factor. Not so in the US. The 2025 Center for Strategic and International Studies (CSIS) report recently concluded that “today, access to electricity supply is the binding constraint on continued US leadership in AI”.

Both electricity price and volume growth trends should worry the US. Current average electricity prices for industrial users in China and the US are broadly the same at 8c to 9c per KWh. The difference comes in the ongoing dynamics: since 2020, US electricity prices have risen 35%, well above the rate of inflation, whereas Chinese prices have stayed flat. This is understandable given that, since 2019, Chinese annual electricity supply has grown at 4.4% compound annual growth rate (27% total and off a base that is 2.5 times that of the US) versus the US’ growth of 1.9% compound annual growth rate (11% total).

Energy-hungry industry

Even though the booming US AI industry can probably “afford” electricity prices rising at twice the rate of inflation, the crowding out effect on prices of this energy-hungry industry has already draw criticism from Senators Warren, Heinrich and Reed (global warming and the consequential runaway demand for air-conditioners is further boosting US electricity demand, as is the rise of the world of crypto).

This is not the case in China where electricity supply is plentiful and prices are stable. Only recently have US commentators begun to understand what a game-changing difference it makes to have an electricity feedstock such as sunshine and wind that, unlike oil and gas, is essentially “free”!

Yet, as important as AI is, and many US investors and their president breathlessly believe it to be existential, AI is unlikely to become the defining geoeconomic arm-wrestle of the 21st century. Just as US control of oil supplies made the 20th century an American one, this century’s crown will probably belong to the nation that masters the realm of renewable energy.

Obscured by oil-tinted glasses and the political biases and priorities that result, few in the US administration have yet grasped this. In the wake of the US’s near unilateral withdrawal from the global green-tech race, Kingsmill Bond was quoted in the Daily Telegraph as saying: “From China’s perspective, this is just fabulous. For the next four years, the US is giving up on the greatest economic battle of our time.”

When discussing US energy policy and the need to buy wind turbine components from China on 6 July 2025, Trump said: “I have never seen a wind farm in China. Why is that? Somebody check that out.” A visit to China’s north-west Gobi and Taklamakan Deserts and their 50,000 windmills would be a revelation to Don “Quixote” Trump: he would be spoilt for choice in his tilting!

Where oh where, just when America needs such down-to-earth wisdom, is the president of the United States’ answer to Sancho Panza, Don Quixote’s faithful squire?

“Look, your grace,” said Sancho, “what you see over there aren’t giants, but windmills, and what seems to be arms are just their sails, that go around in the wind and turn the millstone.”

The green blindness currently exhibited by the US speaks to a different sort of millstone… the one hanging around its economic neck. DM

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