The AI race between the US and China is increasingly becoming a contest of energy dominance. China has made significant strides in securing cheap and abundant electricity to power its AI ambitions, producing over 10,000 TWh of energy per year, more than double the US output. This energy surplus gives China a strategic edge in developing AI, particularly in data centers.
China's government has executed a single-minded national strategy to secure cheap and scalable electricity for AI development. The country has added 300 GW of new coal power since 2022, enough to power Germany twice over. This has enabled Chinese AI labs like Huawei, Alibaba, and Baidu to operate on subsidized electricity, significantly reducing costs. China offers cheap power at less than 8¢/kWh, enabling energy-intensive AI research. In contrast, US firms pay up to 33¢/kWh in many regions, a fourfold handicap.
The consequences for the US are stark. The US energy grid cannot support AI expansion, with companies like Microsoft and OpenAI building their own power plants to sustain data centers. The US AP1000 reactor program faces delays until 2040-2044, adding only a fraction of China's energy output. US firms face high energy costs, hindering their ability to compete with Chinese AI labs operating on subsidized electricity.
The US is already 15 years behind China in energy production, and the consequences are irreversible. China's AI edge will strongly reshape global power dynamics, potentially leading to economic warfare, military supremacy, and a new multi-polar geopolitical ecosystem dominated by China.
