China’s dominance in renewable energy is expanding its global influence, and unless the United States rethinks its industrial strategy, it risks ceding long-term power to Beijing.

China has come to dominate the global renewable energy market. It leads the world in the installation of solar and wind power, has leapt to the cutting edge of associated technologies, and dominates the renewable supply chain from final products all the way down to critical minerals. It exports renewable energy technology worldwide and finances green energy projects across the globe through its flagship Belt and Road Initiative (BRI). This is an area where the United States has failed to compete and is unlikely to catch up. It should serve as yet another warning to Washington: get serious about strategic investment in emerging technologies or continue to cede ground to Beijing.

China’s Shift From Fossil Fuels to Renewables

Energy projects have long been a staple of China’s Belt and Road Initiative, accounting for around 40 percent of investment through Beijing’s flagship international development policy. For many years, these projects were dominated by fossil fuels, but since President Xi Jinping’s 2021 announcement that China would cease financing new coal power projects abroad, renewable energy projects have rapidly outpaced them, accounting for 68 percent of China’s investmentin overseas energy projects in 2022-2023.

This “Green Silk Road” is not only in China’s interests but also reflects the level of demand across the Global South for new energy technologies that can underpin green development. For instance, across Africa, there has been a rapid increase in agreements for new climate-linked projects, including renewable energy. Electrical grid connection in Africa lags behind much of the Global South, but the continent has huge potential to gain from solar power, boasting “60 percent of the world’s best solar resources.” In the absence of competitive alternatives, Chinese state-owned enterprises and private companies offer affordable and effective infrastructure. This puts China in a position to drive electrification across Africa based on its own renewable technology and supply chains. The failure of the United States to develop competitive alternatives effectively translates into exclusion from a huge potential market. 

Extending Influence Through Green Technology

But energy provision does not exist in isolation. Washington’s position has not been helped by the decision to slash overseas aid and the reputational damage this will do. While China cannot replace the United States as an aid provider (even as its outward investment in infrastructure massively exceeds that of the United States), it is exploiting the United States’ turn inward by presenting itself as the more reliable superpower, building on its record as a provider of infrastructure through the BRI. The gains for Beijing in terms of reputation and influence are clear, and do not require partner countries to fully align with China—they merely require that partner countries see China as providing something they need when other powers won’t. 

Meanwhile, the drive for green technology goes beyond the grid to energy storage and green transport, among other areas. China dominates both lithium batteries and electric vehicles (EVs) across the entire supply chain. China is pursuing digitalisation of energy technology, including via the development of smart grid technologies, and has become a go-to provider of digital infrastructure across the BRI, providing a ready architecture for integration. Increasingly, this also involves working with partner countries to roll out artificial intelligence (AI) systems, a key pledge of the 2024 Forum on China-Africa Cooperation. 

Domestic Industrial Strength is a Global Lever 

This builds on China’s domestic advantages as a manufacturing superpower. As China pushes to automate manufacturing at home, it reduces the opportunities for these industries to relocate to developing countries. This means China could keep producing by far the largest share of renewable energy equipment and a range of compatible green technologies, and doing so at world-leading quality. It could also maintain dominance over the supply chain and be confident in a long-term market across the Global South. 

This is a solid foundation from which China has the real potential to dominate global energy over the coming decades as population and demand surge in the developing world. This could translate into serious geopolitical leverage for Beijing, especially when combined with China’s advances in civil nuclear energy. Chinese energy technology could end up powering economic development in most of the world.

Strategic Challenges for the United States

This is a serious challenge for the United States as it seeks to maintain global primacy. But it points to a far bigger problem for the United States: China is repeatedly demonstrating that it is better at anticipating and exploiting the development of emerging technologies. It is now in the process of achieving something similar with civil nuclear energyand robotics. These gains are bolstered by the country’s dominance of rare earth extraction and processing—something the trade war has brought home painfully to Washington—and mitigation of which will take decades. 

While the United States continues to lead in many areas, the real question is not where Washington is currently ahead; it is whether, and for how long, it can maintain that lead. From AI to jet fighters, Beijing is proving adept at catching up quickly, deploying rapidly and at scale, and pushing its technology overseas. 

Lessons for Washington

It is hard to make any recommendations that could credibly allow the United States to compete with China on renewables across the Global South, even with allied assistance. The redirection of resources and reorientation of priorities and industrial strategy that it would require is far too great. (Indeed, the picture arguably looks better for allies; their ambitions do not necessarily align with Washington’s wish for primacy, meaning they can focus their more limited resources on occupying specific niches in the emerging renewable technology landscape). 

Instead, the saga of China’s dominance should serve as a lesson to Washington: allowing this to happen repeatedly by failing to anticipate and exploit emerging sectors and trying to compete where Beijing has already established dominance is a recipe for ceding US global power and influence. To compete with China, the United States needs to start thinking like China when it comes to industrial strategy and take seriously the desires of countries across the Global South as it invests in emerging technologies.

About the Author: Dr. William Matthews

Dr. William Matthews is a Senior Research Fellow for China and the World in the Asia-Pacific Program at Chatham House. He is an expert in China’s foreign relations, specializing in the geopolitical implications of China as a rising power, including technological competition, China–U.S. relations, and Indo-Pacific security. He previously worked in the AI and geopolitical risk sectors, with a focus on U.S.-China technology competition and strategic vulnerabilities posed by China’s technological and economic influence. Before that, he taught the comparative social science of China at the London School of Economics. 

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