From Oil Fields to Data Centers: The Next Frontier of U.S.–China Competition

Cora Jackson

 Over 60,000 solar panels cover a mountain in Jinhua, China. (Via: ABC.au)

The international energy landscape is being reshaped by competition between the United States and China, with implications for economics, geopolitics, and climate security. Investment in clean energy has grown annually at 25%, amounting to $2 trillion in 2024, double that of fossil fuels. Solar, wind, and battery technologies are now drivers of global economic growth. For emerging economies such as India, Pakistan, and Türkiye, they offer the opportunity to industrialize and reduce dependency on volatile fossil fuel imports. As the threat of climate change looms, the United States and China have pursued starkly different energy strategies.

Due to limited domestic reserves of oil and gas relative to its enormous population, China aims to achieve energy independence and consolidate its position as a clean energy hegemon. In China, more wind turbines and solar panels were installed last year than in the rest of the world combined. Thanks to its clean energy surge, China’s CO2 emissions are falling for the first time despite massive power demand.

More than half of the world’s clean energy patents belong to China. It has rapidly become the global leader in clean energy by dominating electric vehicles, patents, nuclear and battery industries. The recent increase has occurred in large part due to the trade “war” started by President Trump, prompting urgent efforts to focus China’s economy on domestic consumption and autonomy.

Bejing has also leveraged its clean energy leadership to increase its geopolitical supremacy. Since 2023, it has reported $168 billion in foreign clean energy investments. It has forged myriad political and economic ties by using energy exports as spheres of influence, ranging from its construction of the largest wind farm in Africa, located in Kenya, to even supplying Turkey, a nation that once did business with the U.S. and Europe, with nuclear reactors.

Meanwhile, the United States has remained tied to its status as the world's largest producer and exporter of oil and gas, effectively ushering in an era of what President Donald Trump has coined American “energy dominance.” Moves by the Trump administration have heavily favored fossil fuel expansion. In a reversal from the Biden administration, Trump has rolled back restrictions on the supply of American hydrocarbons and has withdrawn regulations that favor electric vehicles.

The renewable energy industry will be significantly impacted by recent legislation from House Republicans, informally known as the “Big Beautiful Bill.” These attempts aim to bolster the traditional energy sector and reduce low-carbon energy incentives. Wind and solar are being aggressively targeted as tax credits have been rapidly eliminated. Thirty new offshore oil and gas leases in the Gulf of Mexico were approved for the 2025-2040 period. These strong-armed moves are centered on the longstanding notion that the world is designed around fossil fuels, and that it is in Washington’s best interest to continue to exploit them.

The Trump administration dismantled longstanding foreign aid programs that were once cornerstones of America’s soft power strategy. The replacement is a transactional diplomacy approach where influence is bought and sold. By securing agreements for arms sales and fossil fuels, the U.S. maintains some geopolitical leverage due its to oil and gas supply. For instance, Ukraine has continued to purchase American gas in exchange for military aid, reflecting this aggressive stance, even with allies.

By controlling critical supply chains, restricting key resources like rare earth magnets, and expanding its technological prowess, China is reshaping global energy markets and making it difficult for rivals, especially the United States, to catch up. Global demand for crude oil will plateau by 2030, exposing the U.S. to greater economic vulnerability. By 2035, solar and wind power will become the two largest sources of electricity production. These largely economics-based decisions translate into cultural, military, and political implications for both the U.S. and China. In turn, the U.S. risks being left out of the emerging global energy transition and the economic opportunities that will define the global battle for clean energy.

Without strategic investments and coordinated multiagency responses, American energy assets risk becoming outdated compared to the essential geostrategic clean energy technologies of the 21st century. The U.S. can take advantage of its position as a leader in innovation and technology by employing a pragmatic federal strategy that responds to China’s dominance of supply chains and clean energy financing abroad. Mobilizing U.S. capital to meet the demands of emerging economies and advancing domestic industrial policy to accelerate research and development for novel technologies will be crucial.  In addition, tax policy and government funding should be leveraged to strengthen the domestic labor force to support innovation hubs at the regional and state levels.  By continuing to reduce reliance on foreign power, supporting surging AI-driven power demands, and leapfrogging into next-generation technologies such as advanced nuclear power and solid-state batteries, the US will be poised to maintain a competitive edge in the clean energy transition and regain lost geopolitical advantage.

If the U.S. fails to adjust to the changing energy landscape, it not only risks falling behind China, but other major powers as well. Oil-rich states such as Saudi Arabia and rising energy powers like Brazil and India who are also drawn into the struggle may create new fault lines in the global energy order. Without bold and strategic investment, Washington may cede its long-term national security, climate resilience, and economic growth in the face of rising global demand and climate change.