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00:00This is a story about taking your eye off the ball.
00:03Since President Trump came to office the first time,
00:06he's been focused on the economic and national security risks
00:09posed by one country in particular.
00:12Did you say China?
00:13China?
00:14China!
00:15We were losing to China.
00:16We want to beat China.
00:17We're leading China.
00:20In his second term, President Trump has focused on AI
00:23as a key area of competition between the two countries,
00:26and specifically the chips needed to drive all those large language models.
00:32China and other countries are racing to catch up to America
00:36having to do with AI, and we're not going to let them do it.
00:39We have the great chips, we have the great everything,
00:42and we're going to be fighting them in a very friendly fashion.
00:46But while the U.S. is doing what it can to protect its lead in the computer race,
00:51there's another contest that it may be losing.
00:53The battle to make sure we have the power we need
00:56to drive all that AI we're developing.
00:59It's fascinating because when you look at AI,
01:04there's a huge energy need for the data centers.
01:08We all know Hank Paulson from his time running Goldman Sachs
01:11and then leading us through the great financial crisis as Treasury Secretary.
01:16But he's also devoted much of his career to climate issues
01:19and helped lead Goldman Sachs to China over 30 years ago.
01:24We have one big advantage on China in the sense that we are energy independent, right?
01:30And they aren't.
01:32But we have a shortage of electricity in this country.
01:37The demand is much greater than the supply, and it's growing.
01:42And so we have a shortage of electricity to power data centers.
01:47China, on the other hand, they're investing massively in coal
01:51and a lot of things I wouldn't like them to be investing in,
01:54but they are investing big time in renewables, solar and wind.
01:59They have more renewables than Europe, the U.K., the U.S. combined.
02:05They're going to have half their energy from renewables.
02:07So they've got plenty of electricity.
02:11Meanwhile, in our country, utilities can't meet the demand.
02:16Electricity prices are spiking up.
02:18So ratepayers are putting up their hands and say,
02:22no more at the same time we need the electricity.
02:25And so the interesting thing is, if you look at the U.S.,
02:30all of our electricity, essentially new electricity the last couple of years,
02:34has come from solar and wind.
02:36At the same time, the administration is restraining it.
02:40So, again, I would say that we are ahead of China when it comes to AI.
02:47They're investing massively.
02:49But I've got to tell you, the biggest potential drag we have
02:53is not having enough electricity to power our data centers.
02:59Are we disadvantaging ourselves?
03:01I think we are.
03:03Former U.S. ambassador to China, Nick Burns,
03:06saw the unprecedented scale of China's energy investment firsthand.
03:10I used to travel a lot by train in China
03:13because you can see a lot more of the country.
03:15You can talk to people.
03:16The degree to which China is building transmission lines all across the country,
03:20and I visited 26 of the provinces, even out to the west, it's staggering.
03:25The degree to which they're now controlling the global supply chain in electric vehicles,
03:30in lithium batteries, in solar panels, in wind power,
03:36they are the world leaders in this.
03:37And I think that the United States should be making a similar effort.
03:40You know, maybe it's not as cost-effective now,
03:42but we have to think out to the 2030s and 2040s.
03:46And I do think, as we consider this big challenge of how do we compete with China
03:52and yet not get into a war with China,
03:55we have to start planning more long-term as they are doing.
03:59The numbers bear out what Hank Paulson and Nick Burns have seen on the ground in China.
04:05Since 2021, in just five short years,
04:09it has added more power capacity across all energy technologies
04:13than the United States has built in its entire history.
04:17And that gap is only growing.
04:19Over the next five years,
04:21China plans to add more than 3.4 terawatts of energy generation capacity,
04:25nearly six times as much as the U.S.
04:29They've been developing their electric grid at a rate that is extraordinary.
04:34Elizabeth Economy, a China policy expert and senior fellow at the Hoover Institution,
04:39says there will be a high cost to falling farther behind.
04:43China has made a big bet on renewables and clean energy more broadly.
04:48This past year, for the very first time,
04:51it has more power generation capacity in clean energy
04:55than it does in fossil fuel energy.
04:57Now, they're not the only ones.
04:58Europeans are following suit,
05:00but we clearly are moving in the opposite direction,
05:02sort of all in on fossil fuels.
05:04I think it's important to understand that the bet from the Chinese side
05:07is not necessarily just about the health of the Chinese people
05:10or the Chinese environment.
05:12This is a real economic play for them.
05:14You know, they are cognizant of the fact that by 2035,
05:18the clean energy market is estimated to be globally as big as $7 trillion.
05:23And they want to command that market.
05:25So they have spent a lot of time over the past several years
05:28investing very heavily in renewables.
05:31You know, last year, a trillion dollars in renewable investments.
05:34And as a result, they've seen their exports of EVs skyrocket.
05:3880% increase in 2025, 40% for battery exports, 20% for solar panels.
05:44This is a real moneymaker.
05:46So I think for the Chinese, as they look out, clean energy is green, right?
05:51It's green for the environment and, you know, it's green for money.
05:54You make a really interesting point that this has been going on for several years.
05:58President Xi did not just wake up yesterday and say,
06:01let's have a lot of renewables for AI.
06:03It started before, really, there was the big push for AI.
06:06How much of this is pure commerce rather than development of AI and competition in AI?
06:10I mean, on the energy side of it, I don't think that AI is very late to the game.
06:16I mean, the Chinese have been beginning with renewables.
06:19Beginning in the late 1980s, early 1990s,
06:21they were already inviting Western firms in for wind turbines and solar panels and saying,
06:27sure, we'll give you access to the Chinese market.
06:29Now, you just give us some of your advanced technology or set up an R&D center,
06:33or sometimes they might just illegally appropriate the technology.
06:36But, you know, one five-year plan after another,
06:40renewables have been part of the Chinese plan.
06:42And you're right, exactly.
06:44Xi Jinping did not wake up, you know, one day and say, oh, this really matters.
06:48Though China's push into renewables may not have been intended for AI,
06:53that's where it could matter most.
06:55In the U.S., power demand is exploding,
06:58with consumption from data centers alone expected to triple by 2035,
07:03putting even more pressure on a grid already under strain.
07:06But instead of racing to close the gap with renewable alternatives,
07:10the U.S. is pulling back from a sector China increasingly dominates,
07:15accounting for roughly 80 percent of global technology production in solar and battery tech,
07:19and more than 70 percent in wind.
07:22This enormous development of renewables in China didn't come free.
07:27They had to spend some money to do it.
07:29If the United States wanted to get back in this game and compete on the renewable part,
07:33does it have the capacity?
07:34How much money is involved?
07:36How much money has the Chinese government really put into this?
07:38I mean, at this point, it's easily over a trillion dollars.
07:42It's been billions of dollars every year.
07:44And as I mentioned, a trillion dollars, you know, just last year in clean energy investments.
07:49So there's not a way that we're going to compete across this spectrum of technologies,
07:55you know, solar, wind, nuclear.
07:58We're just not going to be able to do that at this point, even in EVs.
08:01Right.
08:01China's exports were worth about 76 billion dollars last year.
08:06Ours, somewhere around three to four billion dollars.
08:09I mean, don't forget, they're also a country of 1.4 billion people.
08:13So roughly three and a half, four times as large as we are.
08:16So that capacity is much greater as well.
08:19But could we get back in the game?
08:21I think that was the point of the Biden administration's Inflation Reduction Act.
08:24Right.
08:25It was a mix of subsidies and tax incentives.
08:27It attracted an enormous amount of foreign investment.
08:30So it had, I think, a lot of potential to reboot the clean energy sector in the United States.
08:37But, you know, the Trump administration is not that interested in the clean energy in the renewable sector.
08:43And so, you know, we saw that they rolled back probably 95 percent of the Inflation Reduction Act.
08:50Can the markets make up a good part of the difference?
08:53By that, I mean this.
08:54Instead of the government giving subsidies or tax breaks, incentives on renewables,
08:58is it possible the market will take over and say it's just cheaper to get energy from some of the
09:03renewables?
09:04Well, I think there's always a hurdle, right, when you're introducing a new technology that you have to get over.
09:11And that is where the government subsidies or incentives, you know, can play an important role.
09:15I mean, we see that now with rare earths.
09:17And I think the Trump administration has come around to appreciate, right, that if you're going to compete with China,
09:23you're going to have to adopt some elements of their playbook, right?
09:26You're going to have to invest.
09:27You're going to have to have a secure market, you know, for the new investment, for the new technology that
09:34you're developing, right?
09:35Because you have to get it over the hurdle from the innovation to the manufacturing to the, you know, deployment
09:40and export.
09:41And I think that's the that's the full life cycle of new technologies that China has created, its playbook.
09:48And we don't really have a playbook that can compete without a little more government intervention than we've typically been
09:54comfortable with.
09:56The U.S. and China may be competing hard on AI, and the U.S. may have taken its eye
10:02off the ball on energy that's critical in that competition.
10:04But there's at least one area where they may find common ground, agreeing on rules to make sure that all
10:12this AI being built and powered is as safe as possible.
10:16Do we need to work with China on safety for AI?
10:21Yeah, obviously we do.
10:25It's at some time.
10:26But right now, they're an adversary when it comes to military and security.
10:33So I think we're going to be forced to do it when we start seeing accidents and bad things happen.
10:41And I just want to make sure we're in the lead when we get to that point.
10:45I really do.
10:47And I'd take a step further and say when President Trump and she meet, it's going to be the first
10:53of, I hope, you know, four summit meetings.
10:56And I'm hoping right now there is, you know, we got a trade deficit, but we've got a trust deficit
11:04big.
11:05And I want to close that trust deficit because we need to figure out how we can compete and work
11:11together at the same time.
11:13And if we don't, the world is going to be a much more dangerous and less prosperous place.
11:18So, again, I view and I think a positive is I really do believe President Trump wants to find a
11:28way to work with China.
11:30And I hope that the Chinese feel the same way.
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