AI experts visit China, get shook by its energy advantage

American AI experts recently returned from China with sobering observations about the country’s energy infrastructure, concluding that China’s abundant electricity supply gives it a decisive advantage in the AI race. The stark contrast highlights how U.S. grid limitations could severely constrain American AI development while China operates from a position of energy abundance.

What you should know: China has solved the power problem that’s becoming a critical bottleneck for U.S. AI development.

• “Everywhere we went, people treated energy availability as a given,” wrote Rui Ma, founder of Tech Buzz China, after touring China’s AI hubs.
• In contrast, surging AI demand in the U.S. is colliding with a fragile power grid that Goldman Sachs warns could severely choke industry growth.
• McKinsey projects companies worldwide will need to invest $6.7 trillion in new data center capacity between 2025 and 2030 to keep up with AI’s strain.

The big picture: China maintains an electricity oversupply while the U.S. struggles with grid constraints that force companies to build their own power plants.

• China’s reserve margin has never dipped below 80%–100% nationwide, meaning it consistently maintains at least twice the capacity it needs.
• U.S. regional grids typically operate with just a 15% reserve margin, leaving little room to absorb rapid AI infrastructure load increases.
• China adds more electricity demand than Germany’s entire annual consumption every single year, with whole rural provinces blanketed in rooftop solar.

Why this matters: The energy infrastructure gap could determine which country leads the global AI race.

• Data center building is the foundation of AI advancement, and spending on new centers now displaces consumer spending in terms of impact to U.S. GDP.
• “AI’s insatiable power demand is outpacing the grid’s decade-long development cycles, creating a critical bottleneck,” Goldman Sachs noted.
• David Fishman, a Chinese electricity expert, warned: “U.S. policymakers should be hoping China stays a competitor and not an aggressor. Because right now they can’t compete effectively on the energy infrastructure front.”

Structural advantages: China’s governance model enables long-term energy planning while the U.S. faces systemic constraints.

• In China, energy planning is coordinated by long-term, technocratic policy that defines market rules before investments are made, ensuring infrastructure buildout happens in anticipation of demand.
• U.S. infrastructure projects depend on private investment expecting returns within three to five years—far too short for power projects that take a decade to build and pay off.
• “They’re set up to hit grand slams,” Fishman noted. “The U.S., at best, can get on base.”

What they’re saying: Energy experts emphasize the urgency of addressing America’s infrastructure disadvantage.

• “Capital is really biased toward shorter-term returns,” Fishman said, noting Silicon Valley has funneled billions into “the nth iteration of software-as-a-service” while energy projects fight for funding.
• “The gap in capability is only going to continue to become more obvious — and grow in the coming years,” he warned.

Real-world impact: Americans are already feeling the strain of AI’s energy demands on their daily lives.

• In Ohio, the electricity bill for a typical household has increased at least $15 this summer due to data centers.
• Some U.S. companies are building their own power plants rather than relying on existing grids because cities’ power grids are too weak.