Introduction

The ongoing geopolitical tensions between the US and China have far-reaching consequences, particularly for developing countries. As both superpowers vie for influence on the global stage, their economic strategies – such as trade policies, investment initiatives, and technological advancements – are reshaping opportunities and vulnerability for emerging economies. This dynamic creates new pathways for growth while simultaneously exposing these nations to heightened risks, including economic dependence, trade imbalances, and geopolitical conflicts. Understanding how these shifts impact developing countries is crucial for navigating the evolving global landscape and formulating strategies to manage both opportunities and challenges in this era. 

US and China’s Diverging Energy Strategies

The United States and China, the world’s largest economies, are also the largest carbon emitters and have their own diverging policies and strategies to deal with it. Their different approaches to climate change and emission clearly draw the lines of differences in political, environmental, and economic priorities that each economy has. Despite the two countries acknowledging the urgency of tackling environmental issues and coming up with solutions for using cleaner, renewable energies, the methodology and the pacing of their approaches bring about the differences they have. 

The United States: Market-Driven Transition with Policy Support

The United States of America, the biggest capitalist economy in the world has carved a very capitalist way out of their energy issues. Under the leadership of former President Joe Biden, the U.S. energy strategy has been characterized by a market-driven approach. This approach aimed to accelerate the transition to renewable energy. The U.S. has a history of resorting to fossil fuels, especially oil and natural gas. Then came the Shale Revolution which catapulted the U.S. into a leading Oil and gas producer (EIA, 2023). The U.S. was not required to look back after that as an economy. But it also reshaped the U.S. energy policy. 

In recent years, however, the U.S. made great strides in adopting renewable energy. The driving force for this was the plummeting costs of solar and wind technologies and federal incentives. The Inflation Reduction Act (IRA) of 2022 marked a turning point for it allocated $369 billion to clean energy investments. It also introduced tax credits for renewable energy projects, electric vehicles, and energy storage, incentivizing clean energy as a strong and environmentally suitable replacement for fossil fuels (White House, 2022). These strategies focused on innovation inviting the private sector to apply its capitalist minds to revolutionize energy use and restore environmental stability. State-level initiatives aided the government and the private sector for this cause, with states like California and Texas leading in the renewable energy deployment (IRENA, 2023). 

Despite their continuous efforts, the U.S. has had a rough bumpy ride riddled with a huge challenge in balancing its fossil fuel legacy with its climate goals. Political polarization and reliance on natural gas as a “bridge fuel” have slowed the pace of decarbonization (IEA, 2023). Additionally, infrastructure constraints and regulatory hurdles have complicated the expansion of renewable energy capacity (NREL, 2023).

China: State-Led Expansion of Renewables and Coal

If we look at the energy strategies that China has adopted, it is reflective of the nature of the government ruling over it. It is state-directed and boasts dual goals of maintaining economic growth and reducing emissions. It has been the world’s largest emitter of greenhouse gases, subjecting it to international pressure to control its reliance on coal, which still constitutes over half of its energy mix (IEA, 2023). However, China also is a proud global leader in renewable energy investment and deployment. It produces a major chunk of the world’s solar panels, wind turbines, and electric vehicles (BloombergNEF, 2023). 

The characteristics of the Chinese approach are centralized planning and humongous state-backed investments in clean energy infrastructure. With ambitious goals of attaining peak carbon emissions by 2030 and achieving carbon neutrality by 2060 (Climate Action Tracker, 2023) on its back, it has set out to expand its renewable energy capacity at an unprecedented scale. It has been investing heavily in solar, wind, and hydropower. This has manifested itself in the form of China becoming a global leader in battery production and electric vehicle adoption (IEA, 2023). 

This is not to say that it does not have to walk on eggshells. Its rapid growth in clean energy infrastructure is being contradicted by its agreements with new coal-fired power plants in the name of energy security and industrial growth (Global Energy Monitor, 2023). This dual-natured approach highlights its complex battles between its climate commitments and reliance on coal for economic stability. 

China’s Trade Policies: Solar Technology Export Strategies in South Asia and Africa  

China’s growing involvement in renewable energy markets in both Central Asia and Africa is driven by a combination of domestic challenges, geopolitical ambitions, and strategic economic interests. In Central Asia, countries like Kazakhstan and Uzbekistan have prioritized renewable energy to address energy security issues. For example, Kazakhstan met its interim target of generating 3% of its electricity from renewable sources by 2020 and aims to generate 15% by 2030, with a significant focus on solar and wind. Similarly, Uzbekistan, which had only about 253 MW of solar and wind capacity in 2022, plans to increase its renewable energy capacity to 8 GW by 2030 (Chadly et al., 2024). In Africa, Chinese companies are increasingly focused on tapping into the continent’s vast renewable energy potential, particularly in solar and wind, driven by excess capacity in China’s domestic market and the search for new growth opportunities. Africa’s potential is immense, with countries like South Africa aiming to add more than 100 MW of solar power each year, attracting significant Chinese investment. 

A significant driver behind China’s investments in renewable energy in these regions is the domestic oversupply of energy products and a slowing Chinese economy. In Central Asia, energy security concerns – fueled by external factors like the ongoing Russian-Ukraine conflict – have led countries to explore alternative energy sources, with solar and wind energy receiving particular attention. For instance, Kazakhstan’s energy shortages are exacerbated by a gap between gas processing capacity and population growth, while Uzbekistan faces energy deficits as gas production declines. In Africa, China’s renewable energy companies are motivated by a competitive market landscape at home, where developed markets in Europe and the US are saturated and demand is contracting. As such, these companies view Africa not only as a market for exporting technology but also as an area for long-term project development, with countries like South Africa emerging as key destinations due to their stable political environment and supportive policy frameworks like the Renewable Energy Independent Power Producer Procurement Programme (RE-IPPPP), which has led to the development of numerous large scale solar and wind projects (South African Institute of International Affairs, 2024).

In both regions, Chinese state-owned enterprises (SOEs) and private companies have different but complementary roles. Chinese SOEs, such as PowerChina and State Power Investment Corporation, dominate large-scale infrastructure projects, often with direct government support. Their deep capital reserves and political leverage make them key players in implementing renewable energy projects. On the other hand, private Chinese companies, such as Jinko Solar and Goldwind, are becoming increasingly active in not just exporting products but in developing and operating renewable energy projects abroad (Power, 2017). These private firms are particularly prominent in Africa, where they are capitalizing on local manufacturing and assembly opportunities, which help meet local content requirements and provide jobs to the local economy.

However, the path to successful investments is not without certain risks. In Central Asia, the political landscape presents challenges, leading to China having to navigate energy dependencies and regional rivalries. The complexity of operating in politically sensitive environments, such as Kazakhstan’s struggle with energy diversification and Uzbekistan’s attempts to modernize its energy infrastructure, requires Chinese companies to adapt to local regulatory frameworks while managing diplomatic tensions (Sharifli, Y, 2024). Similarly, in Africa, issues like political instability, currency depreciation, and poor infrastructure continue to pose challenges to large-scale renewable projects. Despite the region’s vast potential, many Chinese firms are reluctant to fully commit to the African market, opting instead to focus on equipment skates or smaller-scale projects.

China’s strategy in both regions reflects a nuanced approach to renewable energy that balances state-driven goals with the realities of local market dynamics. Unlike the common narrative of a centrally coordinated state-led strategy, China’s renewable energy investments in Central Asia and Africa are largely driven by corporate strategies, with both SOEs and private firms playing a crucial role. These investments are not merely about resource extraction or market expansion, they also involve technology transfer and the promotion of low-carbon energy solutions, with Chinese companies positioning themselves as both suppliers and developers of renewable energy infrastructure. This multi-actor dynamic underscores the complexity of China’s role in shaping the energy future of these regions.

US Trade Policies: Fossil Fuel Exports and Their Impact on Developing Nations

Economic Impacts

The United States has expanded fossil fuel exports, especially liquefied natural gas (LNG), which creates energy dependence in developing countries (Ezz & Volcovici, 2024). As a counter to China’s Belt and Road Initiative, these LNG deals across Southeast Asia provide an alternate source of investment and infrastructure. However, this also ties recipient nations to U.S. energy supplies (Ahmed, 2023). Such reliance can slow the adoption of cleaner energy technologies and lock economies into fossil fuel use (Puyo, 2024). Because prices in global fossil fuel markets often fluctuate, developing countries risk economic instability. As renewable energy gains traction, there is also rising concern about stranded reserves, where they are underutilized and turned into liabilities (Heras, 2024).

Environmental Impacts

The United States essentially transmits a portion of its emissions footprint elsewhere through the export of fossil fuels. Over two billion tons of carbon dioxide equivalent emissions were produced in other nations in 2022 as a result of these exported fuels, accounting for about one-third of domestic emissions in the United States (Ezz & Volcovici, 2024). The lack of sophisticated environmental safeguards can result in pollution, deforestation, and biodiversity loss in many developing countries (Fossil Fuel Shackles: How Wealthy Nations Hook Developing Ones, n.d.). While certain U.S. programs promote ‘intra-fuel switching’ or moving between fossil fuels, this does not actually lessen reliance on fossil fuels. Additionally, it hurts those nations’ state-owned fossil fuel companies (Banks & Lorenzen, 2024).

Geopolitical Impacts

By establishing new commercial connections and dependence, U.S. fossil fuel exports alter the balance of power in the world (Heras, 2024). The United States maintains its fossil fuel exports while advocating for climate action, arguing that these exports keep energy costs down as the country moves toward cleaner energy (Ezz & Volcovici, 2024). The energy policies of developing nations may be influenced by these trade relations to favour the use of fossil fuels (Fossil Fuel Shackles: How Wealthy Nations Hook Developing Ones, n.d.). The United States wins economically from this strategy, but importing countries face environmental hazards as a consequence (Ezz & Volcovici, 2024).

Alignment with Global Climate Goals

The United States’ continued exports of fossil fuels run counter to the Paris Agreement’s objective of reducing global warming by preserving fossil fuels in the ground (Heras, 2024). Instead of concentrating just on lowering consumption, many now support supply-side measures that limit the development of fossil fuels (Heras & Gupta, 2023). Exporting countries are not held responsible for the pollution they indirectly generate, since current accounting regulations do not properly account for emissions from exported fuels (Ezz & Volcovici, 2024). While other nations favour holding exporters accountable, the United States has not taken this position.

Policy Consequences and Recommendations

Supply-side actions are required to solve these issues. These include establishing clear goals for reduced extraction, halting the development of new fossil fuel infrastructure, and gradually eliminating subsidies for fossil fuels (Manley & Cust, 2018).  To support sustainable energy systems, such initiatives ought to include capacity-building, technological transfer, and financial assistance (Hoffart & Holz, 2024).

The export of fossil fuels by the United States boosts the American economy, but it frequently hurts developing countries by putting them under more economic and environmental strain and undercutting global climate goals. Adopting supply-side policies, guaranteeing complete emissions accountability, and assisting developing nations in their transition to sustainable energy should be essentially the next steps. By taking these steps, the inconsistencies in the current fossil fuel trade patterns might be resolved and brought more directly into line with international climate pledges (Manley & Cust, 2018).

Overall Impact on Developing Countries: Policy Analysis

The United States and China, as the world’s two largest economies, have adopted diverging energy strategies that significantly impact developing countries. While the U.S. increasingly emphasizes energy independence, clean energy investments, and geopolitical control over energy markets, China continues its aggressive expansion in global energy infrastructure, especially in fossil fuels and renewables. These strategies shape energy access, economic development, and environmental policies in developing nations.

China has positioned itself as the dominant player in global energy infrastructure through its Belt and Road Initiative (BRI), investing over $50 billion in foreign energy projects between 2013 and 2021 (IEA, 2022). Many developing countries, particularly in Africa and Southeast Asia, benefit from China’s financing of coal, hydroelectric, solar, and wind power projects. For instance, China financed Kenya’s Lake Turkana Wind Power project, Africa’s largest wind farm, while also backing coal power plants in Indonesia and Pakistan (World Bank, 2021). This dual approach supports energy access but raises concerns about long-term environmental sustainability.

Conversely, the U.S. strategy prioritizes clean energy and technological innovation, though its direct energy investments in developing countries are more limited. Under initiatives such as Power Africa, the U.S. has contributed $7 billion to expand electricity access in Sub-Saharan Africa, focusing on renewables (USAID, 2023). However, its reluctance to finance fossil fuel projects has reduced its influence in countries still reliant on coal and oil for economic growth. Unlike China, the U.S. has also imposed sanctions and trade restrictions on certain energy partnerships, limiting developing nations’ access to diverse energy sources (EIA, 2022).

The diverging strategies of the U.S. and China create both opportunities and risks for developing countries. China’s energy investments often come with large debts, as seen in Sri Lanka, where unsustainable loan terms for energy projects led to economic distress (IMF, 2022). Additionally, China’s continued financing of coal power contradicts global climate goals, increasing carbon emissions in partner nations. In contrast, the U.S. promotes sustainability but lacks the large-scale financial commitment needed to fully support developing nations’ energy transitions. For example, despite pledging $11.4 billion annually for global climate finance, actual disbursements have fallen short (OECD, 2023).

Geopolitical tensions between the U.S. and China also affect energy security in developing countries. The U.S. seeks to counter China’s influence by forming alliances such as the G7’s Partnership for Global Infrastructure and Investment (PGII), offering alternatives to Chinese financing. However, these efforts remain underfunded compared to China’s state-backed investments (Brookings, 2023). As developing nations navigate this complex landscape, they must balance economic growth, energy security, and climate commitments while avoiding over-dependence on either superpower.

U.S. and Chinese energy strategies shape the development trajectories of many nations. While China’s large-scale investments enhance energy access, they often come with environmental and debt risks. The U.S. emphasizes clean energy but lacks competitive financial engagement. Developing countries must strategically engage with both powers to maximize benefits while safeguarding long-term economic and environmental sustainability

Conclusion

In conclusion, the US-China geopolitical rivalry is significantly reshaping economic opportunities and vulnerabilities for developing countries. While China’s large-scale energy investments enhance infrastructure and energy access, they also introduce risks related to debt and environmental concerns. Meanwhile, the US promotes clean energy initiatives but lacks the financial commitment to compete with China’s expansive projects. This dynamic creates both opportunities and dependencies for developing nations, requiring strategic navigation to balance economic growth, energy security, and sustainability. To maximize benefits and mitigate risks, developing countries must engage both superpowers while ensuring their policies align with long-term economic and environmental resilience.

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