China won the trade war. China won the energy transition. But the next challenge will be the most important

For generations we have defined economic success by what a country makes - cars, ships, computers, weapons. But that paradigm is shifting as more of our activity moves into the digital sphere.

For more than a century, economic power meant industrial power. The battle was over manufacturing. But that battle is largely settled. Supply chains have been redrawn, factories relocated, and the geography of production transformed. A new contest is under way.

It is the battle for power. Not political power, but electrical power.

Electricity is the enabling force behind everything else. It runs factories, data centres, transport systems and defence networks. It is what allows countries to manufacture, to digitise, to modernise and to fight. Energy is not just another sector of the economy. It is the fuel of the economy.

And at this moment in history, one country has placed itself at the centre of that system. First through trade. Then through renewables. Now, potentially, through the most transformative technology of all: nuclear fusion.

1. Trade wars

The China US trade conflict of 2025 will likely be remembered as a decisive moment in the global balance of power.

Donald Trump imposed sweeping tariffs on allies and adversaries alike, threatening to restrict access to the world’s largest consumer market. The UK, Europe, Japan, South Korea, the Philippines and others made concessions in return for slightly lower duties. They did not reverse the policy. They negotiated for marginally better terms.

One country did not give way. China.

Tariffs escalated in stages. Ten percent. Twenty percent. Fifty four percent. One hundred and four percent. Eventually more than one hundred and twenty five percent on some goods. The pressure was intense.

Beijing responded in kind, but more importantly it deployed a weapon decades in the making: control of critical minerals.

In April, China signalled it could restrict exports of rare earth elements such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. These are not household names. Yet they are essential to the production of high performance magnets used in electric motors, wind turbines, defence systems and advanced electronics.

China produces up to 90 percent of global supply in several of these materials. Cutting off access would not simply raise prices. It would stall entire industries.

That leverage mattered. Tariffs were eventually wound back after high level talks, without Beijing making equivalent structural concessions. Whatever one thinks of the politics, the economic lesson was stark. Through long term planning, subsidies, environmental trade offs and export controls, China had embedded itself so deeply in strategic supply chains that it could exert systemic pressure.

This was not an isolated case. During the pandemic, China demonstrated overwhelming dominance in the production of personal protective equipment. In consumer electronics, seven of the top nine phone manufacturers are Chinese. Even devices branded in the United States or South Korea are largely assembled in Chinese factories.

Over three decades, China moved from low cost goods to advanced manufacturing and then to strategic inputs. It did not simply compete in markets. It positioned itself at choke points.

The trade war did not create that reality. It revealed it.

2. The green transition

The next stage of the power shift is already visible in the energy transition.

The world is undergoing the most significant transformation in electricity generation since the first mass power plants came online in the nineteenth century. Wind and solar capacity have surged globally. But one country stands apart.

China has multiplied its wind capacity several times over since the early 2010s and expanded its solar capacity at extraordinary speed. It accounts for close to half of global installed solar capacity and is still growing faster than any other major economy.

At the same time, China continues to build coal plants. Critics point to this as evidence of contradiction. In reality, it reflects scale. China is not simply replacing old capacity. It is expanding total energy production on a vast scale, ensuring reliability while renewables ramp up.

Crucially, China does not only install renewables. It manufactures them.

It produces more than 80 percent of the world’s solar panels and around 60 percent of wind turbines. Six of the top ten global manufacturers in these sectors are Chinese. The same pattern is visible in lithium batteries and electric vehicles. In 2010, battery technology was led by firms in Japan and South Korea. Within a decade, China controlled roughly three quarters of global production, supported by a vertically integrated domestic supply chain and strong state backing.

Rare earths tell a similar story. The United States once dominated production. By 2020, China controlled the overwhelming majority of global processing capacity.

For developing countries, cheap Chinese solar panels and batteries have been transformative. They have enabled electrification at lower cost and accelerated economic development. For advanced economies, affordable electric vehicles have made net zero targets more attainable.

Yet from a strategic perspective, the pattern is clear. The first phase of the clean energy transition has been shaped and largely controlled by China. The technologies that will replace fossil fuels are, to a significant extent, designed, manufactured and refined within its borders.

Energy is becoming the central arena of geopolitical competition. And China has already secured commanding positions.

3. Energy upscaling

The next challenge is more speculative, but potentially far more consequential. Nuclear fusion.

Unlike nuclear fission, which splits heavy atoms to release energy, fusion forces light atoms together. It is the process that powers the sun. Fusion promises enormous advantages. It carries no risk of meltdown in the conventional sense. It produces far less long lived radioactive waste. It requires small quantities of fuel, much of it derived from hydrogen that is widely available.

There are currently no commercial fusion reactors. Most experimental designs rely on containing plasma heated to around 100 million degrees Celsius using extremely powerful magnets. Other approaches use high energy lasers to compress fuel to fusion conditions.

Both pathways depend on advanced materials and components.

High performance magnets require rare earth elements. High temperature superconducting tape is essential for efficient magnetic confinement. China controls the majority of global production in several of these inputs and is expanding capacity rapidly. Laser systems depend on laser diodes, of which around 70 percent are manufactured in China. Tungsten, vanadium, barium titanate and graphene, all relevant to advanced energy systems, are also heavily concentrated in Chinese supply chains.

Private investment in fusion is growing worldwide. In recent years, funding from China has surged from negligible levels to several billion dollars annually, outpacing much of the rest of the world combined.

None of this guarantees technological supremacy. Fusion remains uncertain. Breakthroughs could emerge from the United States, Europe or collaborative international projects. But the early signs echo previous patterns. Identify a strategic technology. Secure the materials. Scale manufacturing. Invest heavily. Build domestic demand. Then dominate global supply.

The stakes are enormous. Electricity demand in developed economies was broadly flat for much of the early twenty first century. That era is ending. Artificial intelligence, electrified transport, heat pumps and industrial decarbonisation are driving a structural increase in demand. Energy systems are not merely being cleaned. They are being expanded.

With sufficient energy, societies can desalinate seawater, irrigate deserts, power vertical farms, heat cold climates and cool hot ones. Energy abundance changes what is economically possible.

Whoever controls the infrastructure of that abundance will shape the terms on which the future is built.

Conclusion

Over the past two decades, China has executed a coherent long term strategy. It entrenched itself in manufacturing. It secured control over critical minerals. It scaled renewable energy production to unprecedented levels. In key areas of the green transition, it has already won the first round.

Now the focus shifts to the next frontier: energy upscaling through technologies such as nuclear fusion. This is not simply about climate policy or industrial policy. It is about the foundations of economic and geopolitical power in the twenty first century.

Trade shaped the past. Renewables define the present. But the ultimate contest is over who will generate, store and control the energy that powers everything else.

In that contest, the outcome may determine not just which country is great, but which country sets the rules for the century ahead.

Most of the data in this article is sourced from a report circulated in the US government. Its authors operate within the industry but wish to remain anonymous. 

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World Reframed is produced in London by Global South World, part of the Impactum Group. Its editors are Duncan Hooper and Ismail Akwei.

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