Xi Jinping gave an interesting speech at the Davos World Economic Forum. Foreign Policy magazine published a good synopsis that’s worth the time to read, as it highlights the inconsistencies between Xi’s portrayal of China versus his government’s actions.
Political posturing aside, Xi’s speech is worth understanding because he signals his country’s policy objectives. This is important because the USA and China are going to need each other as we transition the world away from fossil fuels towards a clean energy economy. It’s a shared problem all countries must cooperatively address.
For the USA, this dance will force an interesting dilemma. While the USA was busy pouring money into fracking shale, China laid the groundwork for a clean energy economy. It came at a tremendous environmental and human rights cost, but now China dominates renewable energy supply chains. These charts from Bloomberg illustrate the issue.
Given the perception of China as a strategic threat, along with China’s human rights record, cooperation will be a challenge. An alternative is to rapidly build capacity so the USA is not dependent on China’s supply chains. However, that would involve significant public investment and perhaps adoption of an industrial policy. There is some benefit in that it would spur economic development and job creation in the USA, but I have my doubts Congress has the political will to go down that path.