Geoeconomics: China, Nuclear Energy and Artificial Intelligence in the New Struggle for Industrial Power

Luis Rutledge

Geopolitics and Energy

Beijing is not merely building reactors. It is structuring an energy system capable of supporting artificial intelligence, advanced industry and technological autonomy, while reducing its economy’s exposure to the risks of international energy supply chains.

For much of the twentieth century, the geoeconomics of energy was organized around a simple dynamic: geopolitical influence depended directly on control over oil and gas reserves, pipelines and maritime routes. In the twenty-first century, however, this equation has become far more complex.

Although oil and gas remain essential to the global economy, electricity is emerging as the new strategic global infrastructure. The expansion of artificial intelligence (AI), data centers, semiconductors, electric vehicles and industrial automation requires increasingly robust, resilient and uninterrupted power systems. It is through this lens that China’s rapid acceleration of nuclear energy should be understood.

A closer analysis clearly reveals Beijing’s strategy to strengthen its energy security. China currently has 64 operable nuclear reactors and 38 under construction. With approximately 80 reactors being built worldwide, the country accounts for nearly half of the global nuclear expansion currently underway, consolidating Asia as the main driver of this growth.

This is therefore much more than an expansion of generation capacity: we are witnessing a strategy that brings together industrial policy, energy security, digital infrastructure and technological competition.

From the Geopolitics of Oil to the Geoeconomics of Electricity

The transformation underway in China highlights a structural shift in the very nature of energy power. If, for much of the twentieth century, geopolitics was organized around control of oil, maritime routes and hydrocarbon reserves, the new economic and technological competition increasingly revolves around the ability to produce abundant, reliable, competitive electricity on a large scale.

According to the International Energy Agency, Chinese electricity demand is expected to grow by an average of 4.9% per year between 2026 and 2030. In absolute terms, this represents an increase of approximately 2,600 TWh in just five years, roughly equivalent to the European Union’s current total electricity consumption. China is expected to account for nearly half of global electricity demand growth during this period.

This movement is not driven solely by traditional economic growth. It is associated with the electrification of industry, the expansion of electric vehicles, the development of advanced manufacturing, artificial intelligence, data centers and the increasing digitalization of the economy. Electricity is therefore no longer merely a supporting infrastructure; it is becoming one of the main strategic assets in competition among the great powers.

In this new scenario, energy security also comes to mean electricity security and computing capacity. The struggle for oil is not disappearing, but it is increasingly coexisting with a new geoeconomics based on power grids, nuclear generation, renewables, energy storage, semiconductors, data centers and artificial intelligence. A country capable of securing reliable and competitive energy for its digital and industrial infrastructure directly expands its capacity to exercise economic and technological power.

Although China remains dependent, in critical areas, on advanced AI chips designed by U.S. companies, Beijing possesses a structural advantage in another decisive dimension of technological competition: its ability to mobilize capital, state planning, infrastructure and industrial supply chains on a large scale.

Greater coordination among government, state-owned enterprises, the financial system and energy planning allows China to accelerate investment in electricity generation, transmission networks, digital infrastructure and nuclear capacity. This institutional architecture reduces some of the frictions associated with the implementation of large-scale projects and facilitates a faster expansion of the energy base required to support data centers, artificial intelligence, advanced manufacturing and industrial electrification.

Over the next decade, this strategy could substantially increase China’s weight in the global nuclear industry. Rather than simply adding generation capacity, Beijing is seeking to consolidate an integrated nuclear ecosystem, supported by domestic engineering, equipment manufacturing, reactor construction, financing, control of supply chains and a growing capacity to export technology.

China and the United States: Two Models of Expansion

The comparison with the United States reveals two distinct development architectures.

The United States continues to possess significant technological, scientific and financial advantages, as well as a highly innovative private ecosystem involving artificial intelligence, advanced computing, small modular reactors and nuclear fusion research. Its nuclear expansion, however, has historically faced difficulties associated with high capital costs, long deployment cycles and regulatory and financial complexities.

China operates under a different structure. State-owned enterprises, banks, research centers, provincial governments and energy planning can operate within long-term national objectives, allowing greater continuity in infrastructure programs.

This is not simply a matter of less bureaucracy. The key difference lies primarily in the institutional capacity to coordinate financing, energy planning, industrial policy and the execution of large-scale projects within a common national strategy. This difference could become particularly relevant as AI increases the need for firm power generation available around the clock.

A strategic equation is therefore emerging that increasingly encompasses AI, data centers, electricity demand, energy infrastructure, industrial capacity and geoeconomic power. The race for artificial intelligence may consequently generate a second parallel race: the race for the energy infrastructure capable of sustaining the computational economy.

In this scenario, possessing the best algorithms or semiconductors will not be enough. Countries that fail to expand their power grids, firm generation capacity and transmission infrastructure may face a new form of economic constraint: insufficient available energy to sustain the expansion of computing capacity.

The Nuclearization of the Digital Economy

Perhaps the deepest consequence of this movement is the progressive convergence of two sectors that were previously treated as relatively separate: digital infrastructure and energy infrastructure. Artificial intelligence data centers require continuous power. Electricity grids require firm generation. And highly digitalized economies need to reduce the vulnerability of their energy systems. In this new configuration, nuclear energy is therefore returning to the center of industrial policy.

Not as an exclusive substitute for renewables, natural gas or energy storage, but as a component of diversified energy systems capable of providing scale, stability and security of supply. And, in a visionary manner, China appears to be building this infrastructure before digital demand reaches its full scale.

From a geopolitical perspective, what is being built is a new architecture of economic power. In the twentieth century, states sought to control oil, pipelines, refineries and maritime routes. In the twenty-first century, they will continue to need these assets, but they will also have to compete over electricity, semiconductors, computing capacity, data centers, power grids, critical minerals and nuclear technologies.

The geopolitics of oil will not disappear. It will increasingly be accompanied by a geoeconomics of electricity. And it is precisely at the intersection of energy, artificial intelligence, industrial capacity and nuclear technology that China is seeking to build one of the foundations of its economic power for the coming decades.

References:

International Energy Agency e World Nuclear Association para demanda elétrica, data centers e expansão nuclear. (IEA)

Luis Augusto Medeiros Rutledge is a Petroleum Engineer and Energy Geopolitics Analyst. He holds an Executive MBA in Oil and Gas Economics from the Federal University of Rio de Janeiro (UFRJ) and a postgraduate degree in International Relations and Diplomacy from IBMEC. He is CEO of BFI Republic, a researcher at UFRJ, Consulting Member of Portugal’s Observatory of the Islamic World, and the author of numerous articles on Geopolitics and Energy.