Strategic Imperatives in the U.S.-China Technology Race: Power, Hardware, and Engineering Expertise

Editor’s note: In February, The National Interest organized a symposium on the U.S.-China technology race amidst the emergence of DeepSeek and ongoing legal battles over TikTok. We asked a variety of experts the following question: “What are the three most important technology policies that the U.S. should pursue or avoid to compete adequately with China?“ The following article is one of their responses.

The escalating technology competition between the United States and China is reshaping global dynamics. As artificial intelligence (AI) emerges as a critical frontier of this competition, the U.S. must strategically enhance its infrastructure to maintain technological leadership. Three interconnected policy areas—power grid enhancement, hardware innovation, and infrastructure expertise—are key components of a comprehensive plan to secure strategic advantage for the United States. 

Revitalizing the U.S. power grid is critical to unlocking sustainable support for energy-intensive technologies. To do this, the U.S. will need to improve its access to needed hardware and develop the kind of infrastructure expertise China has been amassing in recent years. 

The U.S. power grid is old, with at least 70% of transmission lines over 25 years old, and in need of large investments to maintain reliability standards. The grid is currently operating at capacity, with the demands of frontier technologies like AI exacerbating congestion issues. Reports indicate that grid congestion is already impeding technological advancement and the future development and adoption of AI could significantly increase energy needs, despite gains in energy consumption efficiency. 

Power grid revitalization rests on sourcing key hardware domestically.  Developing local manufacturing options hinges on a number of factors including raw material availability, capital mobilization for increased manufacturing and a dynamic local value chain, to name a few. There are already concerns about the sourcing of critical elements, such as power grid transformers. 

Having clarity on these contributing factors can be a first step in guiding stakeholders to innovate, optimize, and collaborate on finding local sources of critical hardware. To fully capitalize on the opportunity to revitalize the power grid and foster local production of key equipment, it takes strategic determination and sustained efforts across the public and private sectors. 

Executing risky multibillion-dollar infrastructure projects on time and on budget calls for a skilled labor force in engineering and project management. The U.S. has a recent track record of significant delays and budget overruns in completing infrastructure megaprojects. Part of the blame has been assigned to the lack of a skilled workforce. China has been accumulating significant know-how by completing complex infrastructure projects around the world. 

Addressing the barriers to increasing power capacity requires coordination among stakeholders, and strategic leadership from the U.S. government is essential. To compete in this evolving technology race, the U.S. needs to secure the hardware and human capital to achieve a fast modernization of its power grid. 

About the Author: Ismael Arciniegas Rueda

Ismael Arciniegas Rueda is a senior economist at RAND, the nonprofit, nonpartisan research institution, and a professor of public policy at the Pardee RAND Graduate School. His research and teaching are focused on energy markets. 

Image: Shutterstock