The Prof G Pod with Scott Galloway

China Decode: China's Renewable Energy Dominance in the AI Race

November 11, 2025

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  • China's AI competition strategy leverages cheap, abundant solar-generated electricity and government subsidies for data centers, contrasting with the US's current lead in raw CAPEX and superior individual chip technology. 
  • China is pursuing an open-source model for its large language models, resulting in significantly cheaper operational costs compared to leading US models, suggesting a competition for different aspects of AI dominance. 
  • The commissioning of China's third, domestically built aircraft carrier, the Fujian, signals Beijing's goal to achieve military parity with the US by 2035/2050, though the PLA still lacks the battle-testing experience of the US military. 
  • China's rapid advancement in the 'low-altitude economy,' exemplified by EHang's autonomous flying taxis and massive growth in drone package delivery, indicates a high national appetite for adopting futuristic technologies faster than Western counterparts. 

Segments

AI Race Data Center Costs
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(00:01:42)
  • Key Takeaway: The AI race between the US and China hinges on data center viability, requiring massive electricity and water resources.
  • Summary: Data centers are the physical backbone for training AI algorithms, demanding significant power and cooling. Jensen Huang suggested China is only ’nanoseconds behind’ due to cheaper and more abundant electricity generation. The US currently leads in data center CAPEX, exemplified by the $500 billion Stargate project versus Alibaba’s $53 billion equivalent.
China’s Energy Advantage in AI
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(00:07:34)
  • Key Takeaway: China strategically locates data centers in deserts to utilize the world’s cheapest solar power (around two US cents per kWh) and subsidizes energy costs.
  • Summary: Chinese data centers are often situated in inhospitable deserts like the Taklamakan, powered by solar panels generating electricity at about one-fifth the cost of UK coal power. The government further subsidizes energy bills, sometimes halving the cost for these centers. China is also perfecting ‘superclusters’ of indigenous chips to compensate for the lack of access to leading-edge US semiconductors like NVIDIA’s.
Contrasting AI Development Models
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(00:10:10)
  • Key Takeaway: China’s AI development focuses on energy efficiency and open-source models, while the US prioritizes compute-intensive AGI development using proprietary, high-cost chips.
  • Summary: China’s consensus has shifted away from viewing US export controls as crippling, recognizing their distinct advantages in energy and model efficiency. Chinese LLMs are significantly cheaper to run; for example, DeepSeek costs $1.10 per million output tokens compared to OpenAI’s GPT-5 at $10. Nine of the top 10 open-source AI models as of October were Chinese, contrasting with non-open models like ChatGPT.
New Aircraft Carrier Unveiling
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(00:17:33)
  • Key Takeaway: China’s new Fujian aircraft carrier showcases domestic military hardware advancements, aiming to deter the US in potential conflict zones like Taiwan.
  • Summary: The Fujian is China’s first fully self-designed and built carrier, capable of carrying about 60 aircraft and costing over $6 billion. While China has the second-largest carrier fleet (three vs. the US’s eleven), its carriers are diesel-powered, unlike superior US nuclear-powered vessels. China’s goal is to build a military so formidable that the US would hesitate to engage militarily.
US vs. China Military Spending
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(00:24:25)
  • Key Takeaway: The US maintains supremacy in nuclear warheads (over 5,000 vs. China’s 600) and submarine technology, while China’s military spending trajectory contrasts with the US trend of prioritizing debt servicing over defense.
  • Summary: The US holds a massive lead in operational nuclear warheads, though China projects reaching 1,000 by 2030 and is near parity in ICBM stockpiles. Ferguson’s Law suggests countries prioritizing debt servicing over military spending decline in superpower status, a threshold the US crossed recently while China increases defense spending. China’s official military spending figures are treated with skepticism by observers.
Autonomous Flying Taxi Reality
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(00:27:46)
  • Key Takeaway: Chinese company EHang is deploying fully autonomous, battery-powered EVTOL air taxis, planning commercial routes within three years for fares around $30-$40.
  • Summary: EHang’s pilotless electric vertical takeoff and landing (EVTOL) vehicles are real, having completed cumulative flights in 19 countries, suggesting viability beyond hype. Morgan Stanley projects the EVTOL market could reach $1 trillion by 2040, indicating significant commercial potential. China terms this emerging sector the ’low-altitude economy,’ signaling a national focus on this transportation future.
Drone Delivery Growth and EU Tensions
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(00:34:15)
  • Key Takeaway: China is set to deliver over 5 million packages via drone this year, drastically cutting costly ’last mile’ delivery expenses, while EU-China trade relations are worsening due to mistrust over past trade actions.
  • Summary: Drone delivery in China is projected to exceed 5 million packages in the current year, driven by the cost savings in the final stage of delivery. Separately, the French suspension of Shein operations over illegal listings signals growing regulatory friction between the EU and China. European policymakers harbor mistrust following China’s previous use of rare earth export controls, suggesting more investigations and potential sanctions on Chinese firms.