Commentary: Strategic Global Energy Diversion Under the Big Beautiful Act

The recent passage of U.S. President Donald Trump’s “Big Beautiful Bill” represents a pivotal realignment of American policy amid rising international tensions and transformations in the global energy sector. The law signifies a sharp change in the U.S. national security agenda, primarily by excluding Chinese firms from key clean-energy initiatives. Although these measures are framed as adjustments to fiscal, subsidy, and tax policies, they are in practice a profound reset intended to address strategic competition with Beijing, especially regarding green energy and advanced technologies. This divergence indicates a widening rift between the U.S. and China over the governance and future of green technology. [para. 1][para. 2][para. 3]

A central element of the bill is the reduction of generous subsidies for renewable energy projects that were initially introduced in the Inflation Reduction Act. Additionally, the law establishes a “Foreign Entity of Concern” (FEOC) classification. This designation prohibits electric vehicles (EVs) and batteries with links to Chinese supply chains from qualifying for U.S. tax credits, ushering in a form of “soft decoupling” from China’s dominance in green technology supply chains. While the U.S. is tightening its standards and incentives, China continues to aggressively expand its clean energy ecosystem, investing in wind, solar, hydrogen, and hydro technologies. Initiatives such as “East Data, West Computing” are integral to connecting the country’s green energy infrastructure with burgeoning demands from digital services, artificial intelligence (AI), and manufacturing sectors. As the West gravitates toward “green exclusionism,” China may find counter-cyclical opportunities by reinforcing its own place within global supply chains. [para. 4][para. 5][para. 6][para. 7][para. 8]

The bill’s effects extend into strategic high-tech sectors. In AI and data centers, the withdrawal of U.S. renewable incentives could exacerbate energy cost disadvantages for American industry, potentially undermining its leadership in AI. Conversely, China leverages its low-carbon, renewables-powered computing capacity to foster an integrated AI ecosystem—covering hardware through to applications. However, China remains vulnerable to potential bottlenecks, notably its dependence on foreign-made GPUs and the challenge of resource misallocation amid local computational expansion. In the EV market, new U.S. subsidy rules marginalize Chinese battery giants like CATL and EVE Energy while the pullback on domestic subsidies may impair America’s own EV makers, creating a window for Chinese exporters but with considerable trade and policy risks attached. [para. 9][para. 10]

For Chinese companies, the evolving regulatory landscape means that product competitiveness alone is insufficient for global success. Firms must enhance government relations by participating actively in policymaking processes and consultations. Equally, they must prioritize building legal and compliance systems that match Western export, certification, privacy, and environmental regulations to protect against rising protectionism. Mastery of public communication and localized market integration, including joint ventures and local hiring, are also crucial for earning trust and mitigating host country resistance. [para. 13][para. 14][para. 15][para. 16][para. 17]

Ultimately, Trump’s legislation exemplifies a broader trend toward global policy fragmentation in energy and technology. For firms, durable competitive advantage will hinge on technological robustness, meticulous compliance, and the cultivation of genuine local acceptance rather than solely on technological innovation. Success in this fragmented environment depends on adaptability to varied regulatory regimes and public sentiment worldwide. [para. 18]