AI experts return from China stunned: The U.S. grid is so weak, the race may already be over

For American AI reers, that’s almost unimaginable

In the U.S., surging AI demand is colliding with a fragile power grid, the kind of extreme bottleneck that Goldman Sachs warns could severely choke the industry’s growth

In China, Ma continued, it’s considered a “solved blem.” Ma, a renowned expert in Chinese nology and founder of the media company Buzz China, took her team on the road to get a firsthand look at the country’s AI advancements

She told Fortune that while she isn’t an energy expert, she att enough meetings and talked to enough insiders to come away with a conclusion that should send chills down the spine of Silicon Valley: in China, building enough power for data centers is no longer up for debate. “This is a stark contrast to the U.S., where AI growth is increasingly tied to debates over data center power consumption and grid limitations,” she wrote on X

The stakes are difficult to overstate

Data center building is the foundation of AI advancement, and spending on new centers now displaces consumer spending in terms of impact to U.S

GDP—that’s concerning since consumer spending is generally two-thirds of the pie

However, the limiting factor to the U.S.’s data center infrastructure development, according to a Deloitte industry survey, is stress on the power grid

Cities’ power grids are so weak that some companies are just building their own power plants rather than relying on existing grids

Goldman Sachs frames the crisis simply: “AI’s insatiable power demand is outpacing the grid’s decade-long development cycles, creating a critical bottleneck.” Meanwhile, David Fishman, a Chinese electricity expert who has spent years tracking their energy development, told Fortune that in China, electricity isn’t even a question

On average, China adds more electricity demand than the entire annual consumption of Germany, every single year

Whole rural vinces are blanketed in rooftop solar, with one vince matching the entirety of India’s electricity supply. “U.S. policymakers should be hoping China stays a competitor and not an aggressor,” Fishman said. “Because right now they can’t compete effectively on the energy infrastructure front.” China has an oversupply of electricty China’s quiet electricity dominance, Fishman explained, is the result of decades of deliberate overbuilding and investment in every layer of the power sector, from generation to transmission to next-generation nu

The country’s reserve margin has never dipped below 80%–100% nationwide, meaning it has consistently maintained at least twice the capacity it needs, Fishman said

They have so much available space that instead of seeing AI data centers as a threat to grid stability, China treats them as a convenient way to “soak up oversupply,” he added

That level of cushion is unthinkable in the United States, where regional grids typically operate with a 15% reserve margin and sometimes less, particularly during extreme weather, Fishman said

In places California or Texas, officials often issue warnings red-flag conditions when demand is jected to strain the system

This leaves little room to absorb the rapid load increases AI infrastructure requires, Fishman ntoed

The gap in readiness is stark: while the U.S. is already experiencing political and economic fights over whether the grid can keep up, China is operating from a position of abundance

Even if AI demand in China grows so quickly renewable jects can’t keep pace, Fishman said, the country can tap idle coal plants to bridge the gap while building more sustainable sources. “It’s not preferable,” he admitted, “but it’s doable.” By contrast, the U.S. would have to scramble to bring on new generation capacity, often facing years-long permitting delays, local opposition, and fragmented market rules, he said

Structural governance differences Underpinning the hardware advantage is a difference in governance

In China, energy planning is coordinated by long-term, nocratic policy that defines the market’s rules before investments are made, Fishman said

This model ensures infrastructure buildout happens in anticipation of demand, not in reaction to it. “They’re set up to hit grand slams,” Fishman noted. “The U.S., at best, can get on base.” In the U.S., large-scale infrastructure jects depend heavily on private investment, but most investors expect a return within three to five years: far too short for power jects that can take a decade to build and pay off.“Capital is really biased toward shorter-term returns,” he said, noting Silicon Valley has funneled billions into “the nth iteration of software-as-a-service” while energy jects fight for funding

In China, by contrast, the state directs money toward strategic sectors in advance of demand, accepting not every ject will succeed but ensuring the capacity is in place when it’s needed

Without public financing to de-risk long-term bets, he argued, the U.S. political and economic system is simply not set up to build the grid of the future

Cultural attitudes reinforce this apach

In China, renewables are framed as a cornerstone of the economy because they make sense economically and strategically, not because they carry moral weight

Coal use isn’t cast as a sign of villainy, as it would be among some circles in the U.S. – it’s simply seen as outdated

This pragmatic framing, Fishman argued, allows policymakers to focus on efficiency and results rather than political battles

For Fishman, the takeaway is blunt

Without a dramatic shift in how the U.S. builds and funds its energy infrastructure, China’s lead will only widen.“The gap in capability is only going to continue to become more obvious — and grow in the coming years,” he said

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