Extract from ABC News
Analysis
As America pivots back to fossil fuels, China appears destined to take global leadership from the United States. (Reuters: Damir Sagolj)
A few days after Donald Trump signed the One Big Beautiful Bill that ended most subsidies for renewable energy, among many other things, the leading artificial intelligence (AI) company, Nvidia Corporation, became the first to pass $US4 trillion ($6.08 trillion) in value.
And a few days after that, on Thursday, Bitcoin hit a new record high above $US117,000.
The data centres that operate both AI and cryptocurrency are already massively increasing electricity demand and investors are obviously expecting them to keep doing so — exponentially.
Meanwhile, the BRICS summit in Brazil last week — it stands for Brazil, Russia, India, China, South Africa — went in the opposite direction to the United States on climate change, committing to "intensify global efforts to contain global warming".
Trump lies about renewable energy rollout in China. (Reuters: Muyu Xu)
China's renewable energy strategy is paying off
Chinese President Xi Jinping didn't make it to Brazil, but he chaired a meeting of China's Central Commission for Financial and Economic Affairs which issued a directive to crack down on overcapacity and "disorderly competition" in solar power.
Let's join the dots: America is pivoting back to fossil fuels and pulling out of renewable energy while the rest of the world continues to do the opposite, China is grappling with too much renewable energy while investors are bidding expectations to record highs for the new industries whose data centres are eating the world's electricity.
In his Independence Day address after signing the One Big Beautiful Bill, Trump said: "I noticed something — with all the windmills that China sends us, where we waste our money because it's the most expensive energy, you know they make about 95 per cent of them, the wind turbines, I have never seen a wind farm in China! Why is that?"
That is a long way from being true: China is bristling with wind farms, and solar farms.
Mistake number two for Trump is the cost: wind and solar are now the cheapest form of energy in China, as well as in most other places, and onshore wind is by far the cheapest, less than half the cost of coal.
China's long-term strategy of dominating the manufacture of renewable energy and electric vehicles, as well as critical minerals, especially the rare earths needed in modern technology, is now paying off, big time.
'Real men burn stuff'
Meanwhile, in the US, Trump announced a 50 per cent tariff on imports of copper, which is one of the minerals needed for AI and renewable energy.
This will make it virtually impossible for manufacturers in the US to compete with China in high-tech manufacturing.
That was on top of letters Trump sent to dozens of national leaders last week telling them what the tariff is going to be on their exports to America.
Why would America embark on such a series of colossal, and obvious, acts of self-harm?
Trump poses for a group photo after he signed a sweeping spending and tax legislation, known as "One Big Beautiful Bill Act", on July 4. (Reuters: Ken Cedeno)
The rejection of renewable energy and turning back to coal is pure ideology, a macho rejection of environmentalism and wokeism. As Paul Krugman wrote the other day: "Real men burn stuff and don't worry if the process is dirty."
In his Independence Day speech, Trump declared: "Coal is back. You can't use the word 'coal' unless you precede it by saying 'clean beautiful coal.'"
China is also building coal-fired power stations, but only because it has to; the idea of saying "coal is back" and calling it clean and beautiful at the same time as more than one hundred people were dying in a Texas flood is insane.
Trump's tariff lie
As for the tariffs, the world's economists and trade policy experts are mystified by America's trade wars, but I don't think that's what they are: tariffs are taxes that Trump can say are paid by foreign countries rather than by Americans.
The letters he sent last week all said: "We will charge (insert country) a Tariff of only (insert number) on any and all … products sent into the United States."
That's what he always says when he's talking about the tariffs — that he is "charging" that country, as if it's a kind of fee paid to the US government for the right to sell stuff to Americans, and that the US Treasury is making tons of money from them. It is, but not from the other countries.
He knows, of course, as does everyone else, that tariffs are a sales tax paid by the American buyers of the imported products or absorbed into the margins of the local companies importing them if they can't pass it on for some reason.
The US government is "charging" the Americans who buy Brazilian products a 50 per cent tax on what they buy, not Brazil, and will be putting a 50 per cent tax on copper, as well as taxes of at least 10 per cent on every import coming into the US.
It is a GST of at least 20 per cent on the $US4.1 trillion of goods imported into the US — 14 per cent of total goods sold.
Before the tariffs are fully in place, the US government is already making about $US30 billion in extra revenue and will theoretically increase to about $US500 billion.
Except that Trump keeps saying that American citizens aren't paying it — someone else is.
It is breathtaking, brilliant, political mendacity; the media, economists and his political opponents are getting tired of pointing it out, and he just keeps saying it, proving Joseph Goebbels's dictum that if you repeat a lie often enough it becomes true.
The prime minister will meet with Xi Jinping as part of a six-day trip to China this week. (Supplied: Prime Minister's Office )
Xi now more important than Trump
The result of all this is that China — a ruthless autocracy — appears destined to take global leadership from the US, in trade, the means of producing energy and, possibly, in "soft power", or moral leadership, as the US withdraws from foreign aid and multilateralism.
The US dollar seems entrenched as the world's reserve currency and the basis of most finance and trade, but even that can't be taken for granted. It won't be replaced by Bitcoin, but a combination of the Euro and Chinese yuan is likely to eat into its market share.
But Bitcoin and the other cryptocurrencies are not going away, and the data centre capacity they require will continue to add to the ballooning demand for computing power and electricity from AI.
And while the leader in AI chip design, and now the world's most valuable company — Nvidia — is American, its chips are made in Taiwan, just as Apple's iPhones are made in China.
The American technology companies like Nvidia, Microsoft, Meta, Apple and Amazon still reign supreme over the internet and AI era, but China is closing on them fast.
China is already in the process of obliterating the American and European car industries with solid, well-designed, cheaper vehicles and will almost certainly do the same with all other high-tech products, including robots.
So, it's entirely appropriate that Anthony Albanese is meeting Xi again before he meets Trump for the first time.
Xi is more important than Trump now.
Alan Kohler is finance presenter and columnist on ABC News and he also writes for Intelligent Investor.
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