U.S.-China Strategic Competition and Clean Energy Transition: Implications for South Korea’s Economic Security

Chansong C. Lee

clee@sejong.org​

Research Fellow

Sejong Institute

This policy brief analyzes how strategic competition between the United States and China is expanding beyond the military and security domain into key arenas of the emerging geopolitics, such as climate change, the clean energy transition, and critical mineral supply chains. It then systematically examines the implications of this evolving competitive landscape for South Korea’s economic security. The brief contrasts (1) the United States’ retreat from climate leadership in the second Trump administration with (2) the Xi Jinping administration’s strategy to dominate clean energy and critical mineral supply chains. It assesses the nature of U.S.-China strategic competition in the climate change domain and identifies key implications for South Korea.

1. The Convergence of Climate Change Policy and Strategic Competition

U.S.-China strategic competition intensified in the context of China’s rise in its relative power, the 2008 global financial crisis, and the emergence of the Xi Jinping regime in 2012. This competition is now extending beyond traditional and emerging security domains—such as the military, space, AI, and biotechnology—into a new strategic arena: climate change and clean energy transition. Climate change is no longer confined to environmental policy; it has become a key variable shaping national competitiveness, industrial structure, supply chain security, and ultimately the international power structure.

In particular, China’s structural advantage is becoming increasingly visible as it has moved to dominate critical minerals and supply chains that underpin the clean energy transition. At the same time, the Trump administration’s climate denial makes the strategic contrast between the United States and China even more pronounced. Both the United States and China are leveraging climate change as an instrument of strategic competition.

2. The Politics of Climate Change Discourse

2.1 Trump’s Anti-Climate Politics

President Trump has characterized climate change as a “rip-off” and has consistently advanced anti-climate policies. The announcements to withdraw from the Paris Agreement on two occasions (2017 and 2025) symbolically demonstrate the erosion of U.S. climate leadership. The new government has nullified the previous Biden administration’s 2035 greenhouse gas reduction target and dismantled many climate-related organizations and regulatory frameworks at the federal level.

This orientation reflects polarization in U.S. domestic politics. Democratic constituencies tend to regard climate change as a core policy priority, whereas Republican constituencies are more inclined to view it as an exaggerated problem. Trump’s anti-climate policy may represent the interests of the fossil fuel sector and segments of manufacturing in the short term, but it entails costs over the medium to long term, including diminished trust among allies and withdrawal from international norms.

2.2 Xi Jinping’s Climate Industrialism and Strategic Opportunism

In roughly two decades, China has transformed from a climate resister into a state that claims climate leadership. Milestones symbolizing this shift include the 2005 Renewable Energy Law, the 2014 U.S.-China Joint Climate Statement, and its recent pledge for carbon neutrality by 2060. China has adopted an active posture in international climate negotiations and emphasizes normative leadership, but this can be interpreted less as “internalization of climate norms” than as “climate opportunism.”

China remains the world’s largest greenhouse gas emitter and is expanding coal-fired power capacity on a large scale even as it accelerates renewable energy deployment. In other words, China is pursuing an “energy-addition” strategy rather than decarbonization. Nonetheless, the United States’ retreat from climate engagement provides China with political, normative, and industrial opportunities and strengthens China’s soft power among developing countries and energy-deficit states.

3. Dynamics of the Clean Energy Transition

3.1 The Historical and Political Character of Energy Transitions

Unlike past shifts to coal or oil, today’s clean energy transition is a large-scale experiment driven not by resource depletion or economic efficiency, but by the political motivation of preventing future catastrophe. International organizations call for the transformation of a fossil-fuel-centered energy system into a zero-carbon system by 2050, but this is not just a transition of energy sources; it requires fundamental changes in industrial structures and ways of life.

3.2 United States: Returning from Clean Energy to Fossil Fuels and Nuclear Power

The second Trump administration chose fossil energy expansion rather than a clean energy transition. The effective neutralization of the Inflation Reduction Act (IRA), encouragement of fossil fuel exploration on federal lands, expanded LNG exports, and support for the coal industry illustrate this shift. At the same time, the United States has promoted a “nuclear renaissance,” accelerating development of small modular reactors (SMRs) and Generation IV nuclear technologies.

This policy shift may contribute to short-term energy self-sufficiency and industrial competitiveness, but it also entails strategic losses by increasing uncertainty about next-generation clean technologies that the United States had been leading, including hydrogen, carbon capture and storage (CCS), and geothermal energy.

3.3 China: Energy-Addition Rather Than Energy Transition

China has secured overwhelming global production capacity in solar, wind, hydropower, batteries, and electric vehicles. Newly installed renewable energy capacity worldwide in 2023–2024 mostly came from China, and China’s market share in batteries and electric vehicles is also dominant. However, despite these gains, China has not reduced coal and gas consumption.

China’s approach can be described as a “cornering strategy.” That is, China treats the transition period as an opportunity to overtake leading incumbents. Rather than fully dismantling the existing fossil energy system, China is pursuing a strategy to dominate structural advantage in a new energy order by leveraging renewables and core manufacturing capabilities.

4. Competition over Critical Mineral Supply Chains

The material base of the clean energy transition is critical minerals. Lithium, cobalt, nickel, rare earths, and graphite are essential to electric vehicles, batteries, renewable energy installations, and advanced weapons systems. Since the 1990s, China has systematically dominated the entire value chain—mining, refining, processing, and manufacturing—of these minerals, which is now assessed as one of China’s most significant strategic assets.

The United States has continued efforts to reduce dependence on China for its mineral supply. The Biden administration emphasized friend-shoring with allies, while the second Trump administration has sought the restructuring of supply chain through domestic production and other coercive measures. However, replacing its dependence on China’s refining and processing capacity is not realistic in the short term.

China has recently introduced export controls and licensing requirements on gallium, germanium, antimony, and rare earth magnets, among others, clearly using critical minerals as strategic weapons. This indicates that U.S.-China interdependence is entering a phase of weaponized interdependence.

5. Implications for South Korea’s Economic Security

This brief assesses that both the U.S. and China models contain inherent risks. Trump-style coercive diplomacy undermines allied trust, while China’s state-led model generates overcapacity and international backlash. This uncertain competitive landscape is likely to persist for some time, providing South Korea with a window for strategic choice.

As a country accounting for approximately 3% of global emissions, South Korea cannot achieve global climate stabilization on its own. A realistic strategy is therefore required to balance mitigation and adaptation efforts. Climate policy should also be treated as an industrial transition rather than industrial regulation, with gradual efforts to reshape the national economy toward decarbonization.

South Korea’s most significant vulnerability is its critical mineral supply chain. South Korea’s dependence on China is extremely high for graphite, rare earths, gallium, germanium, and related inputs, posing serious risks across the industries for semiconductors, batteries, automobiles, defense, and AI. A multilayered strategy is thus required, encompassing supply diversification, strategic stockpiling, recycling, resource diplomacy, and development of alternative technologies.

This brief recommends that South Korea build a proactive economic security strategy by leveraging cooperation with like-minded resource countries such as Australia and Canada. Seoul should utilize its leadership experience in the Minerals Security Partnership (MSP) and industrial strengths in battery precursors, high-nickel cathode materials, and refining technologies. Expanding South Korea’s strategic space in the U.S.-China strategic competition should be continued.