US, China contrast sharply on climate

The United States is not just changing its climate policy. It is also changing its economic direction.

On Feb 12, the US Environmental Protection Agency rescinded the 2009 Endangerment Finding — the legal foundation for regulating greenhouse gases under the Clean Air Act. This was not a technical adjustment. It was a structural move to reopen a question long considered settled: whether the federal government should regulate climate risk at all.

In March, policy signals extended beyond regulation into capital allocation. Reports indicate that the administration has agreed to compensate the company TotalEnergies to withdraw from two US offshore wind projects, with investment redirected toward fossil fuels.

This is an extraordinary step. It is one thing to roll back clean energy policy. It is another to actively redirect capital away from renewables and back into fossil fuels.

Taken together, these moves amount to more than deregulation. They signal a deliberate shift in economic priorities.

Supporters of the rollback argue that the Endangerment Finding gave regulators excessive power. For more than a decade, it has underpinned emissions standards affecting automakers, utilities and industry. Removing it, they contend, restores balance and limits regulatory overreach.

But opponents see something more consequential — the removal of a stabilizing anchor.

Climate policy is not just about rules. It is about predictability. Longterm investments in energy, infrastructure and technology depend on credible and consistent signals. When those signals are withdrawn or reversed, uncertainty rises not only for regulators but also for markets.

The deeper shift is conceptual. The US is moving from debating how to regulate emissions to debating whether to regulate them at all. Once that "whether" question is reopened, climate policy ceases to be a technical exercise. It becomes a contest over governance itself.

Even for those skeptical of regulation, one point is difficult to avoid. Removing a regulatory framework does not eliminate climate risk. It redistributes it.

Risk shifts to states that maintain their own standards. It shifts to courts, where legal battles will unfold for years. It shifts to insurers forced to price escalating physical impacts. And it ultimately shifts to households, through higher costs and greater exposure.

Climate risk, unlike regulation, does not pause for political cycles.

At the same time, the decision to halt offshore wind development and redirect investment into fossil fuels raises a broader question. At a time when science clearly points to the need for rapid decarbonization, the US is choosing to reinforce its legacy energy system rather than accelerate its transition.

While the US recalibrates, China is moving in the opposite direction with increasing clarity and consistency.

China's newly adopted 15th Five-Year Plan (2026-30) places clean energy, electrification and low-carbon industrial transformation firmly at the center of national strategy. Climate policy is not treated as a constraint. It is treated as an engine of modernization.

China's approach emphasizes "co-control" by integrating air pollution reduction with greenhouse gas mitigation. Policies that reduce coal use, electrify transportation, improve industrial efficiency and expand renewable energy deliver both cleaner air and lower emissions.

This integration matters. Cleaner air produces immediate and visible benefits, fewer hospital admissions, improved quality of life and stronger public support. Climate mitigation, often perceived as abstract or long-term, becomes politically grounded when tied to these tangible outcomes.

The contrast with the US cannot be sharper.

The US now frames climate policy as an economic burden and regulatory overreach, while actively reemphasizing fossil fuels. China frames environmental policy as a pathway to industrial upgrading, technological leadership and long-term competitiveness.

US climate policy has long been vulnerable to political cycles, producing regulatory whiplash. What is new is that this instability is now extending beyond regulation into investment signals.

When governments signal retreat from clean energy, markets respond. Capital flows toward what is supported, scalable and predictable. Innovation follows deployment, and deployment follows policy direction.

For investors and industries, consistency is not a luxury. It is a necessity.

Electrification, battery manufacturing, grid expansion and hydrogen systems require decades of investment. These sectors do not respond well to policy reversal. When regulatory foundations are reopened and governments encourage a return to fossil-fuel pathways, risk rises and investment slows.

China, by contrast, has aligned environmental policy with industrial strategy. Over time, this has helped it dominate solar manufacturing, lead in battery production, and build globally competitive electric vehicle supply chains.

Environmental governance has become a tool of industrial positioning. If clean energy is deprioritized while fossil fuels are reemphasized, the US risks losing momentum in industries that will define future competitiveness.

For the rest of the world, the implications are immediate.

Countries are making strategic choices. In Asia, for example, Japan is advancing hydrogen, South Korea is investing in batteries, and Southeast Asia, India and Pakistan are scaling renewable capacity, as are countries in Africa. European economies continue to believe in clean energy.

The question is no longer whether to act, but how.

The lesson from the divergence between the US and China is clear. Climate policy is no longer a peripheral environmental issue. It is a central component of economic strategy.

The economies that integrate air quality, carbon reduction and industrial modernization will not only deliver cleaner environments, but also drive economic growth. They will define the structure of future industries.

And that is what is truly at stake in the US' climate U-turn.

The author is chief development strategist of the Institute for the Environment at Hong Kong University of Science and Technology and a former undersecretary for the environment.

The views do not necessarily reflect those of China Daily.