How to Win the Global South’s Energy Race
The United States has a comparative advantage over China as an energy provider; it should make the most of it.
China is the world’s largest trading partner. Across Southeast Asia, Africa, and Latin America, it wields its economic heft, building influence and diplomatic soft power in the Global South. Beijing is also a founding member of BRICS+, a rising coalition of countries that includes Brazil, Russia, India, South Africa, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. Two dozen more have applied for membership. BRICS+ already comprises more than a quarter of the global economy and almost half of the world’s population.
Unlike the Soviet Bloc during the Cold War, China is fully integrated into the global market economy, making it a formidable competitor for Washington and Western democracies in a shifting global order where economic factors are just as paramount for influence and power as traditional political and military considerations. Over the last few years, Washington has only begun to grapple with this emerging reality, realizing that hard military and political power will no longer be enough to safeguard a prosperous global free market order underpinned by democratic values.
Democracies are not as well equipped to deal with China’s rising stature in the Global South. Unlike the Chinese Communist Party, Washington cannot direct American business to become a player in any country to compete with China. The next administration will prioritize bilateral economic approaches over multilateral trade agreements. One bilateral approach to help compete with China is to take better advantage of sectors in which the United States enjoys comparative advantages.
The most promising possibility is energy. The United States is the top producer of fossil fuels, including natural gas. Even as the world continues to increase renewable energy production, the fact remains that demands for fossil fuel will inevitably grow, as well, to continue to help meet global demands for energy.
Natural gas is a cleaner alternative to oil or coal. The United States is blessed with abundant gas resources and is the world’s top producer. Washington should take advantage of this to help Global South countries move away from reliance on pollution-intensive coal and oil for energy production. Turning to the Pacific, two promising candidates for the development of a bilateral clean energy policy program are the Philippines and Vietnam.
The Philippines’ oil and gas resources are limited. The country is a net energy importer, reliant on imported fossil fuels. Domestic coal-fired power, after petroleum, remains a major and growing energy source. In addition to domestic coal mining, the Philippines has also been compelled to import coal to meet its constantly rising energy requirements. The Philippines’ electricity rates are already among the highest in Southeast Asia. Meanwhile, domestic production of cleaner natural gas is limited to the Malampaya field, which is projected to run dry by 2027. The Philippines has, however, developed four LNG terminal projects to enable future imports of natural gas.
Vietnam relies on fossil fuels for approximately 80 percent of its energy needs. While it produces oil and gas, coal is the dominant resource for the production of its electric generation requirements. Coal accounted for over 60 percent of its electricity production as of April 2024, and its coal-fired plants are among the most modern in the region. Meanwhile, Vietnam is working hard to develop LNG capacity, having already built two terminals, one at Thi Vai and another at Cai Mep.
China looms large over the Philippines and Vietnam. It is the Philippines’ largest import trading partner. The United States, on the other hand, has consistently run trade deficits with the Philippines. As for Vietnam, China is also the country’s largest overall trading partner by far, as well as its top source for foreign direct investment. The U.S. trade deficit with Vietnam meanwhile reached new highs from January to November 2024.
Washington should consider developing a trade and foreign aid strategy to supply the Philippines, Vietnam, and other Global South countries with environmentally cleaner LNG under a series of bilateral agreements. Those deals could also include corresponding reductions in coal-fired electricity production. To further enhance the process, Washington could offer to sell LNG it purchases at the market from U.S. producers to bilateral partners at below-market prices. Beijing would not have the competitive means to counter this kind of bilateral arrangement.
As a companion to an LNG, clean power trading initiative, Washington should also consider promoting the financing and sale of smaller, modular nuclear reactors (SMRs). In early 2023, the Nuclear Regulatory Commission certified the first SMR design for use in the United States. It can generate fifty megawatts of emission-free electricity.
The Philippines completed the construction of a large 621 MWe Westinghouse nuclear plant in 1984, but it never went operational due to safety and financial concerns. The government is presently assessing the potential for using SMRs. Vietnam has similarly considered the construction of larger nuclear power plants, but none have yet been commissioned. In March 2022, the Vietnamese Ministry of Industry and Trade took the first steps toward consideration of using SMRs for energy production after 2030.
Washington should clear away bureaucratic webs and accelerate a program to promote the sale of U.S.-made SMRs for the Philippines, Vietnam, and other countries. China already has one SMR, the Linglong One, in Hainan Province. It is the first SMR to gain the approval of the International Atomic Energy Agency.
Washington must develop new policy approaches to counter China’s growing influence as the world’s top trading partner. This is a race the United States cannot afford to lose. Programs such as LNG and SMRs can provide the United States with effective tools to compete commercially with China, not only in the Philippines and Vietnam but also with the entire Global South. Washington must counter China’s growing influence in that part of the world with more strategic support for the U.S. private sector in areas where American comparative advantages can help build closer bilateral trading relationships. LNG and small modular reactors are good places to start.
General Timothy Ray (Ret.) is the Chief Executive Officer of Business Executives for National Security (BENS). He is a retired United States Air Force General who last served as the commander of the Air Force Global Strike Command and Commander of Air Forces Strategic-Air, United States Strategic Command. BENS delegations have recently visited the Philippines and Vietnam.
Ramon Marks is a retired international lawyer and Vice Chair of BENS. The views expressed here are his own.
Image: Igor Grochev / Shutterstock.com.