Extreme Weather Will Upend U.S.-China Competition

ALICE C. HILL is David M. Rubenstein Senior Fellow for Energy and the Environment at the Council on Foreign Relations and the author of The Fight for Climate After COVID-19. MENGYE ZHU is a Senior Scientist at the Natural Capital Alliance at Stanford University. The Cost of Falling Behind on Climate Adaptation Climate change looms in the background of the contest between China and the United States. It is the underappreciated factor that could determine who wins the race to develop frontier technologies, gain economic advantages, and secure influence across the world. And as global temperatures continue to climb, its role will become harder to ignore—because the two countries, the world’s largest emitters of carbon dioxide, both face great risks from climate-related extreme weather. Extreme weather threatens the physical foundations of Chinese and U.S. economic and technological power. It can degrade critical systems such as those that convey electricity and water. It can obstruct the transportation networks and break the supply chains on which industry relies. It can destroy housing and businesses, pushing communities into economic downturns as people leave and stores shutter. It can constrict insurance markets as the affordability and availability of property coverage decline. And it can dampen labor productivity and force governments to divert resources to manage public health crises. According to the 2026 Climate Risk Index produced by the nonprofit Germanwatch, China and the United States ranked among the top 20 countries that suffered the largest economic and human tolls from extreme weather between 1995 and 2024. These weather events will only intensify as the planet warms. XDI, a firm that performs climate-risk analysis, has projected that by 2050, the world’s 100 subnational jurisdictions most exposed to climate disruption will include 29 Chinese provinces and 18 U.S. states. How well China and the United States prepare for extreme weather will shape their future economic prospects. The harms of climate-related disasters can be mitigated with managed retreat of people and infrastructure from severely threatened areas, ambitious engineering projects to protect financial centers, robust early warning systems, and other forms of adaptation. According to a World Resources Institute study, every dollar invested in climate adaptation and resilience can generate more than $10.50 in benefits over ten years. Today, China is investing far more than the United States in these kinds of measures. If the United States does not do more to protect the sources of its national power from the extreme weather to come, its economic competitiveness could suffer ever more severe blows. Beijing has been integrating adaptation into its policy planning for more than a decade, releasing its first National Strategy for Climate Adaptation in 2013. Since then, China has gradually built up programs for climate monitoring and early warning, disaster prevention, natural ecosystem resilience, and climate-proofing infrastructure, agriculture, urban development, and public health systems. These efforts involve regional planning—nearly all provinces in China have climate adaptation plans—and at least 17 central government departments and agencies, with goals set through 2035. In 2024 alone, the national government issued around 100 policy documents related to climate adaptation. At the 2025 UN Climate Summit, Chinese leader Xi Jinping committed to making China “a climate-adaptive society” by 2035. China’s 15th Five-Year Plan, adopted earlier this year, similarly calls for a stronger national climate adaptation framework, better risk assessment in vulnerable sectors and regions, and greater capacity to respond to extreme weather. Beijing is backing up its pledges with significant investment. To reduce flood risk in urban areas, for example, China has carried out 90 “sponge city” pilot projects and demonstrations since 2015, using permeable pavement, wetlands, rain gardens, green roofs, and upgraded drainage systems to more effectively absorb rainfall. Between 2021 and 2025, the initiative received about $8.5 billion in central government funding and mobilized roughly $23 billion in total investment—around the same amount of money as the insurance payouts after the 2025 Los Angeles wildfires. China has also launched 67 pilot projects that explore additional solutions, including resilient power grids that better coordinate energy supply, demand, and storage; coastal wetlands that act as natural buffers against storms, flooding, and sea-level rise; “cool city” design to reduce heat exposure; and farming practices adapted to heat, drought, and shifting rainfall. The country’s investment in disaster prevention and emergency management increased by an average annual rate of almost nine percent between 2019 and 2023. Much of China’s spending is geared toward preparing the country’s infrastructure to withstand extreme weather. Over the

Extreme Weather Will Upend U.S.-China Competition

Key takeaways

More in publications