中国经济持久战

For much of the past year, China’s response to trade tensions has continually surprised hawks in Washington. In December 2024, when the Biden administration imposed new export restrictions on advanced chips, Beijing immediately answered by banning exports of several metallic elements to the United States.

In April 2025, after the Trump administration threatened huge tariffs on China, Beijing dug in, imposing strict export controls on seven rare-earth minerals vital to defense and clean energy manufacturing. In May, China stopped buying U.S. soybeans, the largest U.S. export to China by value. And in October, after the United States extended existing export restrictions on Chinese companies to all of their majority-owned subsidiaries, China added five more rare earths and a broad array of advanced processing technologies to its own export controls.

These increasingly bold measures not only posed a major threat to U.S. and global supply chains but would also have significant domestic consequences. The message was unmistakable: China is prepared to absorb pain to put real pressure on the United States.If the approach was bold, however, it was not reckless.

By opting for calibrated retaliation, Beijing preserved negotiating space and kept off-ramps open. After U.S. President Donald Trump and Chinese leader Xi Jinping met in South Korea in late October, China agreed to postpone many of the restrictions. Yet calibration should not be mistaken for weakness.

Alongside its announced moves, China has developed a potent arsenal of nontariff barriers and legal instruments that it can draw on when needed. Discarding the strategic restraint that had previously characterized its approach to the United States, China has shown it is ready to weaponize its supply chain dominance.

This tough stance has been reinforced by domestic political considerations. Chinese leaders and negotiators are determined not to relive the public backlash that followed the 2020 Phase One trade agreement between Beijing and the first Trump administration, which to many Chinese commentators seemed as lopsided against China as the treaties that Western colonial powers brokered with the Qing dynasty.

For Xi, who has vowed to end China’s “century of humiliation,” another deal that appears to favor the United States is politically untenable, and his willingness to stand up to Washington has become a means of solidifying his position as the country’s paramount leader ushering in a “national rejuvenation.

”Yet Beijing’s approach cannot be reduced to retaliatory tactics or nationalism. China’s leaders have spent years preparing for Trump’s return and view the trade war as part of a much larger contest that is likely to last for decades. In the short term, Beijing’s priority is securing the concessions on advanced technology needed to accelerate semiconductor development in China and reduce reliance on imports.

In the medium term, it aims to deepen technological capacity, diversify export markets, and capture a larger share of value-added exports in global supply chains to reduce U.S. leverage. In the long run, it intends to build an alternative global trading and financial architecture strong enough to strip the United States of its unilateral sanctioning power.

Above all, China wants recognition that its core interests lie beyond even the threat of Western interference—that it has full freedom of action within its sphere of influence, including Taiwan and its regional periphery, and that it can engage economically with the world on terms no less favorable than those accorded to the United States or other great powers.

In essence, China is attempting a geopolitical feat without precedent. It seeks to obtain an equal place alongside the United States without triggering “the Thucydides trap’’—the tendency for rising and established hegemons to come to blows. Unlike earlier revisionist powers, China intends to complete its ascent through the steady accumulation of economic power and influence rather than through military conquest.

To succeed, it must not merely draw even with the United States but surpass it in some areas, to the point that any U.S. refusal to acknowledge its superpower status appears absurd to the rest of the world.As this protracted struggle unfolds, conventional side-by-side comparisons of economic data or military capability are unlikely to provide a clear indication of which side is ahead, which is slipping behind, and why.

When success in one domain comes at the expense of another, the ultimate effect on national power or influence can be ambiguous. As history has shown, a country’s global influence also depends on less tangible qualities such as the values it projects, its reputation, and its ability to attract allies and partners.

To come to a clearer overall assessment of China’s quest for power, it is useful to borrow from a discipline that thrives on uncertainty and tradeoffs. In credit finance, banks and lenders assess a business’s creditworthiness by applying a series of broad criteria commonly referred to as “the four Cs”: capacity, capital, character, and collateral.

Translated into geopolitics, this framework offers a structured way to evaluate China’s continuing rise and its implications for the United States.As Washington retreats from multilateralism and becomes more consumed by domestic polarization, Beijing will continue to exploit opportunities to advance its own geopolitical goals.

On paper, it is well positioned to do so: it can mobilize resources at an immense scale, it dominates green energy supply chains, it commands the world’s largest standing army, and its artificial intelligence companies have shown they can keep abreast of their American counterparts. But the United States retains other forms of global influence and clout that will be hard for China to match.

As a close examination of the four Cs suggests, the contest between Washington and Beijing will not only be determined by which country has the best AI models or the most ships. Hard-to-quantify dynamics are likely to be as important as raw empirical advantages and hard power. To prepare for this long struggle, then, the United States will need to better understand what China is seeking and how it stacks up against American power in different domains, and where Washington’s own policies are falling short.

NATION OF MILLIONSChina’s global power is founded on its immense population and resources, or what might be called its capacity. As long ago as the thirteenth century, Marco Polo marveled at the extent of China’s cities, wealth, and territory in The Travels of Marco Polo, whose original Italian title was Il Milione, or The Million.

Today, that vastness has enabled China to mobilize resources for growth at a scale and speed that eclipse most competitors. In 1978, China was among the poorest countries, with a per capita GDP of about $157, less than one-60th that of the United States and less than one-tenth of Brazil’s. Now, it is the second-largest economy and exports more goods and services than any other nation on earth.

This unprecedented ascent has been built on the backs of China’s easily exploited migrant laborers, a subset of its workforce that grew from roughly 30 million in 1989 to nearly 300 million in 2024. These low-paid workers have fueled the country’s explosive growth, manning factories, operating ports, building infrastructure, and making China the industrial powerhouse of the world.

Today, the Chinese Communist Party is betting that the country’s huge army of engineers and scientists can do the same for technology and innovation. Already, China has nearly caught up to the United States in spending on research and development. Chinese researchers now publish more papers in elite scientific journals and file more patent applications than their American counterparts.

Behind these figures lies a deep well of human talent: China produces roughly 3.6 million STEM graduates annually, over four times the U.S. total.Yet this enormous capacity also poses one of China’s biggest challenges. It has left the economy lopsided and reliant on foreign markets to absorb excess output, leading to growing friction with many Western governments.

And China’s industrial and supply chain dominance has pushed many countries to reduce their dependence on the country, eroding Beijing’s principal source of leverage. China’s extraordinary industrial power thus presents a paradox: the country can produce almost anything cheaply and at enormous scale, yet the more it uses this strength, the faster the world turns against it.

Beijing’s almost singular focus on building its industrial base has also stunted the development of a balanced domestic market. Chronically weak household demand has prevented the Chinese economy from becoming a self-propelling engine. For household consumption to account for the same share of GDP in China as it does in the United States, the average Chinese family would have to consume 70 percent more—a tall order.

In fact, China’s consumer spending growth has slipped to its lowest levels in over a decade, with retail sales growth in 2024 around 3.5 percent, well below the double-digit gains of earlier years. Consumer prices fell year-on-year in several months of 2025, signaling deflationary pressure in parts of the economy.

Falling prices reduce corporate profits, further increasing the true economic cost of maintaining bloated industrial capacity.China’s massive industrial capacity has made it especially dependent on the United States. In addition to being the leading destination for Chinese exports, the United States has served as a vital source of best practices that Chinese policymakers and companies have repeatedly drawn on to craft their own approach to industrial, financial, technological, and military development.

Even in sectors in which Chinese companies have long outpaced American competitors, such as electric vehicles and batteries, the United States remains an indispensable source of talent, research networks, and demand. These realities contribute to the conundrum that Xi faces in negotiating with the second Trump administration: if China is to eventually stand on its own against the United States, it must first pull its rival closer so it can lean on American expertise in sales and product design.

History has shown that capacity alone does not make a superpower. In the early twentieth century, Germany boasted a world-beating industrial base and top engineering talent but ultimately failed to establish enduring regional hegemony. Starting in the 1960s, Japan enjoyed decades of dominance in automobile manufacturing and electronics but failed to translate this advantage into geopolitical power before the rest of the world caught up.

Even when capacity helped create a superpower, that status could be short-lived if other attributes were weak. The Soviet Union developed a vast industrial and scientific sector and achieved spectacular technical feats, such as the first space flight and the world’s largest nuclear arsenal. Yet political and bureaucratic sclerosis, combined with an unbalanced statist economy, ultimately led to its demise.

Today, China has the industrial capacity of a superpower, but it will need to match that strength in other domains to consummate that status in geopolitics.RICH BUT NOT QUITE GLORIOUSAlong with capacity, aspiring superpowers need to have immense capital—the ability to deploy vast sums of money to influence behavior and shape outcomes abroad.

China now holds over $3.3 trillion in official foreign exchange reserves, more than any other country. The Communist Party’s near-complete hold over China’s financial system also allows it to invest state funds with a speed and scale that would be unthinkable almost anywhere else.Moreover, China has transformed its massive foreign exchange hoard into an active instrument of financial statecraft through its sovereign leveraged funds.

These vehicles finance the party’s industrial policies, back Chinese firms’ strategic acquisitions overseas, and partner with foreign institutions to reduce political resistance to Chinese capital. At the 2024 summit of the Forum on China‑Africa Cooperation, for example, Xi pledged more than $50 billion in renminbi-denominated loans to African countries, much of it underwritten by the China Development Bank and other state-backed institutions.

These loans are as much about securing political support for China’s expanding corporate footprint as they are about promoting the international use of the renminbi.Yet China’s capital and financial power is more constrained than its headline figures suggest. Consider the overall status of the renminbi in the global financial system.

On paper, the preeminence of the U.S. dollar looks vulnerable, with the dollar accounting for just 56 percent of global reserve allocations, a 30-year low. Yet despite China’s position as the world’s leading trading nation, much of the dollar’s lost share has shifted not to the renminbi or other currencies but to gold and other nonsovereign assets.

Since 2008, central banks have increased their gold holdings by 25 percent to the highest level since 1970. By contrast, the dollar still dwarfs the euro, which accounts for roughly 20 percent of reserve allocations, and the renminbi, which holds just two percent. Thus far, the diversification away from the dollar appears to be less an endorsement of an alternative currency than a reflection of waning confidence in the U.

S.-led financial order.China is attempting a geopolitical feat without precedent.Still, China has been building financial infrastructure to reduce global dependence on the dollar, if not to replace it outright. In 2024, China’s Cross-Border Interbank Payment System grew by 47 percent, compared with just 12 percent growth for SWIFT, the Western-dominated interbank system responsible for moving most of the world’s dollars between countries.

For now, CIPS handles only a fraction of the global transactions that SWIFT does, but the system has the capacity to be scaled up rapidly. Following Russia’s invasion of Ukraine in 2022, for example, Western governments expelled Russian banks from SWIFT. To bypass Western sanctions, Russian entities began to adopt CIPS, and today, nearly all of Chinese-Russian trade—99 percent—is conducted in renminbi and rubles.

To truly challenge the dollar, however, China would have to make the renminbi fully convertible and dismantle the capital controls that underpin its system of financial repression. It would also need to allow foreigners to hold renminbi-denominated assets on a far greater scale. Some progress has been made: since 2020, foreign holdings of renminbi-denominated bonds have risen 83 percent, to $597 billion.

But that figure would need to increase more than 20-fold to match foreign holdings of U.S. corporate and government debt securities. Until China allows far greater foreign access to its debt, there will simply not be enough renminbi-denominated assets for investors to replace their dollars even if they wanted to.

Meanwhile, China’s growth model is reaching its limits. The very mechanisms that once fueled the country’s rise—a state-dominated financial system, suppressed consumption, and export-dependent growth—are now constraining its future. For decades, the government used capital controls, artificially low deposit rates, and an undervalued currency to funnel household savings into industrial sectors.

In effect, Chinese households subsidized the country’s rise through foregone returns while the rest of the world splurged on discounted Chinese goods. That model is no longer sustainable: foreign exchange reserves have barely grown since 2017, and the social costs of financial repression are mounting.

At an electronics market in Shenzhen, China, October 2025 Tingshu Wang / ReutersChina’s aging population now lacks the savings to support itself. Younger workers must shoulder the burden of caring for two sets of elderly parents amid rising living costs and eroding household consumption, driving a collapse in domestic demand.

The country’s family formation rate—the proportion of adults who establish a new household unit within a given period—is among the lowest in the world, and its population began shrinking in 2023, far earlier than Chinese planners had projected. Eventually, China will have to scale back overseas investments to fund social welfare.

Xi’s government is betting that new technology can offset these financial pressures—that China can innovate its way out of demographic decline and export its way out of industrial overcapacity. The assumption is that by achieving and maintaining global dominance in advanced industries, Beijing will generate enough prosperity to mitigate structural weaknesses at home.

Yet this will require a precarious balancing act: sustaining growth, maintaining social stability, and managing demographic decline all at once. Failure in any one of these tasks could upend China’s bid for global economic leadership.As Beijing is learning, although capital can be deployed more flexibly than capacity, it is also exhaustible and is rarely decisive on its own.

Abundant financial resources do not guarantee lasting power. In the sixteenth century, imperial Spain was awash with silver imported from the New World, but the empire’s structural fragilities had already sealed its decline. China’s accumulation of capital has come with its own liabilities: built on domestic repression and export dependence, it also remains constrained by the renminbi’s relatively small profile in the international system, which limits China’s financial leverage abroad.

Ultimately, the country’s rise to superpower status will hinge not just on industrial capacity and capital but also on its leaders’ ability to convert national assets into enduring global influence.SOLIDARITY WITHOUT ALLEGIANCEIn credit analysis, a company’s character—its established way of conducting business and cultivating goodwill—relates to how it uses its capacity and capital.

Analogously, China’s character, or the way it asserts itself on the world stage, can be understood by examining how it uses its vast industrial base and financial resources. Guided by its own creed, Beijing tends to wield economic power according to its own precepts rather than global norms or external expectations.

Beijing’s approach is inseparable from the Communist Party’s pursuit of domestic legitimacy, which hinges on its promises to deliver ever-greater economic prosperity and end China’s century of humiliation at the hands of Western powers. In addition to justifying the party’s authority at home, this narrative of historical grievance provides the foundation for an assertive foreign policy, galvanizing Beijing’s recurring appeals to sovereignty and noninterference and its claims of affinity with countries across the developing world.

Yet China’s moral posture imposes constraints. From the 1980s through the early 2010s, Beijing emphasized partnership with the United States and the West; “socialism with Chinese characteristics” depended on integration into the U.S.-led global trade system and access to Western technology and finance.

But to China’s leaders, integration was never the goal. It was merely the means to accelerate modernization and restore national strength. The party’s larger objective was to learn from the West without becoming it.As China’s economic and military power grew and Washington became disillusioned with its stalled liberalization, the relationship soured and the party recalibrated.

Since 2018, Xi has set aside integration and made self-reliance the organizing principle of China’s national strategy. This shift was reinforced by the first Trump administration’s restrictions on Chinese tech giants such as Huawei, which exposed China’s vulnerability to export controls. In response, “national rejuvenation” came to mean autonomy and insulation from Western pressure.

China’s rapport with the United States and its allies has thus evolved from pragmatic engagement to principled divergence.Beijing has a persistent deficit of soft power.Nonetheless, Beijing does not seek to export an alternative set of Chinese values or send its ideology abroad, as the Soviet Union once did.

Instead, its aims are almost exclusively strategic: to reshape global norms around sovereignty and development in ways that advance its own interests. By defining itself largely in negative terms—it is not Western, not liberal, not subordinate—Beijing has succeeded in cultivating solidarity among some states but has struggled to inspire genuine allegiance.

China’s global influence is further constrained by weak cultural affinities with other countries. Unlike Western powers, whose alliances are reinforced by shared heritage, language, and values, China lacks comparable cultural or societal linkages. Largely transactional, its partnerships are not grounded in moral obligation or historical kinship.

China’s relations with its neighbors and closest cultural kin, Vietnam and Taiwan, remain among its most adversarial. And although the Chinese diaspora is vast and economically dynamic—a great many of the world’s major cities have a Chinatown—the party sees Chinese people living abroad as potential sources of ideological risk and has been known to monitor and intimidate them.

In both cases, Beijing’s approach has inhibited the formation of organic, trust-based ties between China and other societies, leaving it with a persistent deficit of soft power.China’s defensive pragmatism has also made it reluctant to play a constructive role in conflict resolution. Although it claims to be a neutral power, for example, Beijing has maintained solidarity with Moscow in its war in Ukraine under the banner of opposing Western “hegemony.

” The pro-Russian stance has fed growing concerns in Europe, whose leaders and policymakers increasingly view China as both an economic competitor and a security threat. Such tensions help explain why China often commands respect but not affection. It is seen as formidable but not completely trustworthy; its leadership powerful but not quite legitimate.

Without moral leadership to complement its material strength, China’s global role remains that of a power to be managed—and, perhaps, feared—but not one to be followed.MIDDLE KINGDOM MISTRUSTIf capacity defines what a country can do, capital determines the resources it can draw on, and character describes how it chooses to act on the world stage, the fourth C addresses a more elusive question.

In credit analysis, the function of collateral is to reassure lenders when there is a lack of trust that a company will make good on its loans. In geopolitics, this might be termed credibility, or whether a country can persuade other nations that it will make good on its promises and intentions. Achieving credibility is arguably the ultimate prerequisite for superpower status.

It cannot be bought or declared by fiat; it must be earned through practice. It is the glue that sustains alliances, stabilizes expectations, and transforms influence into global leadership.Credibility is the weakest dimension of China’s geopolitical power. Despite its immense capacity, great wealth, and expansive overseas footprint, the country faces persistent skepticism about its intentions.

China has invested heavily in international campaigns to project its reliability and legitimacy—including in climate diplomacy, UN peacekeeping, and its sprawling Belt and Road Initiative, the global development program on which China has spent some $1.3 trillion and signed agreements with around 150 countries.

Yet despite their scale, these efforts have not delivered the credibility Beijing seeks. In some cases, China has exaggerated its actual contributions, sowing mistrust about its agenda. For example, it has presented itself as a leading international source of development financing, even though multilateral development banks, private investors, and traditional Western lenders still account for a larger cumulative share.

In other cases, China’s overseas investments have unwittingly amplified doubts about its reliability and transparency. Consider the widely held view that Beijing has been deploying “debt trap” diplomacy with poorer countries, deliberately ensnaring them in unsustainable debt to seize strategic assets.

Although empirical studies have found little evidence of such deliberate intent, the pervasiveness of this narrative shows the extent to which China’s opaque lending practices and the political leverage that appears to be built into its financing model have led to global unease.International anxieties about China’s industrial overcapacity follow a similar pattern.

In many Western capitals, a belief has taken hold that China’s enormous excess production is the result of a deliberate strategy to dump cheap goods in their markets and destroy their industrial bases. In fact, overcapacity appears to be largely an unintended consequence of China’s long-standing economic growth model.

Yet Beijing has been unwilling to confront the problem because of its determined quest for industrial leadership and the entrenched interests of local governments, state-owned enterprises, and state-controlled banks. As a result, the charge has stuck, reinforcing broader misgivings about the country’s intentions.

Robots at a car plant in Baoding, China, November 2025 Maxim Shemetov / ReutersWestern theories about China’s stagnating growth have provided yet another reason to doubt the country’s credibility. According to the “peak China” thesis, Beijing faces a fatal long-term economic slowdown because of mounting and irreversible structural problems.

In this view, the disparity between China’s official optimism and the observable malaise in the Chinese economy raises questions not only about the reliability of Chinese data but also about China’s projection of power in the world. Some China watchers have speculated that accumulating economic pressures could cause Beijing to abandon its peaceful rise, opting for aggressive or coercive action to secure its interests while it can.

China’s expanding control of overseas ports and critical infrastructure has added to these suspicions. Chinese state-affiliated entities now hold stakes in more than 100 overseas port projects around the world, over 70 percent of which have potential military as well as civilian capabilities. Although evidence of militarization remains limited, Western defense strategists warn that these dual-use facilities could evolve into a global network for the Chinese navy.

Once again, negative perceptions have been fueled by Beijing’s lack of transparency as well as its unhelpful tendency to blur boundaries between state and commercial actors. Although the fears may be overstated, they remain plausible enough to call into question China’s overseas investments on national security grounds.

In this sense, Beijing’s credibility deficit is cumulative and largely self-inflicted.Of course, rising powers have invited suspicion about their motives throughout history. In the 1980s, Japan faced accusations of “aid imperialism,” and its growing trade surplus, high-profile purchases of American assets, and strong technological and manufacturing prowess fueled fears that it threatened American dominance, prompting protectionist measures.

Yet the speed and scale of China’s rise have brought it a credibility problem far greater than that of its predecessors. Beijing’s opacity, fragmented policymaking, and continual fusion of state, commercial, and strategic motives have thus created a self-reinforcing cycle. The more China asserts leadership, the more its actions invite skepticism—leaving it strong in capacity and financial power yet uncertain in character and weak in credibility.

ENDURANCE TESTChina should not be underestimated. Under Xi, it has spent the last 13 years consolidating strength and girding itself for a competition for global power that could last decades. It has suffered reversals, most notably during the COVID-19 pandemic, when the Communist Party’s draconian lockdowns exacerbated structural economic problems, eroding the faith of Chinese society in ever-improving prosperity.

Yet the country has maintained its overall trajectory: incremental accumulation of economic strength combined with a growing assertion of strategic autonomy. That has served China well in the trade war with the United States. No other government has gone tit for tat with Washington on tariffs and export restrictions and emerged mostly unscathed.

For the first time since its rivalry with the Soviet Union, the United States faces a peer competitor that is capable not only of defying its power but also of forcing it into an accommodation.Assessed by the same four Cs, the United States can no longer count on its traditional advantages. After World War II, the United States’ capacity was unmatched; its overwhelming industrial power, financial heft, and scientific achievement set the standard for excellence in nearly all fields.

For decades, the United States has also led the world in character and credibility, exporting its values, its prosperity, and its security umbrella to dozens of countries while defending the system of global markets based on the U.S. dollar and the rule of law that it largely built. But these strengths have faded, and with them, the sense that American preeminence is a fact of nature.

When Washington last faced a rising superpower, at the dawn of the Cold War, it could rely on a coalition of confident allies. That is less true today. Combined with the fiscal recklessness and weaponization of economic policy that the United States has demonstrated in recent years, the second Trump administration’s disdain for alliances and its maximalist trade posture have had a real effect on international perceptions.

In October 2025, Canada announced its intention to double its exports to countries other than the United States—a kind of “de-risking” approach that was once reserved for China. Beijing has noticed these fractures and is working methodically to widen them.The United States can no longer count on its traditional advantages.

On the other hand, China faces its own persistent limitations. Precisely because they have such power to transform industries and markets, the country’s unparalleled capacity and capital have become liabilities. In the absence of a strong positive vision of global leadership, it continues to fall short in both character and credibility, raising questions about its larger intentions and the terms of its rise.

And its domestic issues, including weak consumption and a growth-slowing demographic shift, pose significant challenges of their own. Even if Beijing can mitigate these problems, the United States’ incumbent position in the world order and its enviable natural resources may provide structural bulwarks that China is unable to surmount.

The best-case outcome, then, is likely a stabilized confrontation—confined to the political, economic, and diplomatic spheres and carefully insulated from military escalation—in which neither side can achieve a decisive victory. China has already concluded that it is in a protracted contest with the United States.

If Washington does not want to erode its position further, it must put aside short-term tactics and settle into the same long game. But it must also recognize what the contest is really about. Contrary to the assumptions of many U.S. policymakers, China’s leadership does not seek to unseat the United States or to replace a global system from which China has greatly benefited.

But it does seek to end the U.S. strategy of containment and to obtain a de facto veto over unilateral U.S. actions, such as sanctions. By ratcheting up its actions against China, the Trump administration has inadvertently reinforced Beijing’s determination to consummate its superpower status.For the United States, success in this contest, then, is unlikely to lie in punitive actions against Beijing.

Instead, Washington must shore up its traditional credibility in the world and use it to steer China along a less hostile path, presenting Beijing with dilemmas rather than ultimatums and seeking to shape outcomes over time rather than dictate them immediately. For China, in turn, success will require resisting U.

S. pressure and sustaining its current trajectory to the point where its rise becomes too costly for the United States to try to contain. And it will require overcoming international skepticism about Beijing’s larger aims. In view of their mismatched strengths and weaknesses and their increasingly shared deficit of trust from the rest of the world, however, both sides will likely find that any larger victory remains elusive.

This contest will hinge not on pivotal moments but on the slow test of strategic endurance.