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In The Future China Will Be Dominant & the US Irrelevant
By Matt Morgan - June 02, 2025

 

Summary

China’s strategic investments and hybrid economic model are positioning it for global dominance in high-tech industries, while the U.S. faces stagnation and policy challenges that threaten its competitive edge.

China’s Industrial Policy

China employs a hybrid approach combining state-led planning with market forces, selectively pulling back to allow competition while harnessing advantages of the American system like avoiding monopolies.

Beijing’s industrial policy focuses on strategic industries like aerospace, AI, and next-gen information technology, as well as manufacturing, to drive economic development and elevate quality of life.

China’s trajectory emphasizes building national resilience by becoming a strong player in various industries, including robotics, AI, steel, and aluminum.

Evolution of China’s Economic Strategy

China’s industrial policy has evolved with different strategies used over time, such as joint ventures, targeted industry support, and protection of domestic industries through tariffs and non-tariff barriers.

The Chinese government has invested heavily in public spending on science and research in target areas like satellite technology, space, solar, and semiconductor technology.

China’s industrial policy has successfully driven growth in strategic industries, with domestic companies like Huawei and BYD emerging as global leaders in telecom equipment and electric vehicles.

Comparison with US Economic Model

The US has never been a true classical free market, with government regulatory agencies like FDA and EPA playing crucial roles in public safety and environmental protection.

US strengths include its universities and companies built on pillars of American power and innovation, such as government regulatory agencies and research at national labs.

Global Economic Implications

China’s focus on manufacturing in the physical world, as opposed to a consumer-focused economy, is driving policies supporting robotics, autonomous vehicles, and industrial automation.

Factories worldwide may reorganize their supply chains with China at the center as it becomes the world’s preeminent technological and economic superpower.

The US potentially squanders its strengths, including its ability to attract international talent and capital, which are crucial pillars of American innovation.

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