Great-power competition in the 21st century is indeed shifting from “who controls land, energy, and financial nodes” to who can organize irreplaceable production systems.
China’s rise comes precisely from the fact that, across a growing number of physical industrial chains, it has built capabilities the world cannot easily route around.
America’s danger is that it increasingly relies on sanctions, financial jurisdiction, export controls, tariffs, chip restrictions, and military presence, such kinds of form of punitive power to preserve its central position. Every sanction gives others another reason to build alternatives. The more frequently sanctions are used, the stronger the incentive for de-dollarization becomes. The tighter chip controls become, the faster China’s domestic substitution accelerates. The more expansive U.S. long-arm jurisdiction becomes, the more allies and middle powers want to preserve a second system.
But China should still not underestimate America’s capacity for reorganization or its deep institutional resilience.
The United States has not lost all creative power. It remains a composite hegemonic system: weakened and incomplete in many manufacturing chains, but still extraordinarily strong in finance, technology, military power, institutional alliances, and global rule-setting capacity.
Its industrial manufacturing base has declined in relative terms, but America still possesses the dollar system, the world’s deepest capital markets, top universities, basic science, frontier AI models, semiconductor design, aerospace, the military-industrial complex, vast energy production, alliance networks, and global military projection.
At the same time, after a series of conflicts and shocks over the past five years, China’s position in many globally irreplaceable chains has clearly continued to rise.
China does have the world’s most complete manufacturing system. But its own irreplaceability also has limits. In high-end semiconductor equipment, parts of industrial software, aircraft engines, life-science toolchains, global brands, financial pricing power, and overseas political trust, China still has important weaknesses.
So the China-U.S. competition is not a war that has already been decided. It is a long systemic contest over supply chains, technological origins, capital discipline, institutional organization, and the capacity to provide global public goods.
China is structurally rising across more and more physical production chains, while the United States still holds central positions in several high-end technologies, capital networks, and security systems.
The real competition is not simply who is stronger today. It is which system can repair its own weaknesses faster.
Good you give the US a chance to turn things around. Perhaps it's possible, but they keep trying and failing. The problem they face is how to stem the fiscal haemmoraging. A 6% (of GDP!) deficit may be manageable under crisis conditions but really, the US isn't in such a situation. It's in a structural decline. The Oligarch system worked fine when there was no other place to recycle the massive accumulation of wealth. That is no longer the case. Money printing that in the past was the preferred method of "stabilisation" has lost its usefulness. Curbing cheap inputs from China and Russia has created a substantial surge in inflation. This is a structural supply side issue that the US has little control over. Pushing up interest rates leads to a debt crisis (already serious prior to the China decoupling). So many simultaneous crises and the answer is to reinvigorate the 19th century policy of gunboat diplomacy. And that has failed miserably in Hormuz. It's difficult to see how this gets turned around without some grand bargain Yalta 2.0.
The irony is that when taken as a whole (USA, Canada, Mexico) N. America has everything it needs to achieve near-total autarky. The fly in that ointment is the Epstein class, with its rapacious financial scheming and allegiance to a foreign nation that has nothing in common with our fundamental cultural principles or ideals.
So the war is being fought in the open, and the USA tariffs are back firing. Driving trade partners into new partnerships. Arguably, the headlock technique is most evident at home with a MAGA administration.
ICE and “4Profit prisons” are putting the entire USA in a headlock. Not it’s neighbours.
The stated intention of this administration is to put the western hemisphere in a headlock. Cuba. Venezuela, Panama Mexico, Canada, Greenland etc. North and South America, but the ones suffering the most, are it’s own citizens.
I suppose we must raise a glass to the Orange Failure and his administration for their 250 front lawn cage match at the White House. Way to show the world your true colours and best moves, headlocks and body slams. Happy 250 birthday USA. USA. USA. usa usa usa
Here are some questions and issues that I think you could address and develop in future articles. They are not objections to the framework, but attempts to stress it from its own limits.
1. On the impossibility of a major war (NATO-Russia)
In your article "The Supply-Chain War" you suggest that the war in Ukraine does not define the global agenda because it is not on the axis of the new principal contradiction. When I previously asked you about the possibility of a direct war between Russia and NATO, you replied that China would not allow Russia to start it. Let me go a step further: what if the EU and NATO (with or without explicit US leadership) strangle Russia to the point of suffocation? Who would stop NATO? Would the US be willing to restrain its own allies to avoid a war that no longer directly affects it? Recent events suggest otherwise. The scenario of an uncontrolled escalation on the European flank still seems possible to me, and I would like to know whether your framework rules it out completely or only considers it improbable.
2. On China's capacity to "veto" a Russian war
Your claim that China can deter Russia from entering a direct war with NATO presupposes a level of control that may not exist. China certainly has economic leverage. But if Russia perceives that its survival is at stake (for example, in the face of a massive NATO deployment in Ukraine or the Baltics, or the growing destruction of its infrastructure), could Beijing really stop it by threatening to withdraw its support? Russian sovereignty is not a puppet. Wouldn't this question deserve some nuance?
3. On Iran's control of the Strait of Hormuz
You write that keeping the strait open does not depend on warships, but on "refining capacity, energy corridors, the physical base of critical materials." But empirical evidence suggests the opposite: Iran dominates the strait primarily through its asymmetric military capability (anti-ship missiles, drones, naval mines, Revolutionary Guard forces). China's "refining capacity" is the reason Iran does not dare to close it completely, not the source of its controlling power. Aren't you inverting causality here?
4. On the possibility of an Iran-Israel escalation
Even if China and the US wanted to contain the conflict, can they really do so? Israel has its own interests and its own capacity for initiative. So does Iran. And non-state actors (Hezbollah, the Houthis, Iraqi militias) have escalation logics that do not respond to orders from Tehran or Washington. An open war between Israel and Iran that closed the Strait of Hormuz and destroyed the Gulf's desalination plants would have a cascading effect: energy collapse → supply chain collapse → market collapse → food crisis. What would become of your thesis that "war no longer has a battlefield" if that battlefield were to open up all at once? How does this scenario fit into your framework?
5. On the stability of System B in the face of a leadership change in China
Your framework assumes that there is no designer, that China's industrial metabolism (System B) is robust and autonomous, with a Party that acts as its "immune system." But let us consider a thought experiment: if Xi were replaced by a leader who did not share the system's premises, someone who sought to dismantle the power of the CCP and liquidate the state-owned enterprises (for example, a "Western liberal" accidentally installed in Beijing), would the system survive? Or does B itself have self-defense mechanisms that would prevent such a dismantling? Your answer to this is important to know whether B is a monolithic structure or, in some way, a contingent political project.
6. On the mutual absorption between A and C, the new leadership of A, and the risk of self-destruction
In your response to my previous comment, you pointed out that it is not only A absorbing C, but that C is also capturing A in the reverse direction: the elections, the Federal Reserve, the federal agencies. I accept the bidirectionality. You also describe that a new leadership is taking shape in A (industrial hawks, Silicon Valley accelerationists, union workers) and that this could be the beginning of a change. But that same evidence can be read another way: not C becoming independent, but A coopting C as its high-tech arm and, more worryingly, as its qualitative military weapon (AI applied to war, autonomous drones, networked combat systems, etc.). The cases of Anthropic (Pentagon contracts) and the GENIUS Act (stablecoins tethered to Treasury debt) point in this direction of co-optation. The new leadership of A, far from being the vanguard of an independent C, could simply be the selection of the leaders most apt to use C against B.
Furthermore, you argue that to fight a supply-chain war, you first need a chain worth defending. If A cannot rebuild its own (as you admit), what is left for it? Only the option of destroying B's chain through direct military coercion? That would be a regression to the 20th century, exactly what your framework says no longer works. But history is full of empires that, faced with the impossibility of competing, opted for shared self-destruction. Is that not the real risk of the coming decade? My question, in short, is: how can we distinguish, empirically, between a scenario of C's independence (your optimistic reading) and one of C's co-optation as A's weapon, followed by a strangulation war against B (my pessimistic reading)? Do you consider this scenario impossible, or would nuance also be appropriate here?
The ground in this analysis is economic growth plus competition for markets. This is not a new phenomenon of course, it is the underlying premise for the expansion of human civilization up to the present day, whether recognized or not. I would argue, however, that we’re fast reaching the end of that rubric as a working principle around which to structure our economies. The problem was first recognized by Thomas Malthus and later expanded in 1972 with the "Limits to Growth" report commissioned by the Club of Rome. We’re now approaching (or have reached) that limit, depending on how you measure it, but I think it’s important to define what we mean when we talk about growth. Up until now, that has been solely a measure of economic output without differentiating the type of growth being stipulated. To counter this metric I propose breaking the definition into two factors: progressive and regressive growth.
To give some examples. Where I live (West Coast Canada) every second home has either an RV or boat in the driveway, sometimes both. These get used for a week or two out of the year and the rest of the time just sit there gathering dust. Granted they provide employment for the people who make them and the materials that go into them, but that’s about it. Otherwise they just consume valuable resources that, unlike heavy equipment, railcars, trucks or aircraft, add little or nothing to the economy, they just sit there depreciating. A dead end. Much of what we call "consumer products” fit this description. They are basically appeals to vanity, like the monster trucks that are everywhere here, of which perhaps 10% are actually working vehicles. This is only sustainable during economic expansion when wage growth gets directed towards these items, but given the growing wealth gap in the developed nations this obviously can’t last. I call this regressive growth.
Progressive growth, on the other hand, is exemplified by such things as LED lighting, improved EV battery technology, cellular phones and modular reactors. The irony here is that each increment in efficiency, durability, lifespan or other positive metric actually contributes to a decline in other areas of the economy via displacement and obsolescence. There are real benefits to these technologies that outweigh these factors of course or we wouldn’t be adopting them, but the fact remains they are destructive of existing modalities that would otherwise contribute to the current definition of growth.
Why do I bring this up? Because in the same sense that ChinArb's analysis focuses on the hidden ground of supply chains, and how recognition of this new reality is forcing changes in trade routes and relationships, I believe the constraints imposed by these new arrangements will cause a shift in perception of what constitutes genuine economic growth. Necessity being the mother of invention, I believe these constraints will lead to a broad analysis of what we actually need vs. what we can do without, and more to the point, how we can acquire the former with less dependence on outside sources. In short, a movement towards Autarky is being driven by these changes which has profound implications for nations that depend on trade to sustain their economies. Best example of this is of course Russia, which has been forced to adopt an autarkic approach by reason of sanctions and other obstacles thrown in its path. In many respects they are ahead of the pack in achieving this, best example of which is aircraft production which is now entirely domestically sourced. Obviously this can only be achieved if the resources needed are available in-house, so this doesn’t suggest an end to global trade, but it does impose limits for future consideration, especially in the USA/ China nexus where the former has the capacity for autarky when Canada and Mexico are included, whereas China is highly dependent on external inputs and markets to maintain current levels.
Looking further down the road, I believe future economics will be defined not by growth in markets, trade routes or supply chains per se, but by dynamic equilibrium or homeostasis as the constraints of living on a finite world with rapidly diminishing resources starts to have a real impact on economic activity. Then the question of what we really need vs what we can do without will determine the direction of future economic growth.
And so it is Western Civilization is committing sociocide and the Afro- Asian heartland will prevail. So much for manifest destiny. It was all decided 200 million years ago with the Great Pangaea
Great essay and I think you have clearly articulated what comes after the post WW2, post Cold War, post GWOT, post GFC, post Covid global shutdown new world order
An excellent essay with a great framework.
Great-power competition in the 21st century is indeed shifting from “who controls land, energy, and financial nodes” to who can organize irreplaceable production systems.
China’s rise comes precisely from the fact that, across a growing number of physical industrial chains, it has built capabilities the world cannot easily route around.
America’s danger is that it increasingly relies on sanctions, financial jurisdiction, export controls, tariffs, chip restrictions, and military presence, such kinds of form of punitive power to preserve its central position. Every sanction gives others another reason to build alternatives. The more frequently sanctions are used, the stronger the incentive for de-dollarization becomes. The tighter chip controls become, the faster China’s domestic substitution accelerates. The more expansive U.S. long-arm jurisdiction becomes, the more allies and middle powers want to preserve a second system.
But China should still not underestimate America’s capacity for reorganization or its deep institutional resilience.
The United States has not lost all creative power. It remains a composite hegemonic system: weakened and incomplete in many manufacturing chains, but still extraordinarily strong in finance, technology, military power, institutional alliances, and global rule-setting capacity.
Its industrial manufacturing base has declined in relative terms, but America still possesses the dollar system, the world’s deepest capital markets, top universities, basic science, frontier AI models, semiconductor design, aerospace, the military-industrial complex, vast energy production, alliance networks, and global military projection.
At the same time, after a series of conflicts and shocks over the past five years, China’s position in many globally irreplaceable chains has clearly continued to rise.
China does have the world’s most complete manufacturing system. But its own irreplaceability also has limits. In high-end semiconductor equipment, parts of industrial software, aircraft engines, life-science toolchains, global brands, financial pricing power, and overseas political trust, China still has important weaknesses.
So the China-U.S. competition is not a war that has already been decided. It is a long systemic contest over supply chains, technological origins, capital discipline, institutional organization, and the capacity to provide global public goods.
China is structurally rising across more and more physical production chains, while the United States still holds central positions in several high-end technologies, capital networks, and security systems.
The real competition is not simply who is stronger today. It is which system can repair its own weaknesses faster.
Good you give the US a chance to turn things around. Perhaps it's possible, but they keep trying and failing. The problem they face is how to stem the fiscal haemmoraging. A 6% (of GDP!) deficit may be manageable under crisis conditions but really, the US isn't in such a situation. It's in a structural decline. The Oligarch system worked fine when there was no other place to recycle the massive accumulation of wealth. That is no longer the case. Money printing that in the past was the preferred method of "stabilisation" has lost its usefulness. Curbing cheap inputs from China and Russia has created a substantial surge in inflation. This is a structural supply side issue that the US has little control over. Pushing up interest rates leads to a debt crisis (already serious prior to the China decoupling). So many simultaneous crises and the answer is to reinvigorate the 19th century policy of gunboat diplomacy. And that has failed miserably in Hormuz. It's difficult to see how this gets turned around without some grand bargain Yalta 2.0.
The irony is that when taken as a whole (USA, Canada, Mexico) N. America has everything it needs to achieve near-total autarky. The fly in that ointment is the Epstein class, with its rapacious financial scheming and allegiance to a foreign nation that has nothing in common with our fundamental cultural principles or ideals.
"The real competition is not simply who is stronger today. It is which system can repair its own weaknesses faster."--- truer today than ever !!!
I smell what you’re cooking.
So the war is being fought in the open, and the USA tariffs are back firing. Driving trade partners into new partnerships. Arguably, the headlock technique is most evident at home with a MAGA administration.
ICE and “4Profit prisons” are putting the entire USA in a headlock. Not it’s neighbours.
The stated intention of this administration is to put the western hemisphere in a headlock. Cuba. Venezuela, Panama Mexico, Canada, Greenland etc. North and South America, but the ones suffering the most, are it’s own citizens.
I suppose we must raise a glass to the Orange Failure and his administration for their 250 front lawn cage match at the White House. Way to show the world your true colours and best moves, headlocks and body slams. Happy 250 birthday USA. USA. USA. usa usa usa
Trump's antics constantly remind me of Shelley's Ozymandias.
https://poets.org/poem/ozymandias
Dear ChinArb,
Here are some questions and issues that I think you could address and develop in future articles. They are not objections to the framework, but attempts to stress it from its own limits.
1. On the impossibility of a major war (NATO-Russia)
In your article "The Supply-Chain War" you suggest that the war in Ukraine does not define the global agenda because it is not on the axis of the new principal contradiction. When I previously asked you about the possibility of a direct war between Russia and NATO, you replied that China would not allow Russia to start it. Let me go a step further: what if the EU and NATO (with or without explicit US leadership) strangle Russia to the point of suffocation? Who would stop NATO? Would the US be willing to restrain its own allies to avoid a war that no longer directly affects it? Recent events suggest otherwise. The scenario of an uncontrolled escalation on the European flank still seems possible to me, and I would like to know whether your framework rules it out completely or only considers it improbable.
2. On China's capacity to "veto" a Russian war
Your claim that China can deter Russia from entering a direct war with NATO presupposes a level of control that may not exist. China certainly has economic leverage. But if Russia perceives that its survival is at stake (for example, in the face of a massive NATO deployment in Ukraine or the Baltics, or the growing destruction of its infrastructure), could Beijing really stop it by threatening to withdraw its support? Russian sovereignty is not a puppet. Wouldn't this question deserve some nuance?
3. On Iran's control of the Strait of Hormuz
You write that keeping the strait open does not depend on warships, but on "refining capacity, energy corridors, the physical base of critical materials." But empirical evidence suggests the opposite: Iran dominates the strait primarily through its asymmetric military capability (anti-ship missiles, drones, naval mines, Revolutionary Guard forces). China's "refining capacity" is the reason Iran does not dare to close it completely, not the source of its controlling power. Aren't you inverting causality here?
4. On the possibility of an Iran-Israel escalation
Even if China and the US wanted to contain the conflict, can they really do so? Israel has its own interests and its own capacity for initiative. So does Iran. And non-state actors (Hezbollah, the Houthis, Iraqi militias) have escalation logics that do not respond to orders from Tehran or Washington. An open war between Israel and Iran that closed the Strait of Hormuz and destroyed the Gulf's desalination plants would have a cascading effect: energy collapse → supply chain collapse → market collapse → food crisis. What would become of your thesis that "war no longer has a battlefield" if that battlefield were to open up all at once? How does this scenario fit into your framework?
5. On the stability of System B in the face of a leadership change in China
Your framework assumes that there is no designer, that China's industrial metabolism (System B) is robust and autonomous, with a Party that acts as its "immune system." But let us consider a thought experiment: if Xi were replaced by a leader who did not share the system's premises, someone who sought to dismantle the power of the CCP and liquidate the state-owned enterprises (for example, a "Western liberal" accidentally installed in Beijing), would the system survive? Or does B itself have self-defense mechanisms that would prevent such a dismantling? Your answer to this is important to know whether B is a monolithic structure or, in some way, a contingent political project.
6. On the mutual absorption between A and C, the new leadership of A, and the risk of self-destruction
In your response to my previous comment, you pointed out that it is not only A absorbing C, but that C is also capturing A in the reverse direction: the elections, the Federal Reserve, the federal agencies. I accept the bidirectionality. You also describe that a new leadership is taking shape in A (industrial hawks, Silicon Valley accelerationists, union workers) and that this could be the beginning of a change. But that same evidence can be read another way: not C becoming independent, but A coopting C as its high-tech arm and, more worryingly, as its qualitative military weapon (AI applied to war, autonomous drones, networked combat systems, etc.). The cases of Anthropic (Pentagon contracts) and the GENIUS Act (stablecoins tethered to Treasury debt) point in this direction of co-optation. The new leadership of A, far from being the vanguard of an independent C, could simply be the selection of the leaders most apt to use C against B.
Furthermore, you argue that to fight a supply-chain war, you first need a chain worth defending. If A cannot rebuild its own (as you admit), what is left for it? Only the option of destroying B's chain through direct military coercion? That would be a regression to the 20th century, exactly what your framework says no longer works. But history is full of empires that, faced with the impossibility of competing, opted for shared self-destruction. Is that not the real risk of the coming decade? My question, in short, is: how can we distinguish, empirically, between a scenario of C's independence (your optimistic reading) and one of C's co-optation as A's weapon, followed by a strangulation war against B (my pessimistic reading)? Do you consider this scenario impossible, or would nuance also be appropriate here?
Best regards,
Eduardo
The ground in this analysis is economic growth plus competition for markets. This is not a new phenomenon of course, it is the underlying premise for the expansion of human civilization up to the present day, whether recognized or not. I would argue, however, that we’re fast reaching the end of that rubric as a working principle around which to structure our economies. The problem was first recognized by Thomas Malthus and later expanded in 1972 with the "Limits to Growth" report commissioned by the Club of Rome. We’re now approaching (or have reached) that limit, depending on how you measure it, but I think it’s important to define what we mean when we talk about growth. Up until now, that has been solely a measure of economic output without differentiating the type of growth being stipulated. To counter this metric I propose breaking the definition into two factors: progressive and regressive growth.
To give some examples. Where I live (West Coast Canada) every second home has either an RV or boat in the driveway, sometimes both. These get used for a week or two out of the year and the rest of the time just sit there gathering dust. Granted they provide employment for the people who make them and the materials that go into them, but that’s about it. Otherwise they just consume valuable resources that, unlike heavy equipment, railcars, trucks or aircraft, add little or nothing to the economy, they just sit there depreciating. A dead end. Much of what we call "consumer products” fit this description. They are basically appeals to vanity, like the monster trucks that are everywhere here, of which perhaps 10% are actually working vehicles. This is only sustainable during economic expansion when wage growth gets directed towards these items, but given the growing wealth gap in the developed nations this obviously can’t last. I call this regressive growth.
Progressive growth, on the other hand, is exemplified by such things as LED lighting, improved EV battery technology, cellular phones and modular reactors. The irony here is that each increment in efficiency, durability, lifespan or other positive metric actually contributes to a decline in other areas of the economy via displacement and obsolescence. There are real benefits to these technologies that outweigh these factors of course or we wouldn’t be adopting them, but the fact remains they are destructive of existing modalities that would otherwise contribute to the current definition of growth.
Why do I bring this up? Because in the same sense that ChinArb's analysis focuses on the hidden ground of supply chains, and how recognition of this new reality is forcing changes in trade routes and relationships, I believe the constraints imposed by these new arrangements will cause a shift in perception of what constitutes genuine economic growth. Necessity being the mother of invention, I believe these constraints will lead to a broad analysis of what we actually need vs. what we can do without, and more to the point, how we can acquire the former with less dependence on outside sources. In short, a movement towards Autarky is being driven by these changes which has profound implications for nations that depend on trade to sustain their economies. Best example of this is of course Russia, which has been forced to adopt an autarkic approach by reason of sanctions and other obstacles thrown in its path. In many respects they are ahead of the pack in achieving this, best example of which is aircraft production which is now entirely domestically sourced. Obviously this can only be achieved if the resources needed are available in-house, so this doesn’t suggest an end to global trade, but it does impose limits for future consideration, especially in the USA/ China nexus where the former has the capacity for autarky when Canada and Mexico are included, whereas China is highly dependent on external inputs and markets to maintain current levels.
Looking further down the road, I believe future economics will be defined not by growth in markets, trade routes or supply chains per se, but by dynamic equilibrium or homeostasis as the constraints of living on a finite world with rapidly diminishing resources starts to have a real impact on economic activity. Then the question of what we really need vs what we can do without will determine the direction of future economic growth.
And so it is Western Civilization is committing sociocide and the Afro- Asian heartland will prevail. So much for manifest destiny. It was all decided 200 million years ago with the Great Pangaea
Excellent article. Looking forward to the next one.
Great essay and I think you have clearly articulated what comes after the post WW2, post Cold War, post GWOT, post GFC, post Covid global shutdown new world order