Unlike the US's focus on quarterly results and election cycles, China's leadership operates on a civilizational timescale. From their perspective, the US is a recent phenomenon, and losing the US market is an acceptable short-term cost in a much longer game of survival and dominance. This fundamental difference in strategic thinking is often missed.

China's harsh, deflationary economic environment and intense domestic competition, while causing many companies to fail, effectively hones a select few into highly resilient and efficient champions. These survivors are now prepared for successful global expansion.

China's durable advantage isn't just its massive workforce but the collective "process knowledge" generated on factory floors. This expertise in solving countless small manufacturing problems cannot be easily written down or encoded in equipment, creating a powerful, hard-to-replicate competitive moat.

While Apple, valued in the trillions, abandoned its car project after a decade, Chinese electronics firm Xiaomi, worth a fraction as much, launched a record-beating electric vehicle in three years. This highlights the execution-focused, vertically integrated model that allows Chinese companies to out-maneuver wealthier but less agile Western competitors.

Unlike the U.S. government's recent strategy of backing single "champions" like Intel, China's successful industrial policy in sectors like EVs involves funding numerous competing companies. This state-fostered domestic competition is a key driver of their rapid innovation and market dominance.

While the U.S. AI strategy pursues a 'winner-take-all' model leading to high profits, China's state-backed approach aims to commoditize AI. By spreading resources across many players to create a low-cost, replicable model for export, it structurally limits the potential for monopoly profits to accrue to shareholders.

A nation's leadership class shapes its priorities. China's government, heavily populated by engineers, excels at long-term, systematic infrastructure and technology projects. The US, dominated by lawyers, often gets mired in litigation and short-term cycles, hindering large-scale execution.

China's economic structure, which funnels state-backed capital into sectors like EVs, inherently creates overinvestment and excess capacity. This distorted cost of capital leads to hyper-competitive industries, making it difficult for even successful companies to generate predictable, growing returns for shareholders.

China's government sets top-down priorities like dominating EVs. This directive then cascades to provinces and prefectures, which act as hundreds of competing, state-backed venture capital funds, allocating capital and talent to achieve the national strategic goal in a decentralized but aligned way.