Politicians predictably declare initiatives for domestic production of critical goods like munitions or rare earths when dependencies are exposed. However, these declarations rarely translate into effective action, suggesting we must learn to manage economic entanglement as a form of mutual deterrence rather than wish it away.

From China's perspective, producing more than it needs and exporting at cutthroat prices is a strategic tool, not an economic problem. This form of industrial warfare is designed to weaken other nations' manufacturing bases, prioritizing geopolitical goals over profit.

To counter the economic threat from China's state-directed capitalism, the U.S. is ironically being forced to adopt similar strategies. This involves greater government intervention in capital allocation and industrial policy, representing a convergence of economic models rather than a clear victory for free-market capitalism.

The current trade friction is part of a larger, long-term bipartisan U.S. strategy of "competitive confrontation." This involves not just tariffs but also significant domestic investment, like the CHIPS Act, to build resilient supply chains and reduce reliance on China for critical industries, a trend expected to persist across administrations.

A U.S. national security document's phrase, "the future belongs to makers," signals a significant policy shift. Credit and tax incentives will likely be redirected from financial engineering (e.g., leveraged buyouts in private equity) to tangible industrial production in order to build resilient, non-Chinese supply chains.

The US won World War II largely due to its unparalleled manufacturing capacity. Today, that strategic advantage has been ceded to China. In a potential conflict, the US would face an adversary that mirrors its own historical strength, creating a critical national security vulnerability.

China is structurally incapable of displacing the U.S. due to a trio of critical weaknesses: Xi Jinping's consolidation of power has paralyzed decision-making, geography boxes in its military, and an irreversible demographic crisis signals imminent collapse.

Relying on an adversarial nation like China for manufacturing, especially for critical technologies, places a country in a "horrifyingly weak position." In the event of a war, the inability to produce essential goods is a fatal flaw that renders a nation powerless.

The widely reported collapse of China's housing market is not an organic crisis but a state-directed reallocation of capital. By instructing banks to prioritize industrial capacity over mortgages, the government is deliberately shifting funds away from a speculative real estate bubble and into strategic sectors like microchips to counter US sanctions and build self-sufficiency.