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.

China's promotion of open-weight models is a strategic maneuver to exert global influence. By controlling the underlying models that answer questions about history, borders, and values, a nation can shape global narratives and project soft power, much like Hollywood did for the U.S.

China's showcase of advanced military hardware, like its new aircraft carrier, is primarily a psychological tool. The strategy is to build a military so 'forbiddingly huge' that the US would hesitate to engage, allowing China to achieve goals like reabsorbing Taiwan without fighting. This suggests their focus is on perceived power to deter intervention.

An emerging geopolitical threat is China weaponizing AI by flooding the market with cheap, efficient large language models (LLMs). This strategy, mirroring their historical dumping of steel, could collapse the pricing power of Western AI giants, disrupting the US economy's primary growth engine.

President Xi Jinping used a phone call with President Trump not just for bilateral issues, but to strategically signal displeasure with Japan's hawkish stance on Taiwan. This "shadow play" diplomacy shows China leveraging its relationship with the U.S. to indirectly manage and warn other nations, making the U.S. a channel for its geopolitical messaging.

While the West may lead in AI models, China's key strategic advantage is its ability to 'embody' AI in hardware. Decades of de-industrialization in the U.S. have left a gap, while China's manufacturing dominance allows it to integrate AI into cars, drones, and robots at a scale the West cannot currently match.

While the U.S. oscillates between trade policies with each new administration, China executes consistent long-term plans, like shifting to high-quality exports. This decisiveness has enabled China to find new global markets and achieve a record trade surplus, effectively outmaneuvering U.S. tactics.

Beyond raw materials, China's national ambition is to achieve near-total self-sufficiency. The prevailing mood is that there is "nothing for which it wants to rely on foreigners a single day longer than it has to." This philosophy of aggressive import substitution signals a fundamental break with the logic of reciprocal global trade.

A historical indicator of a superpower's decline is when its spending on debt servicing surpasses its military budget. The US crossed this threshold a few years ago, while China is massively increasing military spending. This economic framework offers a stark, quantitative lens through which to view the long-term power shift between the two nations.