China's inner circle, led by Xi Jinping, believes the U.S. is in terminal decline. They view American social and political paradoxes—like New York, the center of capitalism, electing a socialist—not as features of a complex democracy, but as evidence of a fracturing and decaying society.
Related Insights
The dynamic between a rising power (China) and a ruling one (the U.S.) fits the historical pattern of the "Thucydides' trap." In 12 of the last 16 instances of this scenario, the confrontation has ended in open war, suggesting that a peaceful resolution is the exception, not the rule.
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.
The rise of a precarious gig workforce of over 200 million people directly contradicts the Communist Party's founding promise of a "dictatorship of the proletariat." This growing underclass, living with minimal security and rights, represents a societal shift towards a capitalist-style structure that the party was originally formed to overthrow, creating a deep ideological crisis.
The core driver of a 'Thucydides Trap' conflict is the psychological distress experienced by the ruling power. For the U.S., the challenge to its identity as '#1' creates a disorienting fear and paranoia, making it prone to miscalculation, independent of actual military or economic shifts.
Despite America's high standard of living, decades of wage stagnation have created a national psychology of pessimism. Conversely, China's explosive wage growth, even from a lower base, fosters optimism. This psychological dimension, driven by the *trajectory* of wealth, is a powerful and often overlooked political force.
As America's global dominance wanes, power is bifurcating into two distinct successor empires. China is winning the physical world of manufacturing and military hardware. Simultaneously, the internet is winning the digital world of media (AI, social) and money (crypto, smart contracts). This succession has already occurred but has not been fully priced in by global markets.
Unlike pragmatic predecessors, Xi Jinping operates from a quasi-religious belief that China is divinely intended to be the "middle kingdom"—the world's dominant power. This ideological North Star explains his confrontational approach to geopolitics, even when it seems economically irrational.
The political landscape is not a simple left-right binary. It's a four-way conflict between distinct factions: the internet (tech), Blue America (media), Red America (manufacturing), and China. Each engages in specific clashes, like the 'tech clash' (internet vs. blue) or the 'trade war' (red vs. China), which better explains modern global tensions.
An obsessive focus on internal political battles creates a critical geopolitical vulnerability. While a nation tears itself apart with divisive rhetoric, strategic adversaries like China benefit from the distraction and internal weakening. This domestic infighting accelerates the erosion of the nation's global influence and power.
From 2001 onwards, while the U.S. was militarily and economically distracted by the War on Terror, China executed a long-term strategy. It focused on acquiring Western technology and building indigenous capabilities in AI, telecom, and robotics, effectively creating a rival global economic system.
