spectator.org
Can Trump’s New National Security Strategy Effectively Counter China?
The recently released 2025 National Security Strategy (NSS) from the Trump administration frames China as America’s primary strategic competitor, stressing the need to rebalance economic and military relations to prevent China’s state-dominated model from undermining U.S. and allied leadership. The NSS criticizes past U.S. policies for fueling China’s rise without compelling it to adhere to international rules.
Today, America aims to promote reciprocal trade, reduce dependence on key industries, and rally allies — such as Europe, Japan, and South Korea — to pressure China toward domestic consumption while bolstering military deterrence in the Indo-Pacific to avert conflicts over Taiwan or the South China Sea.
Unlike previous U.S. national security strategies, Trump eschews ideological contrasts between China’s authoritarian system and democracy, focusing instead on the economic arena. He is deeply concerned with whether America can sustain its lead in economics and technology amid this competition.
So, can the United States — or the broader democratic alliance — maintain economic superiority over China’s authoritarian economy?
Analyzing the Strengths of a State-Dominated China From an Industrial Perspective
China’s economy can be broadly divided into three categories of industries, each with varying degrees of state involvement.
First are the priority sectors, those subsidized and guided by the government, such as high-speed rail, energy, high-tech, banking, and biotechnology. China places great emphasis on industrial policy, and because the government directly intervenes in the economy, these policies are not merely advisory; they function like corporate strategic decisions that the entire nation must execute. The process involves the state designating an industry as a priority, shielding it from foreign competition, selecting domestic champions, and mobilizing national resources to develop it. By leveraging China’s massive market for large-scale production, costs are driven down, enabling exports that conquer global markets and outcompete rivals abroad.
Second are supply chains. In priority industries, the state spares no expense to build comprehensive chains, such as the mining stage for electric vehicle batteries. Since minerals are often located in war-torn, corruption-riddled African nations, free-market capitalist firms shy away due to high risks and low profits; China, however, uses state intervention to secure advantages and form mature supply chains.
The third category comprises fully competitive, decentralized industries like apparel and toys manufacturing. The state offers no subsidies, allowing brutal competition and survival of the fittest, with winners flooding the world with cheap goods.
While all three categories hold competitive edges, the most threatening to the world are the advantages seized in the first two. The NSS targets precisely this, advocating reduced reliance on China’s critical industries and supply chains by promoting reshoring or diversification.
Differences in Scientific and Technological Innovation
From the perspectives of science, technology, and economic development, innovation falls into two types. One is original, even foundational scientific breakthroughs — from nothing to something, or zero to one. The other builds on existing innovations, improving them—from one to N.
In zero-to-one innovation, China lags behind democratic nations, especially the United States, due to a lack of freedom and excessive government control over thought.
However, in the one-to-N expansion phase, China’s strengths shine: Once a leading technology matures, China acquires it by any means necessary, then leverages state-driven investment for rapid scaling.
The Advantages of Wartime Economic Mobilization
At the heart of the China model is the “whole-nation system,” where the state can marshal the entire country’s resources to advance a single industry — a feat democratic nations struggle to match. Democracies only enact similar mobilization during wartime emergencies, as when the U.S. entered World War II, unleashing unprecedented energy and drive. When their survival is at stake, democracies’ latent mobilization power can rival or surpass authoritarian advantages, but at a steep cost: convincing the populace to support the war effort, with no guarantee of compliance.
In contrast, authoritarian states operate in a perpetual “quasi-mobilized” state, ready to direct national efforts toward specific industries based on circumstances, such as today’s artificial intelligence sector. China boasts vast data reserves and can deploy state power to resolve bottlenecks like power generation.
The NSS views the Trump administration’s policies as akin to “wartime economic mobilization” — for instance, strengthening tariffs, investment scrutiny, and support for key industries — but acknowledges the domestic resistance and slow progress. This highlights democracies’ lack of flexibility, yet it also serves as a reminder: If the democratic camp perceives China as an existential threat, it could unlock even greater potential.
The Learning Capacity and Weaknesses of Authoritarian Systems
In democracies, officials prioritize electoral victories. Governments cannot implement economic strategies like businesses, as they lack strong incentives to learn from other nations’ experiences. Moreover, electoral cycles disrupt policy continuity.
Authoritarian governments adopt a paternalistic mindset, always guiding the economy. They favor planned economies and industrial policies, with the state directing development without fear of turnover. But their greatest weakness is proneness to major errors: Misjudging an industry leads to massive economic losses.
History is replete with industrial policy failures. Japan’s early efforts poured resources into high-definition televisions and liquid crystal displays, only to miss the internet boom, turning its companies into a “lost generation.” Taiwan’s government once promoted pig farming and sugarcane, ending in failure. China’s planned economy era saw even graver setbacks, like the Great Leap Forward’s backyard steel furnaces and the “grain as the key link” campaign.
Yet, after these failures, China’s government exhibited a sudden surge in learning capacity. It eagerly absorbs global best practices, such as Singapore’s state-owned asset management model, the U.S. Bayh-Dole Act (allowing private researchers to own patents from government-funded research), science and technology parks, and government-as-mother-fund with private firms as sub-funds investment schemes. Through this learning, it boosts efficiency and effectively drives and guides enterprises. Chinese local governments, motivated to grow their economies, quickly imitate successful models from elsewhere.
The China Model’s Impact on the World and Its Challenges
Relying on these strengths, China is closing the gap with global high-tech leaders. This means reduced dependence on international markets in many fields, while low human rights standards, economies of scale, and government support enable leadership in new products and technologies, drawing foreign buyers and fostering reliance on Chinese goods. This is exactly the scenario the U.S.-led democratic camp dreads — the NSS explicitly calls for decoupling in critical industries and supply chains, at least minimizing dependence, to prevent China from weaponizing trade.
In the long term, competition between the China model and the democratic camp could unfold in three ways.
First, maintaining the status quo: Democracies remain dependent on China for key supply chains like rare earths and pharmaceuticals, importing cheap manufactured goods; China politicizes its economy, using trade to punish critics or suppress opponents, while dominating narratives through state-orchestrated “exchanges” that bribe democratic elites. This is no equilibrium — it’s a situation the democratic camp must change, and the NSS is driving that shift.
Second, full or partial decoupling: China develops its own tech standards and economic sphere, aligning with like-minded nations (e.g., Russia, Iran, North Korea, Venezuela); democracies form their own system, avoiding Chinese infiltration and trade weaponization. But complete decoupling is extremely difficult, as European nations often prioritize short-term gains in deals with the CCP — the NSS recognizes this challenge and urges allies to unite in pressure.
Third, intermediate paths: These lack fixed forms but could involve collective democratic pressure for Chinese reform or internal Chinese demands for political change and improved human rights. Their interaction might steer China toward gradual democratization, ending trade weaponization. If China becomes a rule-abiding nation, this could be the world’s best outcome — the NSS’s deterrence and economic strategies aim to guide it there.
In this unprecedented great competition between the U.S. and China, the China model’s weaknesses lie in insufficient innovation, decision-making risks, and low individual freedoms. Yet its whole-nation system offers resilience and advantages; given time, it may catch up technologically with democracies. Democratic tech blockades on China could even spur its independent development and creation of parallel systems.
The core issue isn’t who wins the U.S.-China economic and tech race, but protecting democratic political, economic, and social institutions from erosion and destruction by authoritarian states like China. America’s new National Security Strategy highlights this point, but its countermeasures remain immature and require further development.
Shaomin Li is a professor of international business at Old Dominion University.
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