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Chaos seems to mark US policy under President Donald Trump at first blush. But behind what appears (and sometimes is) capricious Trump Administration decision making are policymakers with serious plans. They intend to engage perceived threats to the United States power, while transforming its economy in ways making it less dependent on global supply chains and “reserve assets.” Recognizing festering wounds to the US economy while seeing areas of strength, Trump policymakers look to cauterize the former while pivoting more fully to the latter. Trump’s presidency has openly engaged in criticizing past US liberal interventionist and neoconservative foreign policy. Branded as “America First” Trump’s US does not seek isolationist  withdrawal from the globe, but rather a dismantling of institutional structures and alliances that no longer benefit Washington. The United States can and should continue projecting power far but, not wide, according to America Firsters. Under America First, the national interest does not always align with the “international community,” a term America Firsters would regardless see, borrowing a line from Benedict Anderson, as a fictitious “imagined community.” America First means dismantling the liberal hegemonic world order, or at minimum the US offloading the bill for it. The cost of that liberal order, with some 750 US military bases abroad, combined with growing power of the BRICS (China chiefly, but not only), signals to America Firsters America’s need to retreat from some parts of the world, while continuing to exercise dominance in others. Related to national security is the fallout from a generation of globalization in labor markets. US offshoring of manufacturing in the post-Bretton Woods period lowered production costs. Cheap goods produced abroad were then purchased by Americans even more cheaply courtesy of the overvalued dollar as the world’s reserve currency. This worked great for US consumers, albeit with the intention of also pushing down US labor costs. Globalization enabled the United States to vacuum up global manufactures, while also running up massive government fiscal deficits. As former Vice-President Dick Cheney described it during globalization’s heyday, “Reagan proved deficits don’t matter.” What was once, however, a massive advantage for the United States later became its “twin deficits” problem.   In short, the best fit for the US is a realist spheres of influence model, according to the Trump Administration. The criticism of the liberal world order, of course, circles back to the aforementioned economic challenges: on the one hand, the negative economic processes related to global labor organization and America’s indebtedness, and on the other hand, the strengthening of emerging international actors. Amongst these entities, the People’s Republic of China has long been high on the agenda. During the first Trump administration the president escalated tariffs on goods imported from Asia’s giant, which then led to a trade war. According to a Pew Research Center survey from mid-April 2025, although Americans believe that this bilateral trade relationship benefits China more than the US, they are “skeptical that increased tariffs on Chinese imports will have a positive effect on the country or on their own lives.” The Trump Administration thinks otherwise. America’s economy entering Trump’s presidency looked strong. On the cusp of the great 2008 financial shock, the European Union’s dollar GDP was $16.4 trillion, the US’ was $14.8 trillion. But by 2024, EU GDP was $18.7 trillion, while the United States posted a GDP of $28 trillion. Thus, in the span of less than a generation, the US went from having a GDP 9.8% short of the EU’s in 2008 to leaping ahead with a GDP 32% larger by 2024. These impressive US GDP gains were built on the foundations of financial services, corporate high-value added HQ (headquarters) functions, intellectual property, higher education, and information technology. Yet, there were problems: Maintaining world order, or empire, was, as we asserted above, expensive. In 2024 the US military budget was $824 billion. This figure does not even count huge “off (or black) budget” items related to security, etc., for which costs are not precisely known. Besides these numbers, we should not forget about the military’s global presence: The US paid for global security costs, protecting important maritime trade routes, chokepoints – not just supporting the American interest, but for instance chiefly helping China trade with the world. These costs were covered, in part, through US borrowing, much of it from abroad. In 2024, the US government deficit stood at $1.8 trillion, or 6.4% of GDP. While the total US debt reached $38 trillion. The last time the US federal budget was in surplus was in the last term of President Bill Clinton, when there were both reduced military expenditures (post-Cold War “peace dividend”) and top marginal income tax rates of 39.6%. And before Clinton’s second term, US budgets were only in surplus in 1969 and before that only for several years in the 1950s. Decelerating US decline also requires addressing these areas. First is the area of domestic costs. US public pension costs (Social Security and Medicare) face a fiscal crisis. The dedicated taxes (Federal Insurance Contributions Act, or “FICA”) will soon be insufficient to pay for pension costs. FICA taxes in the late 20th century, under President Ronald Reagan, were raised above pension costs. The surplus (a de facto tax on labor) was to finance costs of a future changed 21st century demographic mix creating lower ratios of workers to pensioners. This funding forward model could only work if surplus revenues were invested in productivity enhancing infrastructure creating larger future economic growth and productivity. Instead, the FICA tax surpluses levied on labor were largely used to reduce budget deficits resulting from tax cuts to the wealthy and corporate sectors. In short, to be blunt, the money was taken from labor, with continued borrowing now to pay pension costs running up against the limits of the US to borrow. Second, reserve assets. Lack of ground rents, given the US had no centuries long accumulation of land ownership from feudalism, meant low land prices and reduced inequality generally in the United States. Additionally, the United States applied tariffs to protect domestic markets and promote industrialization generally starting with their first Secretary of Treasury, Alexander Hamilton’s Report on Manufactures in 1791 that gave the US high tariffs, only later rivaled by Russia under the economic leadership of Sergei Witte and Pytor Stolypin in Russia’s late Czarist Russia period. Third, after the 2008 US financial shock it became clear that China was not limited to being merely a supplier of lower-tier consumer goods to the world, but risked becoming a power that could challenge the United States (an idea encapsulated in the Thucydides trap). Rather than markets paving the path toward liberal democracy, as many US policymakers previously assumed, the ascendancy of Xi Jinping signaled China’s fealty to an autonomous route to development. However, China still depends on the global system, the institutions, and structures that have ensured and continue to ensure its participation in global trade, for example. China does not yet possess the global capabilities that would allow it to defend its interests beyond its borders. Therefore, taking action against Beijing as a rival could cause difficulties in time for a country that is dependent on numerous structures maintained by Washington. The Trump administration’s goals and responses to the US crises are to: • Offload costs of US “empire” to other states currently benefiting from it• Recovery through fall in commodity prices (energy, food, metals, etc.)• Move from globalization to regional spheres of influence• Postpone “Armageddon” of global exit from US dollar• Widen leads in AI, thus requiring cheap energy• Reduce US government debt levels• Widen US lead in space• Reshore US industry To achieve these goals, a tariff policy was established that fundamentally shapes American economic and foreign policy, to which Washington has put forward the following proposals: First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision. Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods; Second, others can stop unfair and harmful trading practices by opening their markets and buying more from America; Third, they can boost defense spending and procurement from the U.S., buying more U.S.-made goods, and taking strain off our service-members and creating jobs here; Fourth, they can invest in and install factories in America. They won’t face tariffs if they make their stuff in this country; Fifth, they could simply write checks to the Treasury that help us finance global public goods. Or more passively, accept conversion of their Treasury Bills into century-long non-interest bearing bonds. American foreign policy actions can generate results that are drastically different from expectations, and in certain cases can accelerate and amplify problems Washington faces. Although it is evident classic free trade agreements have not formed the basis of American foreign and economic policy for some time, the tariffs introduced and then implemented (and periodically suspended) by the Trump administration, imposed challenges to the United States on several fronts: First, tariffs have severely affected or even targeted states that have traditionally been in partnership with the United States (e.g. EU, Japan, South Korea), which Washington could rely on for support, for example during its international interventions. Such steps can, on the one hand, harm and jeopardize American global and economic interests, and on the other hand, push actors towards a multipolarity that Washington fears. Similarly questionable are trade actions against states that could be pillars of a coalition against China (e.g. Vietnam and the Philippines). American weaponization of trade and unilateral military expectations make Washington an unattractive, if not unreliable, partner, thus encouraging multilateralism. Second, Washington’s demands that states sever trade relations with China, or even with Russia, as Trump asked India to do, is accelerating states decoupling from the United States not on ideological grounds but primarily based on realistic economic policy considerations. Third, these steps could also threaten the dominance of the US dollar, and even accelerate decline in confidence of the dollar – further complicating the financing of the deficit. The Trump Administration (Treasury Department) are aware of the dangers (the “Triffin” reserve currency dilemma) but think the crisis is so acute that they must do something even if they risk accelerating the dollar’s collapse. However, it is also true that a drastic decline in confidence in the US currency would require an alternative reliable currency, and currently, the currency of no potential player can be considered perfectly reliable or transparent. Finally, on a global scale, the America First slogan is not necessarily guaranteed to win partners for Washington. It is evident that in the short term, several actors will not be able to free themselves from the security architecture guaranteed by the Americans (see: NATO), but most actors will strive to advance by developing and building their own capacities. In conclusion, Washington under Trump looks to downsize and rightsize. American economic and military power, while strong, has declined from its post-Cold War unipolar moment. Reduced power has diluted American confidence, thus resulting in the US taking at times a more aggressive posture in an increasingly multipolar world. Meanwhile, the rest of the world grows wary at how the Trump Administration reacts to these changed global ‘‘adjustments” that are creating confusion over where spheres of influence begin and end. The days of America acting to, in the phrasing of Joseph Nye Jr., “winning the hearts and minds” of the world, seems off the table. The United States now retreats from soft power with dramatic cuts to foreign aid and international exchanges, such as its Fulbright program. Rather than winning the world over, under Trump, demands for deference to US authority and power now mark its preferred relations with the world, while it disengages from other parts of the globe.

Every few years since 1953, the Chinese government has unveiled a new master strategy for its economy: the all-important five-year plan. For the most part, these blueprints have been geared at spurring growth and unity as the nation transformed from a rural, agrarian economy to an urbanized, developed powerhouse. The task that faced China’s leaders as they met in early October 2025 to map out their 15th such plan was, however, complicated by two main factors: sluggish domestic growth and intensifying geopolitical rivalry. Their solution? More of the same. In pledging to deliver “high-quality development” through technological self-reliance, industrial modernization and expanded domestic demand, Beijing is doubling down on a state-led model that has powered its rise in recent years. President Xi Jinping and others who ironed out the 2026-2030 plan are betting that innovation-driven industrial growth might secure China’s future, even as questions loom about underpowered consumer spending and mounting economic risks. As an expert on China’s political economy, I view China’s new five-year plan as being as much about power as it is about economics. Indeed, it is primarily a blueprint for navigating a new era of competition. As such, it risks failing to address the widening gap between surging industrial capacity and tepid domestic demand. High-tech dreams At the heart of the new plan are recommendations that put advanced manufacturing and tech innovation front and center. In practice, this means upgrading old-line factories, automating and “greening” heavy industry and fostering “emerging and future industries” such as aerospace, renewable energy and quantum computing. By moving the economy up the value chain, Beijing hopes to escape the middle-income trap and cement its status as a self-reliant tech superpower. To insulate China from export controls put in place by other countries to slow China’s ascent, Beijing is doubling down on efforts to “indigenize” critical technologies by pumping money into domestic companies while reducing dependence on foreign suppliers. This quest for self-reliance is not just about economics but explicitly tied to national security. Under Xi, China has aggressively pursued what the Chinese Communist Party calls “military-civil fusion” – that is, the integration of civilian innovation with military needs. The new five-year plan is poised to institutionalize this fusion as the primary mechanism for defense modernization, ensuring that any breakthroughs in civilian artificial intelligence or supercomputing automatically benefit the People’s Liberation Army. Reshaping global trade China’s state-led push in high-tech industries is already yielding dividends that the new five-year plan seeks to extend. In the past decade, China has surged to global leadership in green technologies such as solar panels, batteries and electric vehicles thanks to hefty government support. Now, Beijing intends to replicate that success in semiconductors, advanced machinery, biotechnology and quantum computing. Such ambition, if realized, could reshape global supply chains and standards. But it also raises the stakes in China’s economic rivalry with advanced economies. Chinese prowess in building entire supply chains has spurred the United States and Europe to talk of reindustrialization to avoid any overreliance on Beijing. By pledging to build “a modern industrial system with advanced manufacturing as the backbone” and to accelerate “high-level scientific and technological self-reliance,” the new plan telegraphs that China will not back down from its bid for tech dominance. An elusive rebalancing What the plan gives comparatively modest attention, however, is the lack of strong domestic demand. Boosting consumer spending and livelihoods gets little more than lip service in the communiqué that followed the plenum at which the five-year plan was mapped out. Chinese leaders did promise efforts to “vigorously boost consumption” and build a “strong domestic market,” alongside improvements to education, health care and social security. But these goals were listed only after the calls for industrial upgrading and tech self-sufficiency – suggesting old priorities still prevail. And this will disappoint economists who have long urged Beijing to shift from an overt, export-led model and toward a growth model driven more by household consumption. Household consumption still accounts for only about 40% of gross domestic product, far below advanced-economy norms. The reality is that Chinese households are still reeling from a series of recent economic blows: the COVID-19 lockdowns that shattered consumer confidence, a property market collapse that wiped out trillions in wealth, and rising youth unemployment that hit a record high before officials halted the publication of that data. With local governments mired in debt and facing fiscal strain, there is skepticism that bold social spending or pro-consumption reforms will materialize anytime soon. With Beijing reinforcing manufacturing even as domestic demand stays weak, the likelihood is extra output will be pushed abroad – especially when it comes to EVs, batteries and solar technologies – rather than be absorbed at home. The new plan is cognizant of the need to maintain a strong manufacturing base, particularly among beleaguered industrial farms and other older industries struggling to stay afloat. As such, this approach may prevent painful downsizing in the short run, but it delays the rebalancing toward services and consumption that many economists argue China needs. Ripple effects Beijing has traditionally portrayed its five-year plans as a boon not only for China but for the world. The official narrative, echoed by state media, emphasizes that a stable, growing China remains an “engine” of global growth and a “stabilizer” amid worldwide uncertainty. Notably, the new plan calls for “high-level opening-up,” aligning with international trade rules, expanding free-trade zones and encouraging inbound investment – even as it pursues self-reliance. Yet China’s drive to climb the technological ladder and support its industries will likely intensify competition in global markets – potentially at the expense of other countries’ manufacturers. In recent years, China’s exports have surged to record levels. This flood of cheap Chinese goods has squeezed manufacturers among trading partners from Mexico to Europe, which have begun contemplating protective measures. If Beijing now doubles down on subsidizing both cutting-edge and traditional industries, the result could be an even greater glut of Chinese products globally, exacerbating trade frictions. In other words, the world may feel more of China’s industrial might but not enough of its buying power – a combination that could strain international economic relations. A high-stakes bet on the future With China’s 15th five-year plan, Xi Jinping is making a strategic bet on his long-term vision. There is no doubt that the plan is ambitious and comprehensive. And if successful, it could guide China to technological heights and bolster its claim to great-power status. But the plan also reveals Beijing’s reluctance to depart from a formula that has yielded growth at the cost of imbalances that have hurt many households across the vast country. Rather than fundamentally shift course, China is trying to have it all ways: pursuing self-reliance and global integration, professing openness while fortifying itself, and promising prosperity for the people while pouring resources into industry and defense. But Chinese citizens, whose welfare is ostensibly the plan’s focus, will ultimately judge its success by whether their incomes rise and lives improve by 2030. And that bet faces long odds.

Since the 1970s, the US-China relationship has been defined by a combination of cooperative and competitive objectives. Competitive interests, however, have prevailed, resulting in a rising competition between the two countries. (Pillsbury, 2015) Candidates in the 2016 presidential election treated China as an adversary, with Donald Trump's China-bashing becoming a trademark of his campaign. Rivalry with China has become the organising premise of American foreign policy under Trump's administration. Republicans and Democrats differ on most issues, but they agree on the need to change America's approach towards China. This has sparked speculation about whether the US-China relationship has devolved into a possibly violent clash or a new Cold War. The Trump administration has openly announced a shift in US policy towards China, with Matt Pottinger claiming that the US has modified its China policy to emphasise competition. Former Vice President of Trump Pence stated that the United States will combat China aggressively on all fronts, including economic, military, diplomatic, political, and ideological. This statement is regarded as "the declaration of a new Cold War." (Pence’s, 2018) Former Trump advisor Stephen K. Bannon has declared economic war on China, blaming its exports on the American working and middle classes. Many people agree that China is economically dominating America, and the US government and industry have done little to solve the situation. Globalists such as Madeline Albright, Tom Friedman, and Fareed Zakaria have grown increasingly concerned about China's lack of reciprocity in economic dealings with the United States. David Lampton, a pro-engagement advocate, has criticised China's WTO membership for increasing bilateral trade surpluses. (Staff R. , 2017) The second stage began when Donald Trump determined to halt Chinese commercial and technological advancements, renouncing liberal internationalism in favor of a new grand strategy against China. (Drezner D. R., 2021) The growing view of Xi Jinping as a harsh leader with an aggressive foreign policy contributes to the sense of an ideological clash. China and the United States have initiated an unconstrained war for bilateral, regional, and global dominance, ushering in a new age of strategic conflict that has yet to be fully defined. (Rudd, 2020) The US-China conflict appears to be a Cold War, and any return to a pre-2017 environment of "strategic engagement" with Beijing is no longer politically viable. (Rudd, 2020)However, (Zakaria, 2019) does not feel that the liberal international order has deteriorated as much as is widely assumed, and China is far from a grave threat to the liberal international system. Despite the best intentions of both countries, the US-China relationship is more likely to devolve into economic and military competition. (Lake, 2018) China's strategy aims to modernize its industrial capacity and secure its position as a global powerhouse in high-tech industries. The strategy aims to reduce reliance on foreign technology imports, increase Chinese-domestic content of core materials, and upgrade its dominant position in major strategic industries, such as pharmaceutical, automotive, aerospace, semiconductors, and most importantly, IT and robotics. The 14th Five-Year Plan of China (2021-2025) emphasizes high-quality growth driven by green and high-tech industries, service sectors, and domestic consumption. The US judged China's old growth model as generating a somewhat balanced win-win relationship between the two economies, based on "comparative advantage" and "cost-benefit" evaluations. However, Beijing's new growth model, particularly the "Made in China 2025" aspiration, is perceived as competition with the US service and knowledge economy, resulting in trade and high-tech warfare between the two countries since 2018. (Bernal-Meza L. X., China-US rivalry: a new Cold War or capitalism’s intra-core competition?, 2021) The US business community, once a staunch supporter of engagement, has complained that China has hacked American industrial secrets, created barriers to American firms investing in China, enforced regulations that discriminate against foreigners, maintained high tariffs that should have been reduced decades ago, and blocked American Internet businesses. In a rare joint statement by the allies, the intelligence chiefs of the Five Eyes countries convened on Tuesday to charge China with stealing intellectual property and using artificial intelligence to hack and spy on the countries. (Bing, 2023) The officials from the United States,Britain,Canada,Australia and Huawei,for example,has tight relations with the Party and has been accused of stealing intellectual property as well as spying on Western countries. The United States is concerned about Huwaie's 5G supremacy, which is why it’s CEO, Meng Wan Zhou, was arrested in Canada. Indeed, its importance was highlighted when the United States imposed restrictions restricting, and in some cases prohibiting, Chinese telecoms operations in the American market, and launched a global effort to persuade friends, partners, and others to follow suit. Thus, while President Trump allowed one company (ZTE) a respite from what appeared to be a ban that would put it out of business, later American limitations on Huawei threatened to destroy China's premier international technology company's global viability. (Goldstein, 2020) When it comes to both green technology and chips, it is now at the center of American politics. The CHIPS Act, approved by Congress last year, included $52 billion in grants, tax credits, and other subsidies to stimulate American chip production. That's the kind of industrial policy that would make Hamilton gape and clap. Over the next few years and decades, China will pour vast sums of money into its own industrial strategy programmes, spanning a wide spectrum of cutting-edge technology. According to one Centre for Strategic and International Studies researcher, China already spends more than 12 times as much of its GDP on industrial programmes as the United States. (BROOKS, 2023) Certain social media sites, such as Facebook and Google, are prohibited in China.In the United States, there is a restriction on TIKTOK and WECHAT. To counter China, the United States has implemented a number of statutes, including the: 1.COMPETES Act 2020.: The House Science, Space, and Technology Committee decided to advance the America Competes Act of 2022, which intends to improve America's scientific and technology efforts in the twenty-first century in order to compete with China in vital fields. The bipartisan Act is divided into eleven sections, with Division K headed "Matters Related to Trade." Trade Adjustment Assistance, Import Security and Fairness Act, National Critical Capabilities Review, Modification and Extension of Generalized System of Preferences, Reauthorization of the American Manufacturing Competitiveness Act of 2016 and Other Matters, and Temporary Duty Suspensions and Reductions are the seven sections of the Act. President Joe Biden has indicated his support for the Act, arguing that it will strengthen America's supply chains and reenergize the economy's innovation engine, allowing it to compete with China and the rest of the globe for decades to come. 2.Chips and Science Act 2022: President Joe Biden signed the Chips and Science (or CHIPS) Act into law, promising local semiconductor producers more than $50 billion to expand home output and "counter China." (Cosgrove, 2023) 3.The United States passed the Inflation Reduction Act 2022: Although China now dominates clean technology manufacturing, the Inflation Reduction Act contains provisions geared primarily at strengthening the United States' clean energy supply chain. Furthermore, the global transition to clean technology such as solar panels and electric vehicles is unavoidable and ongoing as they become more affordable than fossil-fueled alternatives and countries take action to achieve their Paris climate obligations. (NUCCITELLI, 2023) CHIP War After failing to achieve an agreement with Chinese regulators, Intel cancelled a $5.4 billion takeover deal with Israel-based Tower Semiconductor. China is one of Intel's most important markets, and on July 3, Beijing announced a license requirement for exporters of gallium and germanium, rare-earth metals used in semiconductor manufacturing. The chip war is mostly motivated by the United States' concerns about China's military exploitation of semiconductor technology. However, China's military sector has a key weakness: most of its cutting-edge applications rely on foreign technological inputs, particularly microprocessor exports. China will be the world's largest buyer of semiconductor manufacturing equipment in 2021, accounting for 26% of worldwide demand. Biden established an export license requirement in October 2022, limiting China's access to semiconductor innovations manufactured by US corporations. In July 2023, Japan officially prohibited the sale of 23 types of semiconductor equipment to China, which is significantly more widespread than the US restriction, impeding China's development of advanced chips and basic chips used in technology such as automobiles and smartphones. The Netherlands Standing Committee on Foreign Trade and Development Cooperation said in September that it will begin limiting its semiconductor technology exports to China. According to Nikkie Asia, this new legislation would prohibit the Dutch ASML from exporting innovative chip manufacturing methods without first getting government-approved licenses. (CHENG TING-FANG, 2023) These export limitations have pushed Beijing to retaliate, with China's most recent regulation on gallium and germanium shipments serving as a direct retaliation to the US' global allies. According to the New York Times Magazine, Taiwan manufactures more than 90% of the world's most advanced microchips and could risk armed confrontation if China goes on the offensive in the future. (Palmer, 2023) Former national security advisor Robert O'Brien, on the other hand, believes that in the case of an impending invasion,the US would destroy Taiwan's semiconductor manufacturers rather than allow them to fall into the hands of China. The chip battle has further pushed Taiwan into an awkward position in the changing geopolitical landscape. (Carr, 2023) The Biden administration intends to restrict shipments of advanced artificial intelligence chips designed by Nvidia to China as part of a broader set of actions aimed at preventing Beijing from gaining advanced US technologies to enhance its military. The action is intended to address regulatory gaps and limit China's access to advanced semiconductors, which might feed AI advances and sophisticated computers crucial to Chinese military purposes. Gina Raimondo, Secretary of Commerce, emphasised that the administration's goal is not to harm Beijing economically. (Alexandra Alper, 2023) In the words of Lampton, "There was a widespread public perception that the Sino-American economic playing field had been unfair to Americans, with the assertion that the American economy was hollowed out, in part due to overt and covert technology transfer to China" (Lampton, 2015) . China's new growth strategy is leading to more rivalry than complementarity in the China-US economic partnership. The fact that "China's achievement in moving up in the global supply and value chains has led to Beijing's larger share of global surplus and the reduction of the profit margin for traditional core states" has disturbed the United States. (Li X. , 2020) As Lenin would have argued, the dynamics of the US-China rivalry are an inter-imperial rivalry driven by inter-capitalist struggle. Competition for the global market could quickly escalate into escalating confrontations of zones of influence, if not war. Conclusion The US-China rivalry is characterised by a complex interplay of economic, technological, and ideological issues. Although the relationship resembles a new Cold War, some argue that it is best understood as a capitalist intra-core competition driven by inter-imperial rivalry. As Lenin foresaw, competition for global markets may escalate into conflicts over areas of control. The contest is likely to last and have an impact on the global order for many years to come since both nations have made large investments in industrial strategy and technology. Advanced semi-conductors and AI chips are necessary for the next race for technological supremacy. 6G telecom and quantum computing. The globe was forced to protect the supply chain for rare earth materials due to this high-tech rivalry. Since they are currently the epicentre of the world's military and economic might. For many years to come, its influence will shape international politics, trade disputes, and technological advancements. Global struggle for these minerals is anticipated in the twenty-first century, much like the wars for oil and gas in the twentieth. Rare earths will be the focus of the twenty-first century. Mineral-rich nations like Brazil, India, Australia, and Vitenam will also become strategically significant for other reasons. As competition for these resources intensifies, international relations will shift and geopolitical alignment will result. 5Gs is no longer the focus of this new technical cold war. It now comes down to controlling the basic materials that enable technology. For this reason, JD Vance adds, "Give us your financial resources, and we'll take care of you." In the trade and technology conflict that has intensified since the Biden Administration increased the restrictions on sales of cutting-edge American technology to China, the Pentagon has designated rare earth as a strategic mineral that is essential for US defence.In response to US technology sanctions, China restricted the export of rare earth materials.It has nothing to do with economics, but rather with military supremacy on a worldwide scale. This is how the US sees the discovery of these rare earth minerals. Donald Trump is threatening Canada, Greenland, and Ukraine for this reason. Due to their large stockpiles of rare earth materials, they are able to protect the global supply chain in this way.Interestingly, however, China produces 63% of rare earth minerals and refines 83% of them. It can store 44 million metric tonnes of reserves in this manner. The US would still have 4-5 million tonnes of metric reserves if it were to seize the deposits of Greenland, Canada, and Ukraine.Thus, they are negligible compared to 44 million metric tonnes in China. If China wisely controls its rare earth export strategy, it will be powerful enough to remind the world of its might without being overly harsh. Then it can demonstrate that Beijing is just as adept at using resources as Washington is at using dollars or sanctions. However, if the world manages to get past it or if China's grip wanes, its greatest advantage may begin to diminish. The next few months are critical because tanks and missiles are not being used in the largest power fight this time. Minerals and magnets will be used to combat it. Bibliography Alexandra Alper, K. F. (2023, October 18). Biden cuts China off from more Nvidia chips, expands curbs to other countries. 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Introduction   The 21st century global politics has now taken a new shape with the advent of artificial intelligence (AI). The traditional nature of great power rivalry revolves around military maneuvers, defensive-offensive moves, and weapons deployment to challenge each other, maintaining their respective hegemony over the international arena. The revival of artificial intelligence has reshaped the conventional great power game.(Feijóo et al. 2020) From now onwards, whenever the strategic circles discuss the security paradigm, AI has to be its part and parcel. The emergence of AI has altered the status quo, where major powers are now shifting towards AI-based technology. As the most basic function of AI is to create such machines and platforms that can perform tasks more proficiently than humans, it has the ability to enhance decision-making, increase efficiency, and reduce the likely risk of human errors. But at the same time, risks are also lingering.   The United States (US) and the People's Republic of China (PRC) are considered to be the main players of great power politics. Their rivalry has long been centered around territorial conflicts and maritime contests. With the PRC claiming most of the territories in the South China Sea and East China Sea, the US, under its Indo-Pacific Strategy (2022), has challenged the Chinese assertion.(Hassan and Ali 2025) But what the world has witnessed is that both economic hegemons have been avoiding any direct military conflict with each other. The most prominent area where both the US and the PRC are now in a continuous competition is the technological domain. China has always maintained an edge over the US in the respective field due to the fact that it holds most of the world’s known rare earth minerals—a key to technological superiority. Through trade barriers, i.e., tariffs, quotas, etc., and restricting trade with prominent Chinese companies, the US has always tried to contain technological developments in China.(Wang and Chen 2018)   “The reality is that both China and the United States are focused on getting the infrastructure necessary to win the so-called AI race. Now, whether it’s actually a race is a separate question, but data, energy, and human capital are all critical inputs to this. The massive investment infrastructure is top of mind for leaders in both countries as they seek to do it. China’s access to the advanced technology and semiconductors is going to be a key cornerstone in this regard.”(Sacks, 2025) US and China have placed AI at the center of their national policies and global strategies. Both have been introducing various policy papers, strategies, and action plans for the advancements in the field of artificial intelligence and how to counter the side. Now, the international arena is witnessing two parallel AI setups: one created by the US and the other by China. As both are tremendously investing in research, development, and innovation in artificial intelligence, their national narratives and global plans are competing with each other, further exacerbating the international AI landscape.   This paper aims to critically analyze key policies highlighted under the national action plans and strategies launched by the US and the PRC, respectively. Applying the theoretical lens of constructivism, which deals with the role of ideas, norms, and values in shaping the international system, the paper will demonstrate key differences between the AI strategies of the US and China and how their ideological beliefs shape their respective AI policies. Moreover, the analysis will provide expert views on the future landscape of the AI race, its relation to the Great Game, and its political, economic, and military repercussions for the rest of the world. Furthermore, the analysis will mostly rely on expert interviews, key excerpts from official administrative documents, and research findings. This study will also provide insights into the Trump 2.0 administration’s policy outlooks vis-à-vis Beijing’s National AI policy.   America’s AI Action Plan 2025   President Trump unveiled his administration’s national strategy on artificial intelligence on 23rd July 2025. Entitled as “Winning the Race: America’s AI Action Plan”, this strategy is a long-term road map to counter and contain China’s growing profile in the tech world, in particular the AI.(White House, 2025) The title of the strategy explicitly announces that the US has entered into the global AI race. Under this strategy, the United States does not want to eliminate China, rather the US desires to lead the AI world as a core nation, while the PRC should operate as a periphery nation. On July 15 2025, while addressing the AI Summit in Pittsburgh, President Donald Trump stated, “The PRC is coming at par with us and we would not let it happen. We have the great chips and we have everything great. And, we will be fighting them in a friendly fashion. I have a great relationship with President Xi and we smile at the back and forth, but we are leading…...”(AFP, 2025)   America’s AI Action Plan: Key Pillars   A. Accelerate AI Innovation   This first pillar of the AI national strategy by the US deals with the fact that AI should be integrated into every sector of American lives. From the grassroots level to the national or international level, the US should be a leading AI power. AI innovation states that any type of barrier, i.e., legal, regulatory, or domestic constraints, must be eradicated at first to promote, enhance, and boost AI innovation in the US. The strategy clearly states the innovation in artificial intelligence to be the fundamental step towards AI global dominance. The American beliefs, values and norms hold much significance in this regard. This strategy laid down the framework where AI platforms and models should have to align with the US democratic principles, including free speech, equality, transparency, and recognition. This means that the US AI action plan will operate under the umbrella of capitalist ideology.(White House, 2025)   Another most important feature in the field of AI innovation is the conglomeration of public-private ventures. Both the governmental authorities and public institutions are provided with such policies and frameworks to integrate AI platforms into their day-to-day operations. Creating an AI ecosystem is the cornerstone of this strategy.(White House, 2025) It aims to build an American workforce mastered in AI capabilities, defense forces and their key platforms integrated with AI, and provide a secure and safe environment to national and international investors, thus encouraging them to increase their investments in the US. Last but not least, the development of various departments countering the unethical use of AI, i.e., deep fakes, thus securing the national sovereignty and integrity of the homeland.   Principal Deputy Director of the Office of Science and Technology Policy (OSTP), Lynne Parker, while highlighting the significance of the US 2025 AI Action Plan, stated, “The Trump Administration is committed to ensuring the United States is the undeniable leader in AI technology. This plan of action is our first move to enhance and preserve the US AI interest, and we are eager to receive our public perception and viewpoints in this regard.”(House, 2025) The AI innovation drive is indicative of the US being a liberal-democratic and entrepreneurial society. It has an innovation culture that focuses on open research, leadership in the private sector, and ethics based on its national myth of freedom, individualism and technological optimism.   B. Building the AI Infrastructure   This is the most crucial pillar of the US AI Action Plan 2025. From propagating the idea of AI innovation, the next step is to build a strong, secure, and renowned infrastructure to streamline the policy guidelines highlighted in the national AI strategy. This includes the development of indigenous AI factories, companies, data facilities, and their integration into the American energy infrastructure. The most significant step highlighted in this pillar is the construction of indigenous American semiconductor manufacturing units.(White House, 2025) Now what does it mean? As of today, China is considered to be the center of semiconductor manufacturing. Semiconductors are the basic units of any technology, i.e., weapons, aircraft, smartphones, etc. The US has long been importing semiconductor chips from China. Integration of the US energy infrastructure with that of the AI facilities is the ultimate objective of this strategy. Immense energy-producing units, i.e., electricity, under the ‘National Energy Emergency Act’ would be established to provide a continuous supply of electricity to AI data centers and facilities without any hindrance.(House, 2025)   But the Trump 2.0 administration, under its protectionist policies, aspires to restrict imports from China and build a domestic semiconductor processing unit. Highlighting the American dependence on Chinese chips, the American chemist and politician John Moolenaar stated, “The Trump administration has made one thing abundantly clear: we must reassert control over our own economic destiny. That’s not isolationism; that’s common sense. The Chip Security Act, outbound investment restrictions, and stronger export controls—those aren’t closing ourselves off. They are about ensuring America isn’t subsidizing or facilitating our own decline. The Chinese Communist Party (CCP) is using American capital to fund aircraft carriers, fighter jets, and AI systems that target our allies and threaten our freedoms.”(Moolenaar, 2025)   The norm of decentralized innovation is applied in developing the infrastructure, and it empowers universities, startups, and private corporations. This is an expression of confidence in market mechanisms and civil liberties, which is in line with its social values of open innovation and competition.   C. AI Diplomacy and Security   The last pillar of the US AI national action plan is to collaborate with international partners and allies. This simply means to export American AI technology to strategic partners and those with common interests. This will, as a result, give rise to new types of groupings known as ‘AI Alliances.”(White House, 2025) The Global Partnership on AI (GPAI), QUAI AI Mechanism, and US-EU Trade and Technology Council are some of its best manifestations. Like the security and defense partnerships, the AI alliances will enable the US and the West to encircle the PRC in the tech world, where strong western collaborations and partnerships would hinder the PRC from becoming the tech giant or from excelling in AI production. It Encourages responsible AI governance and a democratic form of AI standards of the US, which are based on its self-perception as a global governor of the liberal values.   Thus, in order to enhance AI-related exports to allies, the US has established various institutions, including the US International Development Finance Corporation (DFC). The US AI diplomacy aims to counter China’s growing footprints in the international bodies and institutions.(State 2023) As these global bodies are a key to spreading particular norms and values, shaping the public perception, and framing the global order, the US wants to challenge Chinese entrenchments in these organizations through political and diplomatic coalitions and groupings. Doing this, the West will be able to propagate their version of the global AI order. This means capitalism vs. communism will now be clearly visible in the global AI race between the economic hegemons.   The US Vice President J.D. Vance, while addressing the European Union (EU) leaders in Paris explicitly stated, “The US really wants to work with its European allies. And we wish to start the AI revolution with an attitude of cooperation and transparency. However, international regulatory frameworks that encourage rather than stifle the development of AI technology are necessary to establish that kind of trust. In particular, we need our European allies to view this new frontier with hope rather than fear.”(Sanger 2025) In case of security, the strategy aims to establish various AI Safety Institutes (AISIs) to reduce or eliminate the risk of AI-related accidents, which include errors in AI platforms, most specifically in the AI-operated weapon systems, and the unethical use of AI programs, i.e., generative AI or LLMs. Similarly, the strategy emphasized the danger posed by the non-state actors. These violent actors must be restrained from acquiring such advanced yet sophisticated technology.(White House, 2025)   China’s New Generation Artificial Intelligence Development Plan   For the first time in July 2017, the PRC launched its long-term national AI vision 2030, entitled “New Generation Artificial Intelligence Development Plan,” which is comprised of all the policies, guidelines, and measures to be taken by the Chinese Communist Party (CCP) to foster its AI developments.(Council 2017) China’s AI 2030 vision is none other than the extension of the idea that President Xi Jinping circulated in 2012 regarding China’s future role in the field of Artificial Intelligence (AI). This strategy aims to strengthen China’s AI footprints in the international arena. Ranging from investments to infrastructure, this plan of action explicitly declared to develop the PRC into the hub of AI innovation and investment by 2030. This plan of action is determined to bring about a profit of $160 billion by 2030.(O’Meara 2024) While addressing the Politburo Study Session on 25th April 2025, the Chinese President Xi Jinping noted, “To gain a head start and secure a competitive edge in AI, it is a must to achieve breakthroughs in basic theories, methodologies, and tools. By leveraging AI to drive the transformation of scientific research paradigms, we can speed up achieving breakthroughs in scientific and technological innovation in all sectors.”(Agency 2025)   China’s AI Vision 2030: Key Objectives   A. AI Leadership (2020)   The PRC has successfully accomplished this objective. Under this pillar, China has established significant AI infrastructure, including key facilities and data centers, coming at par with the US. Within this, the CCP urged the academic institutions to promote, enhance, and foster research in the AI domain, which resulted in the major developments in the sectors of big data, swarm intelligence, and super artificial intelligence.(Council 2017) China has successfully established its domestic AI industrial complex worth $22 billion. Various educational institutions, i.e., Tsinghua, Peking, etc., and major companies, i.e., Baidu, iFlyTek, etc., have now completely transformed into AI hubs where research, innovation, and practices are conducted through highly advanced AI platforms.   Commenting on the US-China AI leadership contest, Dr. Yasar Ayaz, the Chairman and Central Project Director of the National Center for AI at NUST, Islamabad, explicitly remarked, “Efficiency is the new name of the game now. Chinese AI inventions and developments clarify the fact that even with the smaller number of parameters, you could achieve the same kind of efficiency that others with an economic edge are achieving.”(Ayaz 2025) The AI leadership symbolically builds the socially constructed narrative of the Chinese Dream and national rejuvenation into the need to overcome the century of humiliation and take its place in the world order. Here, AI leadership is not just a technical objective but a discursive portrayal of the Chinese self-concept of being a technologically independent and morally oriented civilization.   B. AI Technology (2025)   The second most important objective of China’s AI Vision 2030 is to reach a level of tech supremacy in the international arena by 2025. Major work areas include localization of chip industries, advancements in semiconductors and robot manufacturing, etc. The first phase of 2020 basically laid the infrastructural foundation of the plan, while this phase deals with the development and innovation of key AI-operated platforms, including robots, health equipment, and quantum technology.(Council 2017) Another most crucial feature of the 2025 phase is to establish various AI labs throughout mainland China. This would result in the integration of AI into different public-private sectors, i.e., finance, medical, politics, agriculture, etc. Last but not least, a civil-military collaboration is described to be a cornerstone in this regard.   The AI-operated platforms would be utilized by both civil and military institutions, thus preserving the PRC’s national security and safety. Giving remarks over China’s technological edge, Syed Mustafa Bilal, a technology enthusiast and research assistant at the Centre for Aerospace and Security Studies (CASS), added, “China, which for the longest time has been criticized for having a technologically closed-off ecosystem, is now opting for an open-source approach. That was evident by the speeches of Chinese officials at the Global AI Action Summit, in which they tried to frame China’s AI strategy as being much more inclusive as compared to the West. And one illustration of that is the ironic way in which deep search is currently furthering OpenAI's initial selfless objective of increasing AI adoption worldwide.”(Bilal 2025) Thus, the AI vision of China reflects ideational promises of social order, central coordination, and a moral government, ideals that are based on its political culture and civilization background.   C. AI Innovation Hub (2030)   By 2030, China aims to be at the epicenter of global AI innovations, development, and investments. The PRC’s political, economic, and defense institutions will be governed under AI overhang. The most significant feature of this phase is to counter the US-led AI order by challenging the US and the West in various international bodies like the International Telecommunication Union (ITU). The main tenet of China’s 2030 vision is to transform it into a completely AI-driven economy—an AI economic giant.(Council 2017) As the PRC is ruled by the communist regime of President Xi Jinping, China aspires to counter the Western-led AI order through instigating its communist values, including high surveillance, strict national policies, and population control. By avoiding a completely liberal, free speech AI environment in mainland China, the CCP aims to come on par with the US by having authoritative control over its people, thus maintaining its doctrine of ‘techno self-reliance.’   Giving his insights on the new global AI order and the ideological rift between the US and China, Dr. Wajahat Mehmood Qazi, advisor on AI and digital transformation to the private tech companies and faculty member at the COMSATS University, Lahore, explicated, “Yes, there is a digital divide, but the interesting part over here is this: the world is evolving, so this big divide is no more about the decentralization or the centralization. If we look at how China is promoting openness by releasing its foundation models, at the same time the ecosystem of their LM models or AI is still in close proximity. Whereas, the western world is having a different narrative. They are talking about the openness of the models, but at the same time it’s more market-driven. In my view, we are entering into a world where innovation requires openness and closed methods simultaneously.”(Qazi 2025)   The concept of innovation with Chinese features is used to describe a socially constructed attempt to exemplify another approach to technological modernity, which combines dictatorial rule and developmental prosperity. It is a mirror image of self-concept in China as a norm entrepreneur that wants to legitimize its system of governance and impact the moral and technological discourse of AI at the global scale.   Conclusion   The constructivist perspective informs us that the competition between Washington and Beijing is not predetermined; it is being conditioned by the perceptions, suspicion, and competing versions that can be rebuilt through dialogue and mutual rules. The ideological divide can be overcome by creating inclusive tools of AI governance, with transparency, ethical principles, and shared responsibility in their focus. The common ground created through the establishment of a mutual conception of the threats and the ethical aspects of AI will enable the United States and China to leave the zero-sum game on AI and enter into a model of normative convergence and accountable innovation. Constructivism thereby teaches us that cooperation in AI is not just a strategic requirement but also a social option, which is constructed on shifting identities and the recognition of global interdependence with each other.   The great power competition is now in its transformative phase, bypassing the traditional arms race for a more nascent yet powerful AI race. In the context of the US-China contest, administrations on both sides are trying their utmost to launch, implement, and conclude critical national strategies and formulations in the field of artificial intelligence. Both are moving forward at a much greater pace, thus developing advanced technologies in the political, economic, and military domains. 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Introduction Hegemony is the core principle in International Relations. It has been conceptualized through military strength, economic influence, and ideological control. The theory of cultural hegemony by Antonio Gramsci is based on assuming control but not necessarily through force, whereas realist theorists such as John Mearsheimer stress the relevance of military strength for ensuring global dominance (Mearsheimer 2001). The 21st century, though, brought into being a different era of transformation and technological breakthroughs that turned the existing arrangements on their head. With the advent of Artificial Intelligence (AI), cyber war, and space technology, great powers are transforming from traditional soldiers to cyberspace warriors. AI and other cyber tools are altering the strategic equation between major powers, providing avenues for countries like China and Russia to undermine US hegemony (Rooney et al. 2022). Hegemony in the past had been founded on military superiority, but at present, academics have discovered that technological hegemony is leading the way. Lethal Autonomous Weapons (LAWs) and AI have captivated researchers because they can transform war. Cyberspace has become the new battleground of power. The US and China are competing for cyber hegemony (Akdaǧ 2025). Space is increasingly regarded as a new battleground in geopolitics. The US Space Force and China’s BeiDou system illustrate how nations weave surveillance and communication in their strategic decision-making (O’Hanlon 2020). Thus, new technologies are reshaping the China-US rivalry. To counter this, countries are investing in tech-based industries, which will change the way human thinks. The analysis will explore whether emerging technologies can efficiently replace traditional tools of hegemony or not. Joseph Nye’s concept of smart power provides a critical framework in this modern era, where influence may flow from military boots to silicon chips. Global powers are moving towards influence and deterrence-based tech models, supplementing hard power. However, this transition has its risks, such as overdependence and ethical concerns. The paper argues that a complete transformation is not happening, but there will be dual-track hegemony where military and technology will coordinate to dominate. Policy implications of this shift are profound. Global powers must collaborate to draft international norms for AI and cyberwarfare, developing nations must develop their technology rather than dependency on global powers, as it will be easier for them to surveil and dominate, and international institutions must proactively govern the techno-political landscape to prevent destabilization. This study will use a qualitative approach, and it will be a case-based methodology combining theoretical perspectives of philosophers. This analysis is important as it delves into the transformation of the mechanics of global power from military hegemony to technology-oriented hegemony. It uses secondary sources like policy briefs, think tank reports, books, etc. Finally, this analysis concludes that soldiers may never be the first line of every fight, but the battle for global supremacy is firmly human-hinged in decisions on technology, ethics, and governance. Hegemony is a core concept in International Relations, grounded in military capacity, economic influence, and institutional influence. Historically, great civilizations like the Roman and British empires attained hegemony by dominating in naval power, making alliances and expanding their territories. In the post-World War II era, the US built dominance through overseas military bases and nuclear deterrence. Historical Foundations of Traditional Hegemony The Roman Empire, a classic example of past hegemony, attained this power by constructing roads, forts, and legions in the world's islands. Later, the British Empire sustained its dominance by modernizing the Royal Navy and the global trade network. The post-World War II era saw the hegemony of the United States with overseas military bases and security alliances. John Mearsheimer, in his book The Tragedy of Great Power Politics, says that according to great powers, hegemony is the best way to ensure their security (Mearsheimer 2001). Limitations of Traditional Hegemony The primary limitation of the traditional hegemonic model is the risk of overreach, entering into too many overseas agreements that become economically and politically unsustainable. Imperial overstretch, a model proposed by Paul Kennedy, explains the collapse of empires when they are unable to maintain their economy due to huge global aims (Kennedy 1988). Concurrently, we can see that after so many years have passed in the Vietnam, Afghanistan, and Iraq wars, the US is spending trillions. Approximately $3.68 trillion was spent on Iraq and Afghanistan (Costs of War | Brown University 2025). This highlights that military dominance can be costly and unsustainable. Mearsheimer, in an interview at the New York Times, claimed that ‘the United States is responsible for causing the Ukraine crisis’. Lack of legitimacy and local resistance is another great flaw in the traditional hegemonic pattern. For example, in Vietnam, soldiers used their knowledge of geography to push back against America's advanced weapons. Similarly, in Afghanistan and Iraq, foreign-led missions struggled with local insurgents. The New Tools of Technological Hegemony Cyber Power Cyber power has rapidly become a strategic field where states project their influence far beyond the geographic borders, often without soldiers. Cyber operations are dominating in this digital age, and the SolarWinds hack shows how states can achieve global influence through an Information Technology (IT) infrastructure breach. In March 2020, Russian hackers placed a secret backdoor in SolarWinds’ Orion software. This infected around 18000 users, including US major government departments (Cybersecurity 2021). The cyberattacks went undetected for several months, revealing vulnerabilities in the digital network. It was the worst cyber-espionage attack ever, an analyst described. Iran's 2019 cyberattack on the oil infrastructure of Saudi Arabia shows that the acquisition of digital superiority can help influence norms, command the critical infrastructure, and set global political narratives without foreign boots on the ground. To address this vulnerability, it is essential to know cyber deterrence theory. It discusses capability, attribution, and resolution. States should advance digital tools, modify their tracking system and enhance communication and transparency. The most lethal weapon today may not fire a projectile-it fires packets. This metaphor illustrates that state actors can erode adversary national infrastructure, banks and election systems without traditional warfare. The US Secretary of Defense Lloyd J. Austin III described the integrated Deterrence that integrates cyber with land, sea, and space under a unified strategy (Masitoh, Perwita, and Rudy 2025). Cybersecurity experts say that cyberpower is now a geopolitical power. And cyber warfare is not a sideshow; it’s a frontline strategy. Artificial Intelligence (AI) and Big Data AI’s strategic significance for national security has been emphasized by leaders like Jason Matheny, CEO of RAND Corporation. He warns that AI could make it easier to make harmful weapons and dangerous technologies (Matheny 2024). The 2023 report of RAND on AI and Geopolitics argues that AI may be the next frontier in US-China rivalry (Pavel et al. 2023). ChatGPT and Bard, like generative AI models, have humanitarian strategic applications, which makes fake news so believable that it feels like fact. This capability of AI can transform propaganda into scalable digital warfare. Beyond surveillance, AI has transformed military operations tactics. Military applications like drone swarming, algorithmic targeting, and predictive ISR create scenarios where the frontline shifts from kinetic zones to data centers. AI diplomacy is becoming the new foreign aid. Financial Times article notes that tech giants are deploying AI mechanisms in Africa not only for development but for their advantage as an influence tool. Thus, AI and big data are a new form of informational hegemony. Space Militarization and Satellite Dominance Space militarization emerged during the Cold War. States like the US, China, Russia, India, and Japan have developed anti-satellite (ASAT) capabilities (Samson and Cesari 2025). General John Jay Raymond at the US Space Command Launch said that, “Outer space is now recognized as a domain of military operations” (Raymond 2021). China’s 2007 ASAT test, which destroyed its own Fengyun-1C weather satellite, is still a thorn in the eyes of major powers. Russia has also launched missions like Kosmos-2553. Evolution from GPS to GNSS (Global Navigation Satellite Systems) reflects strategic change. The US has GPS, China has BeiDou, Elon Musk’s Starlink satellite constellation, and Europe has Galileo; each system highlights the sovereignty in digital positioning. China’s counterpart doctrine states in its 2021 Space White Paper that space-based assets are not crucial for renaissance only but for strategic deterrence without deploying soldiers or causing deaths of your military men (The State Council Information Office of the People’s Republic of China 2022). Undersea Cables and Digital Infrastructure Control Undersea cables carry over 95% of global data transmission (Sherman 2021). Disruption or surveillance of these cables can impact the worldwide flow of data and diplomatic communications. In developing countries like Pakistan, Kenya, and Ecuador, Huawei-funded infrastructure provides smart city services. Cable route is not just wiring undersea, it is influenced by encryption. The US and EU have Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, like surveillance platforms. Cable-Landing zones (CLZs) are the chokepoints used for manipulation, Cloud interconnection policies allow control of traffic flow, and Surveillance software and firmware installed at data centers can be remotely controlled, bypassing local safeguards. Blocking connections can slow or disrupt foreign economic leverage. Digital infrastructure has become a domain for hegemony that is more insidious in strategic potential. This map exposes the physical foundations of digital power. Nations with greater cable landing nodes, like the U.S. and China, wield asymmetric influence, not through soldiers, but through network control. Disruption or surveillance of these cables can cripple economies or governance. Regional chokepoints also reflect strategic leverage in geo-economics and cyber diplomacy, making this infrastructure as consequential as traditional military bases. Figure 1: This map shows the physical foundations of digital power, nations with greater cable landing nodes, like the U.S. and China, wield asymmetric influence, not through soldiers, but through network control.Superpowers’ Technological Footprint United States Silicon Valley is the heart of US technological hegemony, and some other government agencies, like Defense Advanced Research Projects Agency (DARPA), are contributing to maintaining US technological hegemony. Lethal Autonomous Weapons (LAWs), drones, and defense-grade AI-powered decision-support systems are a tech-military hybrid force. Furthermore, the US controls major pillars of technology like operating systems (Microsoft, Apple, Google dominate desktops and mobile devices), and Satellites. Advanced technologies have enabled remote force projection like drone strikes, executing surgical operations, Cyber Command operations from SolarWinds retaliation, deployment of Overhead Persistent Infrared (OPIR) and Space Based Kill Assessment (SKA), enhancing deterrence. China Made in China 2025 vision aims to displace US techno-hegemony. China’s centralized Social Credit System reflects a template of techno-surveillance hegemony. Beijing is now selling surveillance systems to developing countries, highlighting its tech supremacy. China is controlling telecommunications architecture by promoting Huawei’s 5G worldwide. China’s cyber army, the People’s Liberation Army Strategic Support Force (PLASSF), specializes in offensive and defensive cybertech warfare (The State Council Information Office of the People’s Republic of China 2019). China’s Digital Silk Road links infrastructure investments in Asia and Africa with national encryption systems and cloud data centers. Ethiopian Prime Minister Abiy Ahmed, in a bilateral dialogue, said that ‘our fiber networks and data exchanges are now integrated with Beijing’s national infrastructure policy’. Thus, acquiring such a position in technology will prove China’s hegemony and can make it a superpower, making the world again a bipolar one. China’s strategic doctrine focuses on autonomous systems and digital authoritarian export over occupancy and geopolitical projection, respectively. Russia Russia’s global strategy remains rooted in a hybrid doctrine that combines cyber tools, space capabilities and disinformation operations. The Gerasimov Doctrine, Vladimir Putin’s strategic vision, emphasizes the blend of political, cyber, and economic tools to achieve strategic goals without casualties. The Ukraine conflict is a great example of cyber dominance. Russia has cyber units such as APT28 (Fancy Bears), Satellite Spoofing and Jamming, and the Internet Research Agency (IRA), which have executed targeted hacks against North Atlantic Treaty Organization (NATO), disrupted Global Positioning System (GPS) signals, and led disinformation campaigns. Russia’s power formula centers on dense cyber capacity, economic coercion, and unpredictability (making deterrence harder). Risks and Criticism of Tech-Based Hegemony Technology provides tools for security and influence, but overdependence causes strategic vulnerability, which leads to ethical dilemmas and raises questions about digital sovereignty. Overdependence and System Vulnerability A fundamental flaw of technological hegemony is its fragility. Systems are dependent on infrastructure (cloud servers, AI control nodes, etc.). The UN Group of Governmental Experts (GGE) says that lethal autonomous weapons are the cause of escalation in conflicts (CCW 2022). Take the SolarWinds breach of 2020, in which an update exposed thousands of sensitive pieces of information. Ethical Concerns China, Ethiopia, and some other states have AI-powered surveillance regimes. China exports networked camera systems and facial recognition tools to states that use them to suppress dissent. A senior researcher at Amnesty noted that, ‘delegating life and death decisions to software is ethically unjustifiable’. Global South Dependency and Digital Colonialism Due to technological influence, digital dependency has increased in the Global South. Digital dependency without regulatory safeguards leads to digital colonialism. Countries lacking advanced technology are reliant on digital ecosystems developed by superpowers. It is said by Dr Ruha Benjamin that ‘when code becomes law, and pipelines become policy enforcers, sovereignty is outsourced’. Hegemony Without Consent Soldiers are a visible force, but technology imposes itself quietly via platforms, which results in domination without democracy. Tech-enabled coercion doesn’t need tanks; it needs standards embedded in devices, laws baked into algorithms. This contradicts liberal norms of International Relations (IR), where hegemony should rest on consent for international legitimacy (Sakumar, Broeders, and Kello 2024). Future Power Projections: Domain-wise Breakdown There are five interconnected domains of future power projections: land, air, sea, cyber, and space. Land Domain In traditional combat, troops were used to counter enemy force, but now in the third digital era, surveillance grids, AI-powered motion detection systems, and autonomous land robots are replacing soldiers. The Israeli military is testing unmanned ground vehicles (UGVs), which they have named Jaguar, to patrol borders, and this will reduce human casualties. The diagram illustrates the interaction or the coordination between a human coordinator and an autonomous weapon system (AWS), and the target within a given environment. At first, the operator gives a high-level command which activates the controller, and the system provides feedback to the operator, such as mission success or failure. The controller is the brain of this system. It monitors the environment, processes data and controls the weapons. It operates in loops, evaluating the environment and updating the decision. Once the target is detected autonomously, the gun acts, which includes missile launch or gunfire. This entire process takes place in a dynamic environment. Figure 2: The coordination between a human coordinator and an autonomous weapon system (AWS) Air Domain Traditional manned fighter jets were dominating in aerial combat. Now, aerial dominance is shifted towards hypersonic weapons and AI-enabled drone swarms. Russia’s Zircon and China’s DF-ZF are hypersonic missiles that can travel at Mach 5+ speeds. AI drone swarms are rendering conventional missile defense systems obsolete. The US Air Force’s “Golden Horde” project and China’s GJ-11 stealth drone exemplifies this shift. Sea Domain Sea powers used to refer to blue-water navies and submarine fleets. They remain the core of maritime protection, but unmanned underwater vehicles (UUVs) are quickly supplanting aircraft carriers. UUVs are being used to surveil for months on their own, and they will not be detected. Subsea data cables, which transport 95% of internet traffic, are a strategic resource; such cables are undersea digital arteries. Securing the sea in the 21st century means controlling what is beneath it. The diagram illustrates major elements of an autonomous underwater vehicle (AUV). It is an important element in current naval battles and marine monitoring. The GPS/RF module is situated at the top of the AUV, through which the vehicle can position itself beneath the water. The propeller motor is the mobility unit of an AUV, driven by lithium-ion batteries. It provides thrust and directional movements. An electronic aid container serves as a housing store; it includes an onboard computer, a mission processor, a power distribution unit, and communication interfaces. AUVs have sensors which detect how deep the AUV is in the water column by measuring hydrostatic pressure. Acoustic Doppler Current Profile (ADCP), is a sonar device that uses Doppler shift in acoustic signals to measure the speed of water currents. An AUV manage its vertical position with a buoyancy tank. AUVs use an inertial navigation system; they determine the position of the AUV based on prior data. AUVs also contain forward-looking (Sound Navigation and Ranging) SONARs and Altimeters that scan and detect any obstacles in front of them and maintain a safe height from the seabed, respectively. Transducers are the mouth and ears of AUVs; they transmit and receive acoustic signals. They are crucial for clandestine communication and sensing of the environment. These AUVs are extremely crucial in contested sea areas such as the South China Sea or the Arctic. Therefore, AUVs are revolutionizing maritime operations by enlarging surveillance, exploration, and undersea warfighting capabilities. As technology evolves, AUVs will define the future of naval strategy and oceanographic study. Figure 3: Major elements of an autonomous underwater vehicle (AUV). Cyber Domain Cyberspace has no borders. Global powers like the US, China and Russia have developed cyber command units to disrupt the power grids of the opposite side. Russia’s cyber interference in the 2016 U.S. elections, China’s alleged breach of U.S. personnel databases (OPM hack), and the Stuxnet worm targeting Iran’s nuclear program exemplify how software has become a strategic weapon. According to NATO’s 2025 Cyber Doctrine, ‘A cyberattack triggering Article 5 [mutual defense] is not just theoretical—it’s a matter of time.’ Space Domain Traditionally, space power was limited to spy satellites, but now anti-satellite weapons (ASAT), Starlink and military satellite systems have transformed into a combat zone. The US created its Space Force in 2019 to dominate in space militarization. In the Ukraine war, SpaceX’s Starlink became crucial for Ukrainian battlefield communication, prompting Elon Musk to limit military use to avoid escalation. Table 1 (figure 4): Old model versus new model comparison in each domain of future power projection. Done by the author. Domain Old Model New Model Land Troop deployment - Armored divisions - Occupation warfare AI-enabled surveillance grids - Unmanned Ground Vehicles (UGVs) - Real-time satellite + sensor networks Air Fighter jets - Airbases - Strategic bombers Hypersonic missiles (e.g., DF-ZF, Zircon) - Drone swarms with AI autonomy - Human-out-of-loop air dominance Sea Naval fleets - Aircraft carriers Submarines Unmanned Underwater Vehicles (ORCA UUV) - Seafloor cable warfare - Autonomous maritime surveillance Cyber (No traditional equivalent) State-sponsored hacking - Data theft & disinformation ops - Cyber jamming, spoofing in kinetic war Space Reconnaissance satellites Missile early-warning systems ASAT weapons (China, Russia tests) - Satellite internet constellations (Starlink) - Real-time warfighting integration (JADC2) Can Technology Fully Replace Military Power? The emergence of advanced technologies like AI, autonomous weapons and space militarization has sparked the debate about whether technology can replace military power, wholly or not? Strategic autonomy, in which a nation’s ability to defend its interests independently requires both technology and military. Technology acts as a critical enabler but not a substitute. AI can analyze satellite data in seconds, but only trained personnel can conduct peacekeeping missions in fragile regions. Modern warfare is shifting towards grey zone conflicts that fall below the threshold of open combat. Russian operations in Crimea in 2014 blended cyberattacks and physical deployments of troops, due to which the line between technology and military became blurry. This incident shows that technology without boots is of no advantage. In addition, technology needs regular upgrades and educated users, and excessive reliance upon these systems may cause interruptions such as electronic warfare (EW) and electromagnetic pulse (EMP) attacks. In a time of humanitarian crisis, disaster response, and counterinsurgency, forces are indispensable. To defeat an enemy or to dominate, one must employ both technology and an educated military. Unmanned aerial vehicles (drones) have altered the character of air war. Great powers are investing heavily in military AI and quantum communication to improve battlefield awareness, minimize human loss of life, and enhance decision-making, but note that international decisions do not depend on a machine. They don't aim to replace the military, but they want to develop their technology. Thus, the emerging model of global power is not soldiering versus technology, but it is soldiers plus technology. It is known as dual-track hegemony, and a nation that acquires it will dominate shortly. A tech-savvy soldier, supported by AI and robotics, is the face of tomorrow’s war. Conclusion The United States, China and the EU are global powers of the modern era. These states possess the technological capital and military infrastructure that shape the regulation of engagement in cyberspace and AI. Firstly, they must strengthen international norms for cyber operations and AI governance. UNGGE has made some progress relevant to this, but this needs a broader enforcement mechanism like the Geneva Conventions. Secondly, global powers must invest in ethical and auditable technology. As AI is dangerous due to biased surveillance systems, facial recognition abuses, and it is also used in predicting policies, which is a major ethical concern. Algorithmic transparency, data protection, and privacy rights must be enforced as soon as possible. Lastly, multilateralism must extend to outer space. As space is becoming a battlefield, complicating geopolitical rivalry, to counter it, multilateralism must be encouraged. For developing countries like Pakistan, Indonesia, or Nigeria, the emergence of technological hegemony is both a threat and an opportunity. These countries should enforce digital sovereignty policies. These nations should avoid digital dependency, as it will be easier for global powers to surveil and dominate. Emerging powers should build defensive cyber infrastructure instead of offensive. They should build secure networks and legal protection against espionage on their own. Defensive strategy will serve as a strategic safeguard and can be used as a pawn in great power rivalries. Emerging powers should pursue a multilateral coalition among Muslim majority states to enhance their connectivity and ties. South-south cooperation must be promoted. The UN, G20 and other international bodies must move towards digital governance mechanisms instead of vague declarations. UN should form a Global Charter on Tech Governance, similar to a Digital Magna Carta. The charter should have ethical limits on the establishment and use of Artificial Intelligence and Lethal Autonomous Weapons. They should increase their coordination with the G20 to amplify these efforts. G20 should create a Tech and Ethics working Group, which can bridge the trust gap between Developed and developing countries in the digital arena. Global order continues to evolve in the 21st century, and the foundations of power projection are rewritten. There is a paradigm shift from boots to bots. This research demonstrates that while technology has transformed, it cannot entirely replace traditional modes of combat. Technology can only help the military to dominate in a region or conflict, but cannot fully replace it. There will be dual track hegemony, and the one who will acquire this hegemony will control world islands, and controlling world islands means ruling the world. However, this transformation comes with serious risks like AI miscalculations, vulnerabilities of digital infrastructure and ethical concerns. But we should keep in mind that military power is no longer sufficient, nor is technology alone a guarantee of dominance, in post-silo, where military, technological, and normative tools must function together to sustain leadership.ReferencesAkdaǧ, Yavuz. 2025. “Great Power Cyberpolitics and Global Cyberhegemony.” Perspectives on Politics. doi:10.1017/S1537592725000040.CCW. 2022. “Document Viewer.” : 16. https://docs.un.org/en/CCW/GGE.1/2021/3 (October 18, 2025).“Costs of War | Brown University.” https://costsofwar.watson.brown.edu/ (October 18, 2025).Cybersecurity, Centre for. 2021. 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The attempted sale of CK Hutchison’s Panama Canal operations to the US-based company BlackRock and Terminal Investment Limited was more than a commercial transaction. When Beijing publicly opposed the deal, branding it a betrayal of national interests, it transformed into a case study in how global business is being reshaped by strategic rivalry. The controversy illustrates a deeper question: Can Hong Kong’s leading conglomerates still operate on commercial logic alone, or are they inevitably drawn into the geopolitical contest between the United States and China? For Hutchison, the Panama case shows that the room for neutrality is shrinking. Why does it matter? Beijing’s intervention signals to Hong Kong businesses and foreign investors alike that commercial neutrality is no longer assured. Loyalty, alignment, and political sacrifice are emerging as expectations alongside profit and efficiency. For global decision-makers, this raises two critical issues: Why did Hutchison seek to exit its Panama Canal holdings in the first place? Why did Beijing judge it necessary to intervene in a transaction that, on the surface, was driven by corporate strategy? Why Hutchison sold its Panama Canal operations? 1. Strategic Realignment Toward Core Businesses CK Hutchison has steadily repositioned itself around two “twin engines”, i.e. real estate in Asia and infrastructure in Europe. While ports in Latin America once fit into its global footprint, they were never central to this model. By selling its Panama Canal operations, Hutchison freed resources to consolidate strengths where it sees long-term stability and growth. This is part of a deliberate shift visible over the past decade: acquiring the German infrastructure firm ISTA in 2017 and securing UK regulatory approval in 2024 for the £11 billion merger of Vodafone UK and Hutchison’s subsidiary Three. These moves point to a concentration of capital in Europe’s regulated infrastructure and Asia’s high-demand property markets, underscoring a deliberate pivot toward strengthening European operations and ensuring cash flow visibility. This implies that Hutchison is reducing its exposure and a systematic exit to regions marked by political uncertainty and doubling down on reinvesting into higher-yielding and strategically aligned assets, particularly in European infrastructure platform while deepening its Asian real estate footprint. For governments and investors, this suggests that Hong Kong conglomerates are not retreating from globalization but are planning to recalibrate toward safer, higher-visibility assets. 2. Capitalizing on Market Timing and Asset Valuation The divestment also reflected classic Hutchison discipline: Buying early and exiting when valuations reach the peak. With global demand for strategic infrastructure rising, the Panama Canal assets commanded a premium. The resulting HK$19 billion in proceeds and a sharp rise in share price underlined investor confidence. Such timing underscores Hutchison’s longstanding strategy of opportunistic repositioning. This divestment was both value-accretive and strategically well-timed. By crystallizing gains now, the group strengthens its balance sheet and cash-reserve, maintaining its flexibility to reinvest or return capital to shareholders. For policymakers, this implies that global infrastructure assets are increasingly financialized. Strategic nodes like the Panama Canal are no longer just trade arteries but high-value commodities in global capital markets. Governments must therefore view divestments not only as corporate decisions but as moves that can shift control of strategic assets between geopolitical actors. 3. Geopolitical Considerations and Risk Mitigation The Panama Canal is a corridor of strategic significance and what US-President Donald Trump calls Chinese ownership on the potential dual-use nature of port terminals there inevitably drew scrutiny in Washington. U.S. allies have already tightened the screening of Chinese-linked infrastructure deals and the EU’s 2019 FDI framework explicitly flagged ports as areas requiring “special oversight”. Against this backdrop, Hutchison sought to avoid being cast as a “Chinese state-backed actor”, an extension of Beijing’s Belt and Road Initiative. Hutchison has taken deliberate steps to present itself as a neutral and commercially driven multinational investor, rather than an extension of Chinese state policy. The company restructured in 2015 to a Cayman Islands base carefully positioning itself apart from state-linked Chinese enterprises, which creates an international legal identity rather than retaining a mainland Chinese or Hong Kong corporate domicile. By exiting Panama, Hutchison not only monetized assets but also reduced exposure to the intensifying Sino-U.S. rivalry in one of the world’s most contested trade chokepoints. For European and U.S. decision-makers, this implies that Hutchison’s move signals how Hong Kong firms navigate geopolitical pressure. It shows that even Chinese-origin conglomerates may prefer retreat to avoid being entangled in state rivalries. Hutchison pre-emptively mitigated the risk of being labelled a “Chinese state proxy” in a critical geopolitical theatre. This move not only alleviated Western concerns about Hutchison’s control of Panama’s ports but also demonstrated the group’s ability to act with commercial neutrality and flexibility, preserving its ability to operate, finance, and expand in Western markets without being constrained by the “Chinese capital” label. For Beijing, however, this retreat risks weakening China’s global port footprint. This highlights a potential divergence between the commercial logic of Hong Kong firms and China’s strategic ambitions. Why did Beijing intervened? 1. Loss of Chinese Strategic Assets and Diplomatic Advantage The Panama Canal is among the world’s most critical maritime chokepoints and control of its ports carries weight far beyond commerce. For China, investment in Latin American terminals has been part of a wider strategy to shape global shipping routes and enhance strategic reach. From Beijing’s perspective, CK Hutchison’s divestment was more than a business transaction. This was a strategic setback. The transfer of control to U.S.-linked interests was seen as a symbolic “recapture” of the terminals, which weakens China’s presence at a vital corridor. Within the Chinese leadership, the ports had been regarded as potential bargaining leverage in trade negotiations with Washington. But this loss reduced Beijing’s diplomatic toolkit at a time of rising frictions. The episode illustrates how Chinese policymakers increasingly view overseas ports as instruments of geopolitical positioning, not just commercial assets. Hutchison’s decision to sell underscored a broader reality: not all Chinese-affiliated enterprises act in alignment with state objectives. For Beijing, this implies that the Panama case highlighted the limits of relying on Hong Kong conglomerates to advance strategic interests abroad. For foreign governments and firms, it signalled both China’s heightened sensitivity to divestments in contested regions and the growing tension between corporate autonomy and state geopolitical expectations. 2. Absence of Beijing’s Prior Approval Sparked Political Backlash In the Panama Canal divestment, Beijing’s leadership reacted strongly against CK Hutchison’s “transaction first, then approval” approach. Beijing expressed dissatisfaction and even instructed state-owned enterprises to suspend new collaborations with the Li family, who serve as the controlling shareholders and principal decision-makers of Hutchison. Hutchison defended this sale as a “purely commercial and competitive process” by emphasizing Mediterranean Shipping Company as the principal buyer. Yet, in the context of intensifying Sino-U.S. rivalry, this stance was no longer acceptable. Regulatory pressure and political intervention from Beijing slowed negotiations, preventing the transaction from proceeding as planned. The broader precedent is clear: in strategically sensitive areas, Beijing now expects Hong Kong firms to align commercial decisions with state priorities. Neutrality is no longer an option. This marks a fundamental shift in the operating environment, binding the leading Hong Kong conglomerates more closely to state interests and constraining their room for independent strategic choices. For policymakers and investors, this implies that the Panama case shows how Beijing is extending political oversight into commercial domains once seen as autonomous. Hong Kong enterprises face increasing limits on their ability to separate business logic from state loyalty, particularly where Sino-U.S. rivalry is at stake. 3. Public Opinion as Strategic Pressure: Shaping a New Regional Order Beijing’s response to Hutchison’s Panama sale was not confined to official channels. Pro-Beijing media denounced the deal as disloyal and profit-driven, framing it as a matter of national honour. When the Hong Kong and Macao Affairs Office of the State Council, which is the Beijing central body responsible for overseeing Hong Kong and Macao affairs, amplified these narratives, they gained quasi-official status and exerted pressure on both Hutchison and other Hong Kong firms. This discourse resonated beyond China. The Panama Canal Authority warned that excessive concentration of terminal assets could undermine neutrality and competitiveness. This wording strikingly complies with Beijing’s “anti-hegemony” rhetoric. By shaping the terms of debate, Beijing positioned itself to argue for greater balance and competition in Panama’s port operations. Looking ahead, China advocates to leverage new concession tenders to advance its tactical objectives: strengthening the role of China Ocean Shipping Company, counterbalancing U.S. and European dominance and embedding Chinese capital in Latin America’s maritime infrastructure. More broadly, the case illustrates how Beijing integrates public opinion, regulatory narratives, and commercial strategy to shape a regional order more favourable to its interests. For policymakers, this implies that Panama demonstrates how Beijing transforms domestic media pressure into a tool of international influence. What begins as reputational discipline at home can translate into bargaining leverage abroad, particularly in contested regions where infrastructure and influence are intertwined. Points of Special Relevance: Beijing’s Strategic Signal Beijing’s intervention in the Panama Canal case should be read not as a single act but as a strategic signal. Its aims to prevent U.S. and European firms from consolidating control at a vital chokepoint and to avoid the appearance of “losing” strategic assets. At the same time, Beijing used this episode to remind Hong Kong conglomerates that in sensitive geopolitical contexts, commercial logic alone is no longer sufficient. The Panama case demonstrates how Beijing leverages commercial disputes as instruments of statecraft. The more plausible outcome is a conditional arrangement to encourage Panama to introduce mechanisms that limit Western influence in Latin America. China seeks structural adjustments that preserve its influence and reshape the regional order to its advantage. From Neutrality to National Loyalty As U.S. China tensions intensify, many multinational firms pursue de-risking strategies: not full decoupling as it is economically unviable, but carefully calibrated ambiguity that allows them to operate in both markets without explicit political commitments. This balancing act is becoming harder in Hong Kong. Since 1997, the influx of mainland state-linked enterprises has blurred the line between state and market. Benefiting from the “One Country, Two Systems” framework, these firms embedded political expectations into business norms. Ties to the National People’s Congress or the Chinese People's Political Consultative Conference are increasingly relevant in Hong Kong. By 2019, Beijing moved further, promoting patriotism in the business sector such as the Greater Bay Area Business Support Scheme, which channels funding toward firms demonstrating “patriotic entrepreneurship” or contributions to “national rejuvenation”. The result is a growing convergence of economic and political expectations. Commercial autonomy is increasingly contingent on political alignment, eroding the distinction between business logic and ideological loyalty. For investors and firms, this raises strategic concerns: - Will political loyalty requirements constrain the free flow of capital? - Could companies risk state intervention or even nationalization if perceived as acting against China’s interests? These questions remain unresolved, but Hutchison’s Panama case shows how quickly a commercial decision can be redefined as a matter of national loyalty. The broader uncertainty surrounding Hong Kong’s business environment will shape the city’s role as a financial hub in the decade ahead. This is my view on things: An Outlook on Hong Kong Looking ahead, the space for Hong Kong conglomerates to maintain commercial neutrality is narrowing. The rise of a nationalist business paradigm means companies must increasingly balance political conformity with economic self-interest. Two scenarios are emerging: 1. “Hong Kong, then China”: firms retain some operational autonomy and global credibility by prioritizing commercial logic, while carefully managing political sensitivities. 2. “China, then Hong Kong”: political loyalty takes precedence, with business priorities subordinated to national strategic goals of the Chinese Communist Party. Which path prevails will determine Hong Kong’s role as a financial hub. The tension between economic liberalism and political loyalty is no longer abstract. It is becoming the defining fault line for Hong Kong’s business landscape in the decade ahead.

Introduction Contemporary geopolitical competition has moved away from traditional paradigms of direct military conflict, giving way to more sophisticated forms of strategic rivalry. In this new landscape — where the lines between peace and war are increasingly blurred — the control of critical infrastructure and trade routes has emerged as a fundamental element of national power. The Belt and Road Initiative (BRI) — conceived by Beijing as the most ambitious geoeconomic project since the Marshall Plan — seeks to reshape the Eurasian trade architecture, positioning China as the central node of an integrated connectivity system. However, the events of 2025 reveal that this project does not operate in a strategic vacuum; rather, it faces a coordinated response from rival powers that have developed sophisticated strategies to limit, fragment, or condition its expansion. This article examines the indirect containment strategies directed against the BRI, focusing on one particular dimension: the deliberate activation and deactivation of conflicts as a tool of geoeconomic blockade. Through the analysis of two paradigmatic cases, it illustrates how rival powers can employ geoeconomic methods to block, fragment, or constrain large infrastructure projects by strategically manipulating regional conflicts. Two seemingly disconnected but strategically linked events will be examined — both of which have redefined the struggle for control over Eurasian trade routes. On one hand, the military escalation between India and Pakistan in the southern sector, specifically in the Rajasthan–Sindh–Southern Punjab Corridor; on the other, the peace agreement between Armenia and Azerbaijan, which revived the Zangezur Corridor Project, now under U.S. control. Both events represent concrete manifestations of a new form of great power rivalry centered on the instrumental use of conflicts to systematically obstruct the BRI. Geoeconomics as a Theater of War Geoeconomics, understood as an analytical discipline, examines how geographic, economic, and political factors intertwine to determine the relative power of states within the international system. Within this framework, connectivity infrastructures transcend their technical or commercial nature to become strategic assets capable of altering the regional balance of power. At its core, the BRI represents China’s attempt to create a network of economic dependencies that enables it to project political influence across Eurasia. This network includes both land and maritime corridors connecting East Asia with Europe, Africa, and the Middle East, establishing China as the central node of an integrated commercial system. However, the interconnected nature of this system also generates specific vulnerabilities: the disruption of critical segments can produce cascading effects that compromise the functionality of the entire network. Containment strategies, therefore, do not need to dismantle the BRI entirely to be effective. It is enough to introduce points of friction, uncertainty, or external control in key segments to alter participants’ cost-benefit calculations and reduce the overall attractiveness of the Chinese system. This logic of “selective blockade” allows rival powers to exert disproportionate influence with limited resources. In this context, the strategic activation and deactivation of conflicts emerge as a particularly refined tool. Unlike direct blockades — which require a permanent military presence and entail significant political costs — the manipulation of conflicts enables the introduction of instability indirectly, leveraging preexisting tensions to generate disruptions along critical BRI corridors. Thus, the temporal simultaneity of the India–Pakistan crisis and the resolution of the Caucasus conflict does not constitute a geopolitical coincidence but rather the manifestation of a deliberate geoeconomic containment strategy that employs the selective activation and deactivation of conflicts to block the fundamental pillars of the BRI. Case 1: Activation of the Indo-Pakistani Conflict The China–Pakistan Economic Corridor (CPEC) stands as the flagship project of the BRI in South Asia. With an estimated investment exceeding $60 billion, the CPEC aims to connect China’s Xinjiang region with the Port of Gwadar on the Arabian Sea, providing China with an alternative trade route that bypasses strategic straits controlled by rival maritime powers. The fundamental vulnerability of the CPEC lies in its dependence on Pakistan’s territorial stability—particularly in the southern provinces, where both critical infrastructure and the energy resources that sustain the project are concentrated. This is precisely where the strategy of conflict activation reaches its fullest expression. Following the escalation recorded in May 2025, intelligence analysts suggest that the timing and intensity of the Indo-Pakistani crisis indicate a deliberate activation of preexisting tensions with specific geoeconomic objectives. The impact of a hypothetical Indian incursion into the Rajasthan–Sindh–Southern Punjab belt would not necessarily aim for the permanent occupation of Pakistani territory, but rather for a demonstration of capability to disrupt the territorial continuity of the corridor. This interdiction strategy through conflict activation operates across multiple dimensions simultaneously. On the physical level, temporary control over this belt would effectively sever the connection between southern Pakistan and the routes leading to China, forcing costly detours or temporary suspensions of operations. On the economic level, the mere threat of disruption would significantly increase security and insurance costs for Chinese investments, thereby reducing the projected profitability of the corridor. More importantly, on the psychological level, a successful demonstration of interdiction capability through controlled escalation would create lasting uncertainty about the security of Chinese investments in the region. This uncertainty would not be limited to the CPEC, but would extend to other BRI projects that depend on the stability of strategic partners. The implicit message is clear: China cannot guarantee the security of its trade corridors against the strategic activation of conflicts by rival powers. The temporal dimension of this strategy is particularly sophisticated. The activation of conflicts makes it possible to generate immediate disruptions in the functioning of the corridors, while their eventual deactivation — once the strategic objectives have been achieved — avoids the long-term costs of a prolonged confrontation. This modulation of conflict intensity transforms regional tensions into precise instruments of geoeconomic policy. Access to the hydrocarbon reserves in southeastern Sindh adds an additional layer to this activation strategy. By temporarily controlling these resources during periods of escalation, India would not only obtain direct economic benefits but would also deny Pakistan and China the revenues that could otherwise be used to finance and expand the CPEC. This logic of “resource denial through conflict” is particularly effective in infrastructure projects that rely on sustained revenue flows to justify their initial investments. Case 2: Deactivation of the Armenian–Azerbaijani Conflict The second case illustrates the complementary side of this strategy: the use of conflict deactivation as a mechanism to gain control over critical infrastructure. The Zangezur Corridor, renamed the “Trump Corridor for Peace and International Prosperity” (TRIPP), represents a paradigmatic example of how a major power can insert control points into connectivity networks through the instrumental resolution of conflicts. In August 2025, U.S. mediation in the Armenian–Azerbaijani conflict allowed Washington to obtain exclusive development rights over this corridor for 99 years, effectively transforming what could have been a component of the BRI into an asset under Western control. This maneuver is particularly ingenious because it uses conflict resolution — seemingly a global public good — as a tool for broader geoeconomic objectives. The conflict deactivation strategy operates under a logic that is different but complementary to activation. While activation seeks to generate immediate disruptions in existing corridors, deactivation enables lasting control over critical segments of the connectivity network through the establishment of new contractual and regulatory frameworks that emerge from the peace process. The TRIPP occupies a crucial strategic position within the Eurasian connectivity network. As part of the Trans-Caspian Corridor (the so-called “Middle Corridor”), it provides a direct land route between Central Asia and Europe that bypasses both Russia and Iran. For China, this corridor represented a vital alternative to reduce its dependence on routes controlled by rival powers. However, by securing contractual control over the TRIPP segment through the instrumental deactivation of the conflict, the United States effectively introduced a strategic bottleneck in the middle of this network. The effectiveness of this strategy lies in its ability to condition the use of the corridor without explicitly prohibiting it. Washington can employ a variety of regulatory, tariff, and security instruments to make the transit of Chinese goods more expensive or cumbersome, rendering the route less attractive to traders and investors. This form of “administrative friction” can be as effective as a physical blockade, but with far lower political costs and reduced risks of escalation. Moreover, control over the TRIPP allows the United States to modulate its policy toward the BRI according to its broader strategic needs. During periods of bilateral tension, it can tighten restrictions on the corridor as a form of pressure; during periods of détente, it can ease such measures as a gesture of goodwill. This flexibility transforms the corridor into a permanent bargaining instrument in Sino–American relations. Integrated Logic: Activation and Deactivation of Conflicts as a Containment System The true sophistication of the analyzed cases becomes evident when one understands that the activation and deactivation of conflicts are not isolated tactics, but rather components of an integrated system of geoeconomic containment. The effectiveness of each element is amplified when they operate in coordination, creating a dynamic that maximizes pressure on the BRI while minimizing costs for the implementers. The activation of conflicts generates immediate disruptions and heightens the perception of risk associated with Chinese projects. Simultaneously, the selective deactivation of other conflicts allows rival powers to establish alternative control frameworks that channel trade flows toward systems under their own influence. This combination produces a “push-and-pull” effect: pushing trade away from routes controlled by China through the creation of instability, while pulling it toward alternatives managed by rival powers through the creation of selective stability. The temporal dimension of this integrated strategy is crucial to its effectiveness. Cycles of activation and deactivation can be calibrated to maximize the impact on long-term investment decisions, generating sufficient uncertainty to discourage future commitments — without creating levels of instability that would undermine the broader interests of the implementing powers. Systemic Dynamics The strategies of conflict activation and deactivation go beyond their immediate tactical objectives to generate broader systemic effects on the BRI and on global geopolitical competition. These effects operate across multiple levels and time scales, creating dynamics that can fundamentally alter the strategic calculations of all actors involved. First, these strategies introduce an element of structural uncertainty deeper than that produced by conventional forms of interference. While direct blockades or sanctions are predictable in their application, the manipulation of conflicts introduces elements of volatility that are far more difficult to anticipate and mitigate. International connectivity depends on the predictability and reliability of trade routes, but when those routes become subject to the unpredictable dynamics of strategically activated conflicts, investor and trader confidence in the system as a whole is eroded. Second, the alternation between activation and deactivation creates a pattern of cyclical instability that complicates long-term planning. Investors must consider not only the current state of stability in a region but also the likelihood that latent conflicts may be activated in the future for geoeconomic purposes. This additional consideration translates into demands for higher returns to compensate for perceived risk, thereby increasing the cost of capital for future BRI projects. Third, the strategy of activation and deactivation can generate demonstration effects that shape third countries’ perceptions of the BRI’s viability. When these countries observe that middle powers can effectively disrupt segments of China’s system by manipulating local conflicts, they may feel empowered to adopt more assertive positions in their own negotiations with Beijing. This dynamic can gradually erode China’s position as a preferred partner for infrastructure projects. Finally, these strategies create dangerous precedents for the stability of the international system. If the activation and deactivation of conflicts become normalized as tools of geoeconomic competition, other actors may adopt similar tactics, fostering a more volatile and unpredictable global environment. China’s Counterstrategies The strategies of conflict activation and deactivation do not operate in a strategic vacuum; rather, they generate adaptive responses from China that can alter their long-term effectiveness. Beijing has developed a variety of counterstrategies specifically designed to reduce the vulnerability of the BRI to this kind of indirect interference. One of the most important responses has been the development of mediation and conflict-prevention capabilities. Recognizing that many of the conflicts which can be strategically activated have roots in genuine, unresolved disputes, China has significantly expanded its involvement in international mediation. This approach seeks to address the underlying causes of instability that could otherwise be exploited by rival powers. At the same time, Beijing has intensified efforts to build early warning systems that enable it to anticipate the imminent activation of conflicts in regions critical to the BRI. These systems combine traditional intelligence with big data analysis and predictive modeling to identify patterns suggesting the external manipulation of local tensions. China has also pursued a more systematic geographic diversification of routes and corridors, developing multiple pathways to the same destinations to reduce dependence on any single segment of the network. This strategy of “planned redundancy” increases system costs but also enhances resilience against selective blockades caused by activated conflicts. A third line of response has been the development of specialized financial and insurance instruments for projects in high-risk regions. These tools allow China to maintain the economic viability of BRI projects even in unstable environments, thereby reducing the impact of conflict activation strategies. Future Projections The analysis of conflict activation and deactivation strategies directed against the BRI reveals the growing sophistication of contemporary geopolitical competition. The examined cases demonstrate that rival powers have developed effective methods to condition, fragment, or disrupt large-scale infrastructure projects without resorting to direct military confrontation, instead employing the strategic manipulation of conflicts as a tool of containment. These strategies represent an evolution of traditional forms of containment operating within the geoeconomic domain, using the interdependence of connectivity systems and their vulnerability to regional instability as vectors of strategic influence. Their effectiveness lies not necessarily in their ability to dismantle the BRI entirely, but in their capacity to introduce cyclical frictions and structural uncertainties that diminish the overall attractiveness of the Chinese system. However, the adaptive nature of geopolitical competition suggests that these activation and deactivation strategies will generate countermeasures and counter-countermeasures that continuously reshape the balance of advantages. China’s capacity to develop alternatives and redundancies, combined with its growing mediation and conflict-prevention capabilities, may eventually limit the effectiveness of these containment tactics. In the long term, competition surrounding the BRI will likely evolve into even more sophisticated forms of geoeconomic rivalry, where the ability to create, control, and protect connectivity networks — as well as to manipulate or resolve the conflicts that affect them — will become a fundamental measure of national power. This dynamic will have far-reaching implications not only for the main actors involved but also for the international system, which will need to adapt to an era in which the strategic activation and deactivation of conflicts has emerged as a central tool in great-power competition. The growing sophistication of these strategies suggests that the future of geopolitical competition will be marked by an increasing instrumentalization of regional conflicts for global geoeconomic objectives, creating new challenges for international stability and requiring the development of normative and institutional frameworks adapted to this new reality. References Chatham House. (2025). India-Pakistan ceasefire remains shaky; relations unlikely to return to status quo. https://www.chathamhouse.org/2025/05/india-pakistan-ceasefire-remains-shaky-relations-unlikely-return-status-quo Consejo Previsional Mundial (WPC). (2025). Informe sobre la brecha de infraestructura en Asia y el impacto de la BRI. La división de los BRICS y la guerra que estamos ignorando entre India y Pakistán. (2025, 8 de mayo). Navarra Confidencial. https://www.navarraconfidencial.com/espana/la-division-de-los-brics-y-la-guerra-que-estamos-ignorando-entre-india-y-pakistan/ La iniciativa de la Franja y la Ruta es un proyecto de cooperación internacional presentado por China en 2013, con enfoque en infraestructura, comercio y conectividad. (2025, 1 de septiembre). Lisanews. https://www.lisanews.org/internacional/iniciativa-franja-ruta-que-es-objetivos/ Le Grand Continent. (2025, 10 de agosto). Al firmar un acuerdo de paz entre Armenia y Azerbaiyán, EE.UU. desplaza a Rusia en el Cáucaso Meridional. https://legrandcontinent.eu/es/2025/08/10/al-firmar-un-acuerdo-de-paz-entre-armenia-y-azerbaiyan-ha-desplazado-trump-a-putin-del-caucaso-meridional/ Ministerio de Defensa de España. (2025). La visión estratégica de la República Popular China en la nueva era: Análisis del Libro Blanco sobre Seguridad Nacional. https://www.defensa.gob.es/ceseden/-/ieee/la_vision_estrategica_de_la_republica_popular_china_en_la_nueva_era_analisis_del_libro_blanco_sobre_seguridad_nacional_2025 Nedopil, C. (2025). Países de la Iniciativa del Cinturón y la Ruta (BRI). Green Finance & Development Center. https://greenfdc.org/countries-of-the-belt-and-road-initiative-bri/ Reuters. (2025, 7 de agosto). EE. UU. asegura un corredor de tránsito estratégico en el acuerdo de paz Armenia-Azerbaiyán. https://www.reuters.com/world/us-secures-strategic-transit-corridor-armenia-azerbaijan-peace-deal-2025-08-07/

Beijing’s Victory Day parade in Tiananmen Square was designed to dazzle: ranks of uniformed troops, formations of aircraft, and an arsenal of new systems meant to underscore China’s rapid military modernization. But the most consequential image was not a missile or a stealth jet. It was a tableau of three leaders—Xi Jinping at the center, flanked by Vladimir Putin and Kim Jong Un—watching the spectacle together. The scene, widely broadcast and photographed, turned a commemorative event into a geopolitical marker. It was less a snapshot than a signal: the public normalization of a deepening alignment among China, Russia, and North Korea, at a moment when Western democracies are struggling to sustain cohesion on core strategic questions. The parade itself offered the familiar mixture of hardware and narrative. Coverage highlighted the unveiling or public confirmation of advanced systems across domains: upgraded intercontinental missiles, new submarine-launched ballistic missiles, hypersonic and anti-ship capabilities, long-range bombers, early warning aircraft, and a broad stable of unmanned platforms, including undersea vehicles and “loyal wingman” drones. Chinese media presented these developments as evidence of a “world-class” People’s Liberation Army (PLA) moving beyond legacy constraints and into truly multi-domain operations, with information, space, and cyber now integrated alongside land, sea, and air. Independent reporting catalogued the breadth of systems and emphasized a narrative of credible deterrence and strategic depth rather than mere choreography. Yet the more instructive message was political. The presence of Putin and Kim, alongside other leaders, was not a mere ceremonial occurrence. Each leader arrived with clear incentives to be seen at Xi’s side, and each gained by lending visual weight to Beijing’s story. For Moscow, the image reinforced the claim that Russia is not isolated, that it retains powerful partners and is embedded in a wider non-Western coalition. For Pyongyang, the moment was even more significant: an opportunity to step out of diplomatic isolation and be recognized publicly as a member of a consequential strategic grouping. For Beijing, hosting both leaders signaled that China can convene and coordinate—projecting status, reassuring sympathetic governments, and unsettling adversaries by hinting at a tighter web of cooperation among U.S. rivals. The convergence behind the optics has been building for years, and could have happened only on Chinese soil. China and Russia have expanded their coordination across energy, defense, and diplomatic, even as they preserve maneuvering room on sensitive issues. North Korea’s accelerating exchanges with Russia, alongside growing political warmth with Beijing, provide a third leg to this emerging tripod. None of this amounts to a formal alliance with mutual defense obligations. But it does resemble a strategic alignment held together by shared interests: resisting a U.S.-led order, blunting sanctions pressure, reducing vulnerability to Western technology restrictions, and demonstrating that alternatives exist to dollar-centric finance and Western supply chains. The choreography on the rostrum did not create this alignment; it made it more legible and clear. Memory politics is a key component of that legibility. Beijing’s decision to anchor the parade in the commemoration of victory over Japan allows contemporary power projection to be cloaked in a unifying moral narrative. China increasingly leverages World War II memory in diplomacy—shaping a “memory war” that reframes the post-1945 order and what is seen from China as its rightful place within it. Russia’s long-standing use of the “Great Patriotic War” plays a parallel role, justifying current policies through selective historical continuity. North Korea’s revolutionary mythology fits easily into this narrative architecture. By standing together at an anniversary of anti-fascist victory, the three leaders signaled an ideational convergence that complements their material cooperation: a claim to moral legitimacy as guardians of an alternative international vision. The military dimension of the parade, while not the core of this argument, still matters. Displays of a maturing triad—land-based ICBMs, submarine-launched systems, and an air-launched nuclear component—aim to convey survivable second-strike capacity. The public presentation of hypersonic and anti-ship systems is meant to complicate adversary planning in the Western Pacific. The range of unmanned platforms suggests an intent to saturate domains with relatively low-cost, attritable assets, improving persistence and compressing the sensor-to-shooter loop. It is prudent to treat parades cautiously: not all showcased systems are fully operational or fielded at scale, and performance claims are difficult to validate. But as an indicator, the breadth and integration of platforms reflect a planning culture committed to joint operations and “intelligentized” warfare, where AI-enabled targeting and decision support are not theoretical ambitions but programmatic priorities What, then, does the image of Xi–Putin–Kim actually change? First, it clarifies expectations. Observers no longer need to infer the trajectory of this triangular relationship from scattered bilateral overtures. The three leaders have chosen to make their alignment visible. Visibility creates deterrent value, raising the perceived costs of coercing any one member, and it can also facilitate practical cooperation: intelligence sharing, diplomatic coordination at the UN and other fora, synchronized signaling during regional crises, and mutually reinforcing sanctions-evasion practices. Second, it complicates Western planning. Even if Beijing keeps caution around direct military assistance in Europe or the Korean Peninsula, diplomatic top-cover, economic buffering, and technology flows short of lethal aid can still alter the correlation of forces over time. Finally, it resonates across the Global South. Many governments seek strategic autonomy and resist being forced into binary choices. The parade’s optics supplied a ready-made narrative for those who argue that the international system is already multipolar and that non-Western coalitions can deliver security and development without Western tutelage. The contrast with Western coordination was strikingly evident. In the transatlantic community, support for Ukraine remains substantial; however, debates about resource levels, war aims, and timelines have intensified. In the Indo-Pacific, there is a growing alignment on deterring coercion in the Taiwan Strait and the South China Sea; however, national economic interests and differing risk tolerances result in uneven policies toward China. Across Europe and North America, electoral politics continue to inject volatility into foreign policy, complicating efforts to sustain long-term, bipartisan strategies. None of these frictions amounts to collapse, and there are genuine Western successes in coalition-building—from NATO enlargement to evolving minilateral formats in the Indo-Pacific. However, an analytically honest reading of the moment acknowledges that the authoritarian trio in Beijing has projected a unity of purpose that Western capitals currently struggle to match consistently. Three implications follow. The first is narrative competition. If Beijing, Moscow, and Pyongyang can turn a commemorative event into a global story about legitimacy and resilience, they will continue to use history as a strategic resource. The appropriate Western response is not to cede the narrative field but to invest in historically grounded, forward-looking messaging that explains the link between rules-based order and practical benefits—trade reliability, crisis management, and sovereignty protection—for diverse audiences. The second is coalition maintenance. Western policymakers will need to prioritize “coalition hygiene”: aligning export controls and investment screening where it matters most; building redundancy into critical supply chains; closing divergences in sanctions enforcement; and coordinating messaging so that tactical differences do not obscure strategic alignment. This requires political discipline more than new institutions. The third is theater integration. As the Beijing image suggested a cross-regional understanding among three adversarial capitals, allied planning must better account for cross-theater linkages—how actions in Europe affect deterrence in Asia, and vice versa—and ensure that resource allocations and industrial policies reflect genuinely global prioritization. It is important not to overstate. The emerging alignment among China, Russia, and North Korea is asymmetric and interest-based, not a tightly binding alliance. Beijing’s global economic integration imposes constraints that Moscow and Pyongyang do not share. Russia and North Korea each bring liabilities that China will manage carefully. Frictions—over technology, pricing, and regional equities—will persist. But the threshold crossed in Beijing is nonetheless meaningful. These governments judged that the benefits of public proximity now outweigh the costs. That judgment, once made, is difficult to reverse quickly; it tends to generate its own momentum through bureaucratic follow-through and sunk reputational costs. One image cannot rewrite the balance of power. It can, however, crystallize a trend and concentrate minds. The sight of Xi, Putin, and Kim standing together did exactly that. It captured an authoritarian convergence rooted in shared grievances and converging strategies, and it highlighted the challenge facing democracies that wish to preserve an open and stable order: maintaining the patience, unity, and policy discipline to act together. The test for the West is less whether it recognizes the signal—most capitals do—than whether it can convert recognition into sustained, collective action. If Beijing’s parade was a demonstration of choreography and intent, the appropriate answer is not a counter-parade, but the quieter work of alignment: aligning narratives with interests, interests with instruments, and instruments with partners. That work is not glamorous. It is, however, what turns a photo into policy.

Introduction Geopolitical tensions are making global trade increasingly difficult. In order to reduce the associated risk of default, companies are shifting their trade relations to trading partners that are politically similar to them. In the course of the beginnings of geo-economic fragmentation, politically and economically like-minded countries are also gaining in importance for German and European decision-makers. Liaison countries1 in particular can form a counterforce to the trend towards polarization in foreign trade - especially between the USA and China: they are characterized by a pronounced economic and trade policy openness that overrides differences between geopolitical or ideological camps. Consequently, the question arises: How can relevant connecting countries for Germany and Europe be identified? What opportunities and risks do closer trade relations with these countries offer in order to strengthen foreign trade resilience in geopolitically uncertain times?  With a high degree of openness - defined as the sum of imports and exports in relation to gross domestic product - of over 80 percent2 , the German economy is strongly integrated into global trade. Accordingly, the disruptive effect of geo-economic fragmentation on the German economy would be above average. The defensive strategy to strengthen Germany's economic security by pushing for trade policy independence would only reinforce geo-economic fragmentation. Against the backdrop of comparatively high economic vulnerability, it is necessary to focus on those potential partner countries with which German and European foreign trade could be developed and expanded even under the condition of increasing fragmentation.  Geoeconomic Fragmentation  The term "geo-economic fragmentation" is used to describe the politically motivated reorganization of global goods and financial flows, in which strategic, economic and political interests primarily determine the choice of countries of origin and destination for trade flows.3 In the scenario of geo-economic fragmentation, the result would be the formation of a bloc within the global community of states, which would fundamentally change the regulatory structure of global economic networking. In this case, trade and investment would probably concentrate from a previously diverse range of economic partner countries - prior to the formation of the bloc - on those countries that now - since the formation of the bloc - belong to the same bloc.  The likelihood of this scenario occurring and leading to an increased fragmentation of the global economic order has increased again in the recent past. For example, Donald Trump's second term as US president is causing increasing geopolitical uncertainty worldwide.  Statements on the concrete form of a possible demarcation of potential blocs are subject to a great deal of uncertainty. However, the division of a large part of the global economy into a "US bloc" and a "China bloc" is a conceivable scenario for which German politics and business should prepare.  Data already shows that, at a global level, foreign trade openness has decreased in the recent past. Data from the World Trade Organization (WTO) illustrates the increasing hurdles in global trade in goods. While 3.1% of global imports were still affected by tariff or non-tariff barriers to trade in 2016 - including under WTO rules - this figure rose to 11.8% in 2024 over the following years.4 This development goes hand in hand with a noticeable loss of importance and enforcement of the WTO since the 2010s, which previously played a central role as the guardian of the rules-based global economic order.  Studies by the International Monetary Fund (IMF) have already found indications of an incipient geo-economic fragmentation along potential bloc borders. It shows that trade in goods and foreign direct investment between countries that would belong to the opposing camp in the event of a bloc formation declined on average in 2022 and 2023 - in contrast to foreign trade between countries that are geopolitically close.5  In this initial phase of geo-economic fragmentation, liaison countries are beginning to establish themselves as a counterforce, holding the fragmenting global community of states together with new trade and investment routes.  Identification of liaison countries Specifically, liaison countries have the following characteristics: a pronounced openness to foreign trade in the form of a high foreign trade quota and low tariff and non-tariff trade barriers, as well as pronounced economic relations with partner countries from different geopolitical camps. The geopolitical orientation of countries can be examined using data on voting behavior within the United Nations.6 This involves analyzing whether a country can be assigned to the US or Chinese camp - or whether there is no pronounced proximity and therefore political neutrality or "non-alignment" in the sense of ideological independence. The data-based identification of connecting countries is relatively new. Empirical analyses are also limited to connecting countries in the context of US-Chinese foreign trade - specifically US imports from China. In this case, the characteristics of a connecting country can be broken down into (1) "non-alignment" - i.e. a geopolitical distance to both a Western and an Eastern bloc - as well as (2) an increase in imports and foreign investment from China and (3) a simultaneous increase in exports to the United States. In a narrower sense, this is an evasive reaction to trade restrictions, i.e. circumventing trade. If the foreign trade indicators - specifically the trade and investment data relating to the US and China - of "non-aligned" countries for the period from 2017 to 2020 show corresponding characteristic-related changes compared to previous years, these can be identified as countries connecting the US and China.  The analysis of trade data shows that the value of direct exports from China to the USA fell during Donald Trump's first term in office. At the same time, both Chinese exports to some of the "non-aligned" countries and exports from these countries to the USA have increased significantly. These countries have presumably stepped in as a link on the export route from China to the US after the previously direct trade flow was interrupted by trade barriers and had to find a new route. Companies producing in China are therefore likely to have sought new, indirect ways to maintain access to the US sales market.  A certain statistical inaccuracy in the foreign trade data makes it difficult to draw a definitive conclusion in this context. It should be noted: No single commodity can be tracked across national borders in trade data collection. Whether the additional goods imported from China actually found their way to the United States can only be assumed approximately. However, if the trade flows are aggregated, a clearer picture emerges and the circumvention trade via selected connecting countries - including Vietnam and Mexico - becomes visible.  Data on foreign direct investment rounds off the analysis.7 "Non-aligned" countries in which an increase in Chinese investment can be seen between 2016 and 2020 in addition to trade flows can be identified as connecting countries. Here, too, available data suggests that the companies concerned either exported their goods to the United States via a stopover or even outsourced parts of their production destined for the US market to connecting countries. Five connecting countries between the US and China Based on the 2017-2020 study period, various connecting countries can be empirically identified that were used to indirectly maintain access to the US market. In terms of foreign trade volume, the economically most important connecting countries include Mexico, Vietnam, Poland, Morocco and Indonesia.8 All five countries are characterized by the fact that both their exports of goods to the US and their imports of goods from China increased significantly between 2017 and 2020. In addition, greenfield investments (foreign direct investment to set up a new production facility) have risen significantly compared to the period before 2017.  However, the five countries show different priorities in their development, which differentiate them in their role as connecting countries between the USA and China. In Vietnam, exports to the USA in particular have risen sharply. China has been the most important procurement market for Vietnamese companies for years. Poland, Mexico and Indonesia are characterized as connecting countries primarily by the significant increase in imports from China. Morocco, in turn, was able to attract more Chinese foreign investment in particular. Greenfield investments have almost tripled here since 2017. However, Poland - a rather surprising candidate for the role of liaison country, as it is intuitively assigned to the US-oriented bloc - is positioned fairly centrally between the US and China according to the analysis of voting behavior within the United Nations9. In addition, Poland qualifies primarily due to the sharp rise in greenfield investments from China, primarily in the expansion of domestic battery production.10  It cannot be concluded from the previous studies on the USA and China whether German companies are also circumventing trade barriers from the USA via the countries identified. As the trade policy conflicts between the US and China differ significantly from those between the EU and China, there has been a lack of comparable empirical data to analyze connecting countries in the EU context. Opportunities and challenges As the German economy is strongly oriented towards foreign trade and is closely networked with both the USA and China, German companies play a particularly exposed role in the area of tension between the USA and China. Increased economic exchange with potential connecting countries would offer German companies an opportunity to mitigate the expected shock of a geopolitical bloc. They could at least maintain international trade to a certain extent and thus secure some of the endangered sales and procurement markets. On the other hand, there are also costs associated with expanding foreign trade relations with potential connecting countries. The greater complexity also increases the risk in the value chains. Companies that position themselves wisely within this trade-off buy themselves valuable time in the event of a shock to reorganize themselves against the backdrop of changed foreign trade conditions.  From the perspective of foreign trade policy, it is also possible to examine the extent to which stronger foreign trade cooperation with (potential) connecting countries could have advantages. The trade-off between resilience and complexity must then be assessed at a macroeconomic level, beyond individual company interests. In order to make it easier for companies to connect to potential connecting countries and to create appropriate framework conditions, German and European policy can build on existing comprehensive strategies at national and European level. Both the China Strategy11 and the National Security Strategy12 focus foreign policy on connecting countries as part of a stronger economic and political risk diversification. There is also a similar framework at European level with the EU's Strategic Compass13 . Following on from this, the German government could create targeted incentives to open up new markets in liaison countries, which would diversify critical supply chains and reduce one-sided dependencies.  At the same time, connecting countries pose a challenge. These can be used to circumvent foreign trade measures such as sanctions if flows of goods can find alternative routes via connecting countries more easily than before.  In order to realize opportunities and overcome challenges, close cooperation between science, politics and companies is required. This first requires the identification of a selection of potential connecting countries through scientifically sound analysis. This creates the basis for the subsequent steps in which European and German policymakers work closely with companies to create attractive framework conditions for trade with potential connecting countries - for example through bilateral trade agreements.  Attractive foreign trade framework conditions can create the necessary incentive to actually expand trade relations with potential connecting countries. Companies need to weigh up individual cases and make forward-looking decisions: To what extent is there a risk of a loss of production triggered by geopolitical conflicts? And how much would the complexity of the value chain increase if more potential connecting countries were included? Ultimately, the actual choice of preferred sales and procurement markets lies with the individual companies. LicenseThis work is licensed under CC BY 4.0 References1. Verbindungsländer werden im Sinne von Connectors verstanden, vgl. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>. 2. Statistisches Bundesamt (Destatis), Außenwirtschaft. 2025, <https://www.destatis.de/DE/Themen/Wirtschaft/Globalisierungsindikatoren/aussenwirtschaft.html#246 078/>.  3. Shekahar Aiyar/Franziska Ohnsorge, Geoeconomic Fragmentation and ‚Connector’ Countries, Online verfügbar unter:  <https://mpra.ub.uni-muenchen.de/121726/1/MPRA_paper_121726.pdf>.4. WTO, WTO Trade Monitoring Report, Genf, November 2024, <https://www.wto.org/english/tratop_e/tpr_e/factsheet_dec24_e.pdf/>. 5. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>.  6. Michael A. Bailey/Anton Strezhnev/Erik Voeten, »Estimating Dynamic State Preferences from United Nations Voting Data«, Journal of Conflict Resolution, 61 (2017) 2, S. 430-456, <https://journals.sagepub.com/doi/10.1177/0022002715595700/>.7. Gita Gopinath/Pierre-Olivier Gourinchas/Andrea F Presbitero/Petia Topalova, Changing Global Linkages: A New Cold War?, Washington, D.C.: IMF, April 2024 (IMF Working Paper) <https://www.imf.org/en/Publications/WP/Issues/2024/04/05/Changing-Global-Linkages-A-New-ColdWar-547357/>. War-547357. 8. Enda Curran/Shawn Donnan/Maeva Cousin, »These Five Countries are Key Economic ‚Connectors‘ in a Fragmenting World«, in Bloomberg (online), 1.11.2023, <https://www.bloomberg.com/news/articles/2023-1102/vietnam-poland-mexico-morocco-benefit-from-us-china-tensions/>.9. Michael A. Bailey/Anton Strezhnev/Erik Voeten, »Estimating Dynamic State Preferences from United Nations Voting Data«, Journal of Conflict Resolution, 61 (2017) 2, S. 430-456, <https://journals.sagepub.com/doi/10.1177/0022002715595700/>.  10. Enda Curran/Shawn Donnan/Maeva Cousin, »These Five Countries are Key Economic ‚Connectors‘ in a Fragmenting World«, in Bloomberg (online), 1.11.2023, <https://www.bloomberg.com/news/articles/202311-02/vietnam-poland-mexico-morocco-benefit-from-us-china-tensions/>.11. Auswärtiges Amt, China‐Strategie der Bundesregierung, Berlin, Juli 2023, <https://www.auswaertigesamt.de/resource/blob/2608578/810fdade376b1467f20bdb697b2acd58/china-strategie-data.pdf/>.  12. Auswärtiges Amt, Integrierte Sicherheit für Deutschland: Nationale Sicherheitsstrategie, Berlin, Juni 2023, <https://www.bmvg.de/resource/blob/5636374/38287252c5442b786ac5d0036ebb237b/nationalesicherheitsstrategie-data.pdf/>.  13. Rat der Europäischen Union, Ein Strategischer Kompass für Sicherheit und Verteidigung, Brüssel, März 2022, <https://data.consilium.europa.eu/doc/document/ST-7371-2022-INIT/de/pdf/>.

As AI accelerates, the US and China shape the global governance landscape through parallel ambitions and contrasting ideologies. Understanding their policy trajectories reveals key inflection points for potential engagement. The United States and China are the world’s leading powers in artificial intelligence (AI)—and each has global ambitions. As AI development accelerates, so too do calls to regulate it responsibly. Both countries have the capacity to shape the future of AI governance. But understanding where cooperation might be possible requires understanding how each country’s approach has evolved. While their methods and ideologies differ, and their leadership aspirations often appear at odds, two underexamined forces—infrastructure and philosophy—may create unexpected space for mutual engagement. In the US, AI governance has long been shaped by the mythology of the free market. Under President Barack Obama, that mythology was tempered by calls for pipeline diversity. President Donald Trump discarded these in favour of rhetoric about “American values,” an ill-defined phrase deployed more as a competitive cudgel against China than a coherent policy vision. President Joe Biden attempted to resurrect some of Obama’s normative commitments—launching the Blueprint for an AI Bill of Rights, Executive Order 14110 on “safe, secure, and trustworthy AI,” and initiatives like the National AI Research Resource—but the foundations of his administration’s policies remained countering China’s influence through increased export controls and other measures. Trump’s second administration has once again changed focus away from equity and community-centredness, but the continued focus on competing with China and ensuring US “victory” in the “AI race” shows there’s more continuity than often assumed between different administrations’ AI approaches. China, for its part, has been more consistent in its governance strategy, even as it experiments at the margins. Its 2017 New Generation AI Development Plan cast AI as a pillar of national strength, and subsequent regulations on algorithms, deepfakes, generative AI, and facial recognition underscore a clear priority: balancing the “twin miracles” of economic development and social stability. Though early days of “fragmented authoritarianism” have given way to a more centralised approach with specific vertical laws, this logic remains embedded throughout the governance system. China is generally less explicit in its rhetoric than the US, with fewer exhortations about race dynamics and countering the US. In fact, it frequently invokes ideas of ethical pluralism and the language of international cooperation. This framing likely reflects a blend of genuine ideological positioning and diplomatic strategy, but it presents a challenge to US policymakers who continue to frame AI governance in moralising binaries. This is evident in two parallel AI Action Plans released in July 2025. The US released a guiding document—indicatively titled “Winning the Race: America’s AI Action Plan”—with an epigraph from President Trump stating: “As our global competitors race to exploit these technologies, it is a national security imperative for the United States to achieve and maintain unquestioned and unchallenged global technological dominance.” Though the Action Plan itself contains only three substantive references to China, it is built on the premise that global AI is an inherently competitive “race,” and China is clearly the US’s main competitor. A few days after the US AI Action Plan was released, China released its “Global AI Governance Action Plan.” It builds on the 2023 Global AI Governance Initiative, which seeks to portray China as a leader in the global pursuit of AI for the good of humanity and a “champion of the Global South.” The Global AI Governance Action Plan contains fewer specifics than the US AI Action Plan, but calls for “strengthening international cooperation on AI capacity building,” including supporting developing countries to design, implement, and govern AI. It also calls for building a global AI governance system through the UN and again shows the key balance of economic development and social stability: while it acknowledges the need to “jointly push for innovation breakthroughs,” it also advocates for strengthening “policy and regulatory coordination” and building an international AI safety governance framework. The US, on the other hand, is determined to cut “bureaucratic red tape and onerous regulation” while working primarily with its allies. However, recent events have called into question the feasibility of this approach. Notably, despite calls to increase export controls—and mobilise allies to do the same—the US announced shortly before the release of the AI Action Plan that it would again permit Nvidia to export H20 chips to China after previously restricting them. This was part of a trade deal in which China agreed to lighten restrictions on rare earth exports. Though seemingly counterintuitive, this deal reflects a fundamental reality of the modern AI ecosystem: the resources and supply chains enabling it are inextricably intertwined. China mines roughly 70 percent and processes 90 percent of rare earth minerals. US-based Nvidia has 92 percent of the GPU market. Both of these are critical for progress in AI. Both countries are attempting infrastructure decoupling, but the US may have to compromise on its fundamentalism to maintain access to the critical resources it needs. Meanwhile, its advanced chip dominance in turn provides leverage over China. Will this lead to broader cooperation? Geopolitical issues are likely too entrenched for each country to join hands and promote harmonious global AI governance. However, each country’s primary goal is the same: to benefit the “people.” China is claiming that its definition of “the people” is the global community—though this comes with the noted exclusion of domestic critics, including the Uighurs of Xinjiang, who are subject to AI-enabled surveillance and detention. The US’s definition of “the people” has changed from administration to administration, but currently seems to include the American people and potentially allied nations. It’s doubtful that the current administration will agree to substantive global AI governance discussions. But through its Action Plan, China has thrown down the gauntlet—engage with global AI governance or be an obstructionist. What the US will choose remains to be seen. Emmie Hine is a Research Associate at the Yale Digital Ethics Center and a PhD candidate in Law, Science, and Technology at the University of Bologna and KU Leuven. She researches the ethics and governance of emerging technologies, including AI. You can also find her byline in her weekly tech-focused newsletter, the Ethical Reckoner. Emmie holds degrees from Williams College and the University of Oxford, and previously worked as a software engineer. She’s on Bluesky here and X here. This article is published under a Creative Commons License and may be republished with attribution.