China and the Reordering of Power
Not "who wins" but what is actually changing. Sixty years of American single-power dominance is ending on measurable terms - economy, manufacturing, technology, military, alliances.
(about 65% of the US economy and growing roughly twice as fast)
(relative to the United States)
(about a third of the US, growing at roughly twice the pace)
A note on framing. This page is about what has actually changed, not about who is good or bad. Both the "China is unstoppable" and "China is collapsing" framings get more attention than they deserve. The data tells a more careful story: a real and historic shift in some dimensions, much slower change in others, and several genuine question marks that even careful analysts disagree about. Where the chart shows a clear trend, we say so. Where reasonable people read the data differently, we say that too.
The size and the speed
In 1990, China's economy was about 6% the size of the United States economy at exchange rates. Today it is about 65%. There has been no other shift of comparable scale in modern economic history - the US itself overtook the United Kingdom over roughly the same number of decades, but the British Empire was a far smaller starting point relative to the world it sat inside. China starting from a poor agricultural base and reaching the world's second-largest economy in a single generation has no clean precedent.
On purchasing power parity - a different way of measuring economy size that adjusts for the fact that things cost less in China - China passed the United States around 2017. By that measure China is now the larger economy by roughly a fifth. Which measure is "right"? Both are. Purchasing power parity better captures what citizens of each country can actually afford with the money they earn at home. Current dollars better captures what each country can buy from the rest of the world. The story changes depending on which question you are asking.
The harder question is whether the growth rate continues. Chinese economic growth has slowed from double-digit annual rates a decade ago to roughly 4 to 5% today. The reasons are structural and well-documented: a shrinking working-age population, very high household savings rates that depress consumer spending, a property sector that absorbed enormous quantities of capital in unproductive construction, and an investment-led model that increasingly produces less growth per dollar invested. Whether China can shift to a consumer-driven, services-driven growth model in time to ride past these headwinds is one of the largest open questions in global economics. Some careful analysts (Michael Pettis among them) think the headwinds will dominate. Others think the next phase of growth will come from technology and high-end manufacturing rather than property and infrastructure. Both views remain credible.
Manufacturing is the deepest part of the story
China overtook the United States in manufacturing output around 2010 and now produces roughly twice as much manufactured value each year. This is the part of the rise that is genuinely structural rather than cyclical. Manufacturing depends on physical infrastructure, supply-chain depth, skilled workforce, and decades of accumulated industrial know-how. It does not move quickly when conditions change.
What does this look like in practice? China makes more than half of the world's steel, more than half of the world's cement, around 80% of the world's solar panels, around 70% of the world's electric vehicle batteries, and the majority of the world's smartphones, ships, and consumer electronics. In some industries this concentration is even sharper: China refines roughly 80% of the world's rare-earth metals and dominates the processing of lithium, cobalt, and several other metals critical to the clean-energy build-out.
This concentration was not an accident. The Chinese government targeted strategic industries, subsidised them heavily, protected them from foreign competition during their early years, and then released them onto global markets at scale once they were strong enough to win on cost. The same playbook that Korea, Japan, and the United States itself used in earlier eras - just executed at a far larger size and with much more state coordination than any of those predecessors. State-led industrial policy is not a guaranteed success path - India's pre-1991 licence-raj system, the Latin American import-substitution-industrialisation programmes of the 1960s-80s, and a long list of African industrial-policy efforts produced poor outcomes from broadly similar tools. China's specific combination of conditions (a large unified internal market, integration with Western export demand, technology absorption from foreign joint ventures, sustained policy continuity across decades, and labour-cost arbitrage) is not easily replicable elsewhere. Whether the Chinese execution constituted "fair" competition is contested. Whether it worked, for China specifically, is not.
The military buildup
Chinese military spending has roughly tripled since 2010, from about $115 billion to $314 billion in 2024 at market exchange rates. The United States outspends China by a factor of roughly three at that measure (about $1 trillion in 2024). On a purchasing-power-adjusted basis the gap is meaningfully smaller - Chinese military procurement, conscript pay, and infrastructure cost substantially less in local terms, so the same dollar buys more capability. SIPRI and other careful estimators routinely note that nominal Chinese military spending understates real capability by something like a factor of two; on that adjusted basis Chinese spending is closer to half of US spending rather than a third. The rate of change is going the other way regardless of which measure is used: Chinese spending has grown faster than its overall economy for most of the last two decades, and the gap has been narrowing every year.
Even more important than the spending is what it has been spent on. China has built more naval ships in the last fifteen years than any other country in modern history. By number of ships, the Chinese navy is now the world's largest, though the US navy remains larger by total displacement and has more carrier groups. China has fielded the DF-21D and DF-26B "carrier killer" anti-ship ballistic missile systems alongside an extensive A2/AD (anti-access / area denial) network in the Western Pacific. The Pentagon and Western strategists describe these as capabilities designed to threaten US carrier operations in any Taiwan-related crisis; Chinese strategic literature frames them as defensive systems that deter US carrier diplomacy off China's coast and reduce the asymmetry that allowed the US to dispatch two carrier battle groups to the Taiwan Strait in 1996 without Chinese ability to respond. Both framings describe the same capability with different intent attribution. China has also modernised its nuclear arsenal and built capabilities in space and cyberspace that did not exist a decade ago. The strategic geography of the Western Pacific has been reshaped in roughly fifteen years.
The single piece of geography that matters most is Taiwan, and Taiwan deserves its own careful treatment - which it gets in a separate piece on this site. For the purposes of this page, the military buildup matters because it has changed what is and is not possible in the region: a US military intervention in a Taiwan crisis is a much more contested proposition in 2026 than it was in 2006, and the Pentagon's own war games of recent years have stopped assuming clean American victory.
Technology and research
China spends about 2.6% of its economy on research and development. The United States spends about 3.5%. By share, the US still leads. But because the Chinese economy is larger than 65% of the American number, the absolute gap on annual research spending is small and narrowing. On a "purchasing power" basis (what each dollar actually buys at local prices), Chinese research spending may already be roughly equivalent to American research spending in raw input terms.
What that money has produced is mixed. China leads the world in patents filed annually, though the average quality of a Chinese patent is generally lower than the average American or European one. China publishes more scientific papers than any other country and now produces a larger share of the most-cited papers than the United States in several scientific fields. Chinese universities have moved up the global rankings, though the top tier of US institutions still dominates the very top of those rankings.
On specific frontier technologies the picture is clearer. China leads decisively in solar, batteries, electric vehicles, drones, commercial shipbuilding, and high-speed rail. The United States leads in advanced semiconductors at the leading node, biotechnology, aerospace, and most of the software platforms used worldwide. AI is the most contested category: the United States retains a lead on the frontier (OpenAI, Anthropic, Google DeepMind), but the DeepSeek R1 release in January 2025 demonstrated that the gap was narrower than US labs had assumed and that Chinese teams (DeepSeek, Alibaba's Qwen, Moonshot, Baichuan) could approach frontier capability at substantially lower training cost. Whether the US lead in AI remains durable in the second half of the decade is genuinely contested. Across all of these categories the question of who will lead a decade from now depends on choices that have not yet been made on either side.
How the dimensions actually compare
"China rising" is one phrase that covers many separate categories. Some are clearly past their American counterparts. Some are far behind and unlikely to catch up soon. Looking at them one at a time gives a sharper picture than any single headline.
The honest summary: in the categories that depend on physical scale - manufacturing, real-economy size, regional military weight - China has either passed the United States or is closing the gap fast. In the categories that depend on accumulated formal commitments, network effects, and embedded global infrastructure - mutual-defence treaties, reserve currency, English-language cultural reach - the United States retains a substantial lead that has been built over generations and changes very slowly. (China has its own networks - BRICS+, the Shanghai Cooperation Organisation, comprehensive strategic partnerships across the Global South, the renminbi clearing system, the Belt and Road relationships - which run on different rules and at smaller scale, but are not absent.) Whether this will rebalance further depends on choices both countries are making right now.
The paths from here
Neither country has a clean off-ramp. The relationship is too entangled to fully separate, too competitive to fully cooperate, and too consequential for the rest of the world to ignore. Each path below is one realistic shape the next decade could take.
Continued drift toward two centres
The world keeps moving away from a single American centre toward two roughly comparable ones, with neither side clearly winning. Trade, technology, and finance increasingly run on parallel tracks that overlap less each year.
Will it happen? Already happening, gradually. This is the path of least resistance and the one most consistent with the data. Most countries (especially in Asia, Africa, and the Middle East) prefer not to choose sides and will work hard to keep relationships with both. The US and China will keep edging apart in technology and finance while staying entangled in trade.
Formal economic separation
Tariffs, export controls, sanctions, and investment restrictions deepen until the two economies are largely walled off from each other in most sensitive sectors. Companies pick sides. Supply chains split. Cross-border investment falls.
Will it happen? Partly already happening. The semiconductor restrictions are the clearest example, and they have been tightening on both sides since 2018. Full separation across all sectors is unlikely because the cost would be enormous for both economies, but partial decoupling on technology, defence, and "dual-use" goods is the realistic trajectory.
An open confrontation
A crisis - most plausibly over Taiwan - escalates into actual military conflict. The reason this remains a real possibility rather than a thought experiment is that both sides' commitments are now public, both have real military capability in the area, and neither can fully back down without huge domestic political cost.
Will it happen? Both governments are working hard to avoid this and both have strong reasons to. But the structure is unstable in the way that pre-1914 Europe was unstable: a single major incident, mishandled, could escalate faster than either side intends. Estimates of the probability vary widely depending on the analyst's institutional position and time horizon. Calibrated forecasts from Western strategic-studies bodies (RAND scenario work, CSIS, the Pentagon's published war-game outputs) and from Western expert surveys (the Council on Foreign Relations annual Preventive Priorities Survey) cluster in the 5-15% range for the next decade. Chinese-published analysis from Tsinghua and Beijing-based think tanks generally frames the probability as low absent specific Taiwan-side or US-side provocations. The number itself is more useful as "low but not negligible" than as a precise estimate; no party making these forecasts has a strong track record on conflict prediction.
China stalls before catching up
Demographic decline, debt overhang, property sector damage, and political over-centralisation slow Chinese growth enough that the catch-up never completes. China stays a major power but does not become an equal of the United States on most measures.
Will it happen? Plausible. China's demographic curve is harsher than Japan's was at a similar stage, and its debt-to-economy ratio is now higher than most developed countries had at China's level of income. The optimists assume China will keep growing fast enough to fully close the gap; the pessimists think it will look more like Japan after 1990 - an aging economy stuck in slow growth at roughly 70% of the US level rather than passing it.
Managed coexistence with rules
The two governments work out a stable framework: agreed limits on tech transfer, agreed redlines on Taiwan, agreed channels for crisis communication, agreed division of which institutions each side dominates. A new equilibrium that resembles the late Cold War rather than the dangerous early years.
Will it happen? This is what most professional foreign-policy people in both countries say they want, but it has been hard to build in practice. Each side's domestic politics keeps tearing up agreements. A version of this could arrive in the second half of the 2030s after the current generation of leaders steps back, but the path there is bumpy.
Internal Chinese political shift
A change in Chinese leadership, either through formal succession or through political pressure inside the Communist Party, leads to a course correction: less ideological foreign policy, more emphasis on economic recovery, less confrontation with the US.
Will it happen? Genuinely unpredictable. Xi Jinping has consolidated power further than any Chinese leader since Mao, and the formal succession will not be settled for years. Most Western analysts read this as making policy more rigid for now and harder to change without a crisis. Most Chinese analysts in the West argue that Chinese politics has surprised observers before and could again. Both views deserve weight.
Alliance reconfiguration
The traditional US-led system reorganises. European countries hedge more between Washington and Beijing. Middle powers (India, Indonesia, Brazil, South Africa) refuse to choose. BRICS and similar groupings grow into actual alternative institutions rather than slogans. The US-led system shrinks but tightens; the rest of the world becomes more openly multi-aligned.
Will it happen? Already underway. The composition of who sides with whom on any given vote at the United Nations has shifted noticeably in the last decade. The new alignments are looser and less ideological than Cold War alignments were, and they reshuffle issue by issue rather than sticking to a fixed bloc structure.
The realistic forecast is, again, a mix rather than a single path. Continued drift toward two centres is the base case; partial decoupling on technology continues; a crisis-free decade is more likely than a confrontation but not guaranteed; China's growth slows but does not reverse; the rest of the world hedges more and more openly. The single most useful question for any reader is not "who will win" but "how do my own decisions look across these scenarios?"
Where serious analysts disagree
China is one of the most contested topics in modern foreign-policy analysis, and the careful disagreements are more illuminating than the loud headlines. Each of the readings below is held by named analysts whose work is worth reading directly, and the data does not cleanly resolve any of them.
The rise is overstated and is already past its peak
China's catch-up era is essentially over. Demographic shrinkage, debt overhang, property-sector damage, and politically-driven over-investment will slow growth to a Japan-like crawl over the next decade. The country may stay big, but it will not become a peer of the United States, and the talk of imminent Chinese dominance was always an extrapolation from numbers that were already fading.
Held by: Michael Beckley and Hal Brands (the "Danger Zone" thesis), Michael Pettis on the economic side, and a growing fraction of US-based China-watchers. Their data on demographics and capital efficiency is solid; the open question is how long structural slowdown takes to fully arrive.
A US-China equal-power world is the structural reality and the West refuses to see it
The data has been pointing toward a rebalance for thirty years. Western strategy still mostly assumes American primacy as the natural state of affairs. That assumption is now wrong, and the cost of acting on it is dangerous - both for the West, which keeps making promises it cannot keep, and for the world, which gets a more brittle order than it would have if Washington had adjusted earlier.
Held by: Hugh White (Australian National University), and a school of strategic realists in Australia, Singapore, and parts of Europe. Their argument is uncomfortable in Washington but the data underneath it is largely the same data this page uses.
The cold-war framing misreads what's actually happening
The US and China are far more economically interdependent than the US and Soviet Union ever were. The system that emerged after the 2008 financial crisis is something genuinely new - simultaneously competitive and integrated, with finance and supply chains and migration flows that connect the two countries in ways neither side fully controls. Forcing this into a "cold war" frame causes both governments to make choices that fit the frame rather than the reality.
Held by: Adam Tooze and a cluster of historians and political economists who argue that the current relationship has no clean historical precedent. The implication is that policy improvised from older templates (containment, balance of power, decoupling) is likely to produce worse outcomes than a framework built honestly for the actual situation.
The Chinese system has its own legitimacy worth understanding
Western coverage of China tends to treat the country's political system as illegitimate by default and to read every Chinese policy choice through the lens of "is China becoming more like a Western democracy." This misses how the Chinese system actually works, what its citizens actually want from it, and the ways in which it has its own forms of accountability that do not map onto multi-party elections. China is not just a flawed version of a Western country.
Held by: Daniel Bell (Canadian-Chinese political theorist at Shandong University, author of "The China Model"), Eric Li (Shanghai-based venture capitalist and CCP-affiliated public intellectual), and a number of political theorists writing in both English and Chinese. Both have institutional position the reader should know - they are not neutral observers but advocates of a specific reading of Chinese governance. Their position is contested in the West and is taken seriously by comparative-politics scholars (including those who reject their conclusions) because the underlying observation - that the Chinese system has its own internal logic that Western framing systematically misses - is methodologically sound even when the conclusions are disputed.
The Chinese system is more brittle than commonly assumed
Public confidence in the government, while officially high, depends on the steady delivery of rising living standards. As growth slows and youth unemployment rises, the legitimacy bargain comes under strain. The over-centralisation of decision-making under Xi removes the safety valves that helped earlier Chinese leaders correct their mistakes. A slow-motion legitimacy crisis is more likely than the West thinks.
Held by: Susan Shirk (UCSD), George Magnus, and a number of other analysts who knew the country well during the reform era. They are not predicting collapse - they are saying the assumption that the Chinese system is robust to economic stress is less safe than it was a decade ago.
None of these readings is fully right or fully wrong. The reading that fits all of them: China has risen far enough to genuinely reshape the world, fast enough that no Western government has fully adjusted, and into a structural position with real headwinds that may yet slow it. The rebalance is real. The endpoint is uncertain. And acting as though it is either already settled or about to reverse is the easiest way for either Washington or Beijing to make a serious mistake.
What this means for you
Most readers do not directly negotiate with Beijing or Washington. But the rebalance shows up in the prices of the things you buy, the value of the assets you own, the shape of your career, and the resilience of the supply chains you depend on. Some practical observations:
If you work in technology or manufacturing
Your industry is at the centre of the rebalance. Companies that build advanced semiconductors, AI infrastructure, batteries, electric vehicles, biotechnology, or aerospace components are now operating under industrial policy in both countries - subsidies, export controls, "buy domestic" rules, security reviews. The map of where it makes business sense to build, sell, and hire is being redrawn faster than at any point since the 1990s. Career risk and career opportunity are both unusually high right now.
If you invest
Companies with large exposures to the China market are facing a slower-growth, more politically-volatile environment than they did in the 2010s. Companies with supply chains that run through China are increasingly being pushed to diversify - a real cost. On the other side, a basket of "China resilience" investments (companies in India, Vietnam, Mexico, Indonesia that are picking up reshored manufacturing; companies in critical minerals; defence; cybersecurity) has structural tailwinds. None of this is investment advice. It is observing where the policy gradient points.
If you do business with China
The risk profile has shifted fundamentally. Sanctions, export controls, secondary sanctions on partners, sudden changes in Chinese regulations, and the possibility of being caught between Washington and Beijing on a sensitive topic are all materially higher than a decade ago. Diversifying production, having clear answers ready for compliance reviews on both sides, and treating the relationship as one country among several rather than the obvious default are now part of basic business hygiene rather than paranoia.
If you live in the US, Europe, or Asia
Your government is making choices about technology controls, defence spending, alliance commitments, and immigration that will shape the next two decades. Vote on these on the merits rather than the slogans, watch what your country actually commits to versus what it announces, and be sceptical of any politician who frames the relationship in pure-good-versus-pure-evil terms. The countries that make the most careful choices in the next ten years - allies and others - will be in the strongest position when the dust settles.
If you're thinking about geopolitical risk more broadly
The single largest geopolitical risk in the world right now sits across the Taiwan Strait, and most diversified portfolios under-price it. That does not mean panic-positioning - the base case remains no major conflict - but if you have not at least thought through how your savings, career, and home country would absorb a serious crisis in the Western Pacific, that is a useful exercise to do once, slowly, and then put away. The honest goal is to be roughly positioned, not to be precisely hedged against an unpredictable event.
The mechanics behind this
The China question sits on top of three deeper mechanisms that show up across this site. If the analysis above depends on ideas you want to understand first, these fundamentals make the conversation more legible:
