Competition with China: beyond conflict

At the fundamental level, I am firmly opposed to war between the Great Powers. While small conflicts may sometimes be a necessary evil when dealing with rogue states or terrorist organizations, it is imperative to take every possible measure to protect civilians. However, a war involving the major powers would rapidly escalate to catastrophic proportions and devastate the world. For example, during World War I, soldiers died on an industrial scale with over 1 million casualties (dead, wounded or missing) in the first month of the conflict. Should World War III ever occur, we could reach that scale of destruction in a matter of days. A war between the USA and China or Russia would be MAD—Mutually Assured Destruction—and such notions should not even enter serious discourse, as they are truly reckless.

That said, it is important to recognize that rivalry and competition among the great powers, as well as among smaller nations, are natural elements of international relations. As someone from Alsace, France, at the heart of Europe, I naturally support my home region. My studies in the US have fostered an appreciation for Americans’ pragmatic and optimistic ‘can do’ attitude, and after thirty years living in Taiwan, I also hold a positive view of Asia’s potential. My perspective on geopolitical and economic rivalry has become increasingly neutral, especially since Europe is less central to the global competition today. In many ways, the Champions League final of geopolitics is now USA vs China, with Europe lagging behind in economic unity, GDP, growth, and financial strength.

Since military conflict must be excluded, most of the rivalry now plays out in the economic arena. This field is unique because the last two centuries have demonstrated that the economy is not a zero-sum game; in fact, free trade benefits both buyers and sellers. Therefore, I view China's development not as a threat, but as an opportunity and a testament to the effectiveness of global trade and capitalism.

Returning to the comparison with the Champions League, people are drawn to this competition because it features the best players on the world stage. Their skills, speed, and precision far surpass those of local teams, making the contest exciting and inspiring. The AI race between Anthropic, OpenAI, X, Google, DeepSeek, Alibaba, Tencent, and Z.ai is equally compelling, with new models launching every week. Without Chinese competition, American AI companies might lack the urgency to innovate, and vice versa. Chinese firms are striving to outperform or differentiate themselves from American counterparts, fueling faster innovation and greater choices for customers worldwide. Notably, some American startups now choose DeepSeek’s open model for its affordability and greater data control.

Like a good Champions League match, I want to see fair play, not a series of fouls where one team deliberately undermines the other. A true game demands fairness and respect for rules, allowing both sides to perform at their highest level. In this context, the USA has sometimes leveraged its hegemonic position to slow China’s progress, most notably through semiconductor export restrictions. While these restrictions caused short-term setbacks for China’s high-tech sector, they also prompted a long-term shift toward de-westernization of supply chains. China’s government prioritized lending to strategic industries, leading to impressive growth across multiple sectors eight years after the first technology embargo. As for the semiconductor ban, Jensen Huang, CEO of NVIDIA, has pointed out that not selling chips to China hurts his business by forfeiting a massive, lucrative market—one that could help fund essential R&D. The embargo may have slowed China temporarily, but it also sparked ingenuity and urgency, ultimately strengthening China’s self-reliance. In the end, this tactic could prove more detrimental to the US and Europe than to China itself.

Some commentators sense China’s ascendancy and advocate cutting all trade with the country, claiming that brands like BYD will destroy domestic industries. They argue that every transaction with China supports the Communist Party and funds a rival power. However, it’s important to remember that trade delivers mutual benefits. Trade with China allows buyers to enjoy significant savings—products made in China are often more affordable than Western-made equivalents. Moreover, China is a source of revenue and profit for many major European companies (such as LVMH, Siemens, Apple), providing well-paying jobs and additional funds for R&D and investment. As Bastiat famously noted, there’s what we see and what we don’t see: while commentators highlight lost manufacturing jobs and factory closures in the West, they rarely mention that Chinese factories are also closing as low-skilled work moves to countries like Vietnam or India, and new high-tech plants are increasingly automated ‘dark factories.’ These trends demonstrate ongoing pressure for efficiency in manufacturing, which is not a high-margin sector. China isn’t what’s causing change and pain in Western manufacturing. It’s the unstoppable modernization of the world that is creating change, some negative, but mostly positive (worldwide GDP is increasing, poverty is receding...)

The case of Apple illustrates this dynamic well. Since releasing the first iPhone in 2007, Apple has maintained global leadership (20% market share) thanks to continual innovation and an unwavering focus on customer experience. Even in China, Apple is second only to Huawei, achieving a record 13.1 million phones sold in Q1 2026. Manufacturing in China has fostered local competitors, but it also helps Apple control costs and remain competitive. Additionally, many Chinese exports are products designed and produced for Western companies, highlighting the collaborative nature of global commerce.

China’s rise can be attributed to a smarter, more capitalistic Communist Party. But China is not responsible for Western crises; most challenges in the West stem from misguided government policies: expanding welfare states, egalitarian education that overlooks STEM, poorly managed immigration, flawed energy strategies, and inflationary central bank policies.

Western governments are increasingly unable to hide their mistakes from voters. Travelers returning from China report that the US and Europe are now viewed as developing regions, where safety and bureaucratic obstacles hinder progress. Left-leaning experts admire China’s strong, efficient bureaucracy and advocate cutting trade to protect domestic industries, particularly as Western automotive sectors transition to EVs. Building trade walls may keep Chinese EVs out, but risks isolating domestic industries, shrinking markets, and crippling economies through stagnation. This defeatist attitude is, in effect, economic self-sabotage.

The more constructive approach, advocated by too few on the political right (and nobody on the left), is to be wary of government intervention in protecting Western companies. Historically, Western governments have a poor track record in this regard. Fact is US private enterprises remain the most profitable globally, with a market capitalization far exceeding China’s ($40 trillion vs $11.5 trillion USD). Only one mainland Chinese company (Tencent) appears among the top 25 at #19, while the US dominates the list of leading firms. And only five other non-American companies—TSMC, Saudi Aramco, Samsung, ASML, and SK Hynix—also make the top ranks.

Having the most profitable companies allows US firms to invest heavily in productivity and attract top talent. Chinese subsidies are not a sustainable long-term model, and China is still relatively new to capitalism. The Chinese Politburo is filled with smart engineers, but America’s “Magnificent 7” are pioneering a technological revolution that transcends mere international rivalry.

China holds strong cards: a large, educated population, high savings rates, and a diversified power grid. The US, meanwhile, boasts the largest innovative companies, a seasoned financial system, and robust property laws. We should not be alarmed by China’s progress; instead, we should be proud that capitalism drives growth for all nations that embrace it. Rather than hindering China, the US and Europe should identify areas where they can improve—such as expanding nuclear energy, reducing regulation, lowering taxes for workers, pursuing targeted immigration—and adapt to change. Shielding companies from competition is counterproductive. Competition lies at the heart of capitalism, and our most successful private firms prove that engagement and collaboration with China yield better outcomes than isolation. Don't be afraid of China.