David Wallace-Wells writes:

China’s share of global manufacturing has grown so much that by 2030, it is expected to reach seven times what it was in 2000; America’s will have fallen by half. And while Trump’s supporters describe the trade war as an effort to reverse that pattern, they’ve done so little beyond erratic tariffs — with no major pledges of government investment and no real commitment to policy stability — it all looks more like policy by culture-war meme. And yet the best memes of the past week appeared to come from China: satirical A.I. reels of slop triumphalism showing obese Americans struggling to piece together electronics on grimy factory floors. The Chinese Ministry of Finance predicted that the United States “will become a joke in the history of the world economy.”

It has been a decade since China started its Made in 2025 industrial policy. America bet big on artificial intelligence and an economic future in which it reigns. China went big on building more stuff, and it turns out that over 10 years a country like that can build quite a lot (including, apparently, competitive A.I.). Probably you have heard about its dominance in clean energy. The country is now routinely installing as much solar power as the rest of the world combined while producing 90 percent of the world’s solar panels and more than three-quarters of its electric batteries. (As part of its tariff response, it has halted the export of several rare-earth metals and magnets; it produces 90 percent of the world’s supply of those, too.)

China is piling up a dominant position in new patents as well, surpassing the United States, and though patents are just a crude measure of technological progress, the gap is only widening. Chinese spending on university and government research had surpassed that in the United States, even before Trump declared war on the country’s elite universities. And then along came Elon Musk and his so-called Department of Government Efficiency to reduce the American budget by billions of dollars and Immigration and Customs Enforcement to deport international students here on visas or with green cards.

As recently as 2010, China produced a truly negligible part of the world’s medicine; now it is the world’s second-biggest developer of new drugs, and from 2020 to 2024, the value of drugs licensed worldwide from China grew fifteenfold, as The Economist recently noted. From 2013 to 2023, China’s share of global clinical trials grew to 28 percent from 4 percent. The country has surpassed Europe and the United States in the number of high-quality scientific papers published and has opened up leads in materials science, engineering, chemistry and computer science — all domains in which China is responsible for more than 60 percent of cutting-edge research. These seem like important fields. In one recent analysis of data comparing the composition of national economic elites, America’s leadership class was dominated by financial capital workers and China’s much more by engineers.

For most of Trump’s second term, an electric-car billionaire has been at least the second-most-powerful man in government, but Tesla’s stock price has fallen by nearly half since December, with liberal backlash in America and sales in European countries falling almost 50 percent compared with last year. China’s electric vehicle powerhouse, BYD, meanwhile, expects sales in Europe to double in 2025, having grown its global sales almost 15 times over since 2020. “The first China shock was when China was incorporating into our supply chains,” the economic historian Adam Tooze proclaimed in November. “The second China shock is when we beg to be incorporated into theirs.” [Continue reading…]