The great US-China superpower rivalry, with Elizabeth…

PodcastGZERO WorldElizabeth EconomyOct 3

Elizabeth Economy describes a U.S.-China rivalry that combines strategic competition with deep economic ties, while arguing that regular diplomacy can add stability and U.S. retrenchment has opened leadership opportunities for China. She sees China as strong in technology and manufacturing but faces a weaker domestic economy, and says the AI leadership outcome remains uncertain, depending partly on how “winning” is defined. U.S. policy priorities include securing strategic manufacturing capacity and maintaining a government-led space strategy, while diversified energy sources and clean-energy deployment have helped insulate China from the Strait of Hormuz disruption.

China Geopolitical Risk Trade Policy Supply Chains Artificial Intelligence Technology Stocks

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Key Takeaways

Economy describes the U.S. and China as deeply connected through trade, investment, technology, and supply chains even as they compete economically and militarily. She says recent summits have produced limited substantive progress, but frequent meetings and communication channels could add stability; she also argues that a clearer U.S. welcome for Chinese investment could create more reason for Chinese CEOs to join U.S. delegations.

Economy says Xi Jinping is pursuing technology leadership and a leading global economic position by 2049, while China is already strong in technology and advanced manufacturing and set a 70% semiconductor self-reliance target for 2025. Against that backdrop, she describes U.S. policy as retaining manufacturing capacity at home or among allies in strategic areas including semiconductors, AI, pharmaceuticals, and critical minerals, while acknowledging that drawing the boundary is imperfect.

Economy says the AI race remains unsettled: the United States has 10 times more data centers than China and roughly comparable domestic AI diffusion, but Chinese models lead in global use and China has its full AI stack ready. She argues that U.S. safety and local-impact concerns should be addressed without treating them as proof of lost leadership, and says U.S. global adoption could improve if the country gets its AI export package right.

GEO-POLITICS

Interdependent Rivalry — The transcript describes the U.S. and China as economic competitors and military rivals that remain deeply connected through trade, investment, technology, and supply chains.

“Beijing and Washington are economic competitors and military rivals, but they're also deeply tied together through trade, investment technology, and their supply chains.”—

Summit Diplomacy — Economy says recent U.S.-China summits have delivered more pomp and pageantry than substantive progress. Still, she sees value in frequent meetings and new communication channels that could add stability as the countries continue to compete.

“So I would say if I were being ungenerous, what we've seen over the past two summits has probably just been mostly pomp and pageantry over substantive progress…”—

Investment Welcome — Economy says Chinese CEOs might have joined a U.S. delegation to pursue opportunities and deals if there had been progress on an investment board. Without a U.S. signal that new Chinese investment was welcome, she saw little reason for a large delegation to come.

“But I think had there been progress on the board of investment, you may have seen some Chinese CEOs, probably even a substantial delegation coming, trying to seek out new…”—

TECHNOLOGY

China's Tech Strength — Economy says China is a global powerhouse in technology and advanced manufacturing and leads the United States in several sectors.

“Exactly. Both are true. So I always think I need to look at Chinese ambitions and what's happening on the ground…”—

Chip Self-Reliance — Economy says Xi Jinping set a Made in China 2025 target for China to be 70% self-reliant in semiconductors by 2025. She says China pursued self-sufficiency across critical technologies almost a decade before the United States began taking the issue seriously.

“When you look back to 2015, made in China 2025, you know, Xi Jinping set as a goal for China to be self reliant…”—

AI Adoption — Economy says the United States has 10 times more data centers than China and that domestic AI diffusion is roughly on par. Chinese AI models, however, lead in global use.

“We have 10 times more data centers than the Chinese do at this point, right? Our diffusion of AI is basically on par with China domestically, not globally…”—

ECONOMY

China's Domestic Economy — Economy describes China's domestic economy as weak despite its strength in technology and advanced manufacturing. She cites GDP per capita rising from about $10,700 to $13,700 over six years; 40% to 45% of urban workers in gig or flexible employment without the full array of social-security and health benefits; 19% youth unemployment; and substantial property-value losses where many Chinese held their savings.

“At the same time, it kind of stinks to be Chinese right now if you're living inside China…”—

MARKETS

Energy Resilience — Economy says China gets oil from about 10 countries, with Russia its largest source, and holds four months of reserves. She argues that diversified energy sources and clean-energy deployment have helped leave China largely untouched by the Strait of Hormuz disruption.

“And I think we've seen that during the Iran conflict, right, where they've not only diversified their sources of, you know, oil. Right?…”—

U.S.-China Summit Diplomacy

Bremmer introduces the rivalry and asks whether frequent Trump-Xi meetings can deliver substantive progress; Economy says regular communication may stabilize competition even when summit outcomes are modest.

China Reads Trump’s Return

Economy says the administration’s reduced emphasis on democracy and withdrawal from international institutions create openings for China, while U.S. technology and security competition remains firm.

China’s Economic Strengths And Strains

China leads in advanced manufacturing and clean-energy deployment and has diversified energy supplies, but its households face weak growth, job insecurity, property losses, and limited social support.

China’s Growth Model Trade-Off

Economy argues Xi prioritizes global power and technological control over household welfare, and says coordinated foreign pushback against Chinese overcapacity could make the economic costs more immediate.

U.S.-China Space Competition

Economy says the United States remains competitive in space but should retain government leadership and a coherent strategy, while accepting Chinese achievements rather than seeking to suppress them.

The Uncertain AI Race

Economy says U.S. concerns about AI safety and data-center impacts are warranted, China faces its own constraints, and the eventual leader depends on how success is defined and which systems the world adopts.