Crossroads of Power: How China Will — or Won’t — Become the Next Global Superpower
Crossroads of Power: How China Will — or Won’t — Become the Next Global Superpower
Whether China becomes the world’s next undisputed superpower—or settles into a different kind of primacy—hinges on a handful of hard constraints and a surprising set of tailwinds. Our assessment is neither triumphalist nor fatalistic. China is not fated to rule, and it is not destined to stall. It is a country with formidable industrial capacity and mounting structural liabilities, a state able to move capital at scale and a society that is aging faster than its prosperity can comfortably absorb. What happens next will be shaped by the interaction of five strategic pillars: economic durability, technological sovereignty, military reach, financial influence, and coalition-building power. In each domain China is advancing, but not on a straight line, and the path is increasingly contested.
We begin with the economy because everything else—research budgets, defense procurement, diplomatic largesse—ultimately rests on growth. China still produces at world-beating scale. Its factories anchor global supply chains for the energy transition: from photovoltaic wafers to batteries and electric drivetrains. The country dominates solar manufacturing end-to-end, and has returned to the top slot in the global lithium-ion battery supply chain, a reflection of both industrial policy and relentless cost discipline. That capacity has not only lowered prices worldwide but also given Beijing leverage over technologies that governments now consider strategic. The question is whether the dividends from this “new three” (solar, EVs, batteries) can offset slumping property and local-government balance sheets. The answer for now is partial: the green tech boom is real, but its profits are thinner than its gigawatts, and its political dividends are complicated by protectionist blowback abroad.
Blowback is visible across trade and industrial policy. The United States raised tariffs on Chinese electric vehicles to 100% and increased duties on batteries, solar cells, and soon semiconductors. The European Union followed with long-debated duties on China-made EVs, locking in a more defensive stance in sectors where European incumbents feel most exposed. The upshot is a tougher pathway for China to convert scale into uncontested market share in rich economies. Even if Chinese firms can still sell into emerging markets, premium segments in the West—where standards, software ecosystems, and brands are forged—are harder to capture. Protection is not the same as decoupling, but it slows diffusion at the frontier, complicating China’s effort to set global norms around charging standards, grid interconnection, and autonomous driving.
Technological sovereignty remains the hinge. Export controls on advanced semiconductors and chip-making tools have raised hurdles; yet the story is not one-way. A high-profile handset launch built around a domestically manufactured 7-nanometer-class processor demonstrated that China can push the limits of legacy lithography using complex multi-patterning and aggressive design-technology co-optimization. That is not the same as catching up at the leading edge, but it narrowed the gap enough to matter for domestic ecosystems. Meanwhile, U.S. and allied restrictions are unevenly enforced. Investigations and industry reporting have alleged that Chinese chipmakers obtained advanced equipment despite the rulebook—underscoring how porous multilateral regimes can be when corporate incentives, extraterritoriality, and national security collide. Our view is that Beijing’s “good-enough” strategy—compensating for lagging logic nodes with system-level design, packaging, and massive scale—can carry many industries further than Western policymakers assume, even if it cannot eliminate dependence on foreign lithography overnight.
Where the economic engine faces its sternest test is domestic demand and leverage. The property-led growth model has exhausted itself. The liquidation of a marquee developer was a symbol and a shock absorber at once, crystallizing the scale of liabilities that had long been socialized through land finance and local financing vehicles. Beijing has begun to swap opaque debts into more standardized instruments and to seed a slow-motion balance-sheet repair in the provinces. But deleveraging without derailing growth demands a patience that markets rarely grant politicians. In the near term, investment will likely be state-heavy and productivity-light, and the private sector—especially consumer-facing services—will struggle to carry the baton unless confidence recovers decisively.
Demography makes the slope steeper. China’s population is shrinking and graying; the fertility rate appears to hover near one child per woman, and deaths now outnumber births despite modest policy nudges. A smaller, older workforce is not destiny—automation, upskilling, and liberalized household registration could soften the blow—but it tightens the timeline for reform. It also raises the fiscal weight of healthcare and pensions just as land-sales revenue fades. Policy can cushion, not reverse, these dynamics; the politics of redistribution—who pays for elderly care, who gets urban benefits—will matter as much as births per woman.
Capital is voting with greater caution. Net foreign direct investment has slumped to multi-decade lows, reflecting geopolitics, data-security rules, and shifting corporate calculations about resilience. Some of this is cyclical and some is substitution: Chinese firms are investing outward to sidestep tariffs via “near-shoring,” while multinationals are diversifying assembly to Southeast Asia, India, and Mexico. China is not being abandoned—it remains a central node for complex manufacturing—but the “only in China” model has visibly given way to “China plus everywhere we can afford.” The drag is less about factories exiting en masse, more about marginal decisions not made in China.
Military power is the second pillar, and here the picture is clearer. The People’s Liberation Army has grown into the world’s largest navy by hull count and is on track for a much bigger surface fleet by decade’s end, while nuclear forces are expanding faster than most analysts projected a few years ago. China has refined anti-access and area-denial systems, invested heavily in hypersonics, electronic warfare, and space capabilities, and hardened its logistics closer to home. Yet military power is not just metal; it is also experience, trust in the chain of command, and the integrity of procurement. A sweeping corruption purge that reached deep into the Rocket Force and defense ecosystem points to vulnerabilities that modernization alone cannot solve. Those purges cut both ways: they suggest serious quality-control problems but also a willingness to address them. Whether the correction comes fast enough is unknowable from the outside.
Financial influence is the third pillar. Beijing has built an alternative plumbing—CIPS for cross-border yuan clearing—and has pushed for more trade invoicing in renminbi. The currency’s role in global payments has climbed, buoyed by bilateral energy trade and sanctions-driven shifts, but as a reserve asset the renminbi’s share remains small. Capital controls and opaque policy transmission limit central-bank appetite for RMB in size. Converting trade convenience into monetary power requires deep, open capital markets and predictable rule of law; those are strategic choices that affect everything from how research outfits operate in China to how far legal confidentiality extends. The state can mandate more yuan use in certain corridors, but trust—not edicts—ultimately makes a safe haven.
The last pillar is coalition power. Here China’s diplomatic play has been opportunistic and, at times, effective. It has brokered surprising detentes, expanded influence across the Global South, and cultivated minilateral clubs that advertise a post-Western order. It is also building dense economic ties from the Gulf to Southeast Asia that anchor its security interests without formal alliances. But this is not the 1950s. Most partners practice radical hedging. Many want Chinese capital and equipment without Chinese political leverage; they want Western markets and security guarantees without Western strings. The result is a world that welcomes China’s checkbook and technologies while resisting its tutelage. That is not a brick wall; it is a moat filled with nuance.
We also need to take seriously the rumors that shape elite and market expectations—even when they remain unverified. The first is statistical smoothing: seasoned analysts regularly flag the implausible stability of headline growth and the pressure local cadres face to hit targets, notwithstanding new legal penalties for data falsification. Whether or not the skepticism is fully warranted, its existence lowers the signaling power of official figures and amplifies the importance of alternative indicators like freight, electricity, and household surveys. The second is military quality control: the depth of the Rocket Force and defense-industry purges has fueled concerns that corruption may have compromised components and procedures. The third is tech substitution: claims that Chinese firms can fully leapfrog without access to leading-edge tools are often exaggerated, but they persist, and they help mobilize investment into homegrown stacks. We distinguish between rumors that merely spook markets and those that become self-fulfilling. If enough actors distrust the data, they defer investment; if enough officers fear a purge more than a performance review, they pass risk up the chain. Over time, rumor becomes structure.
Set against these constraints are real advantages. China can mobilize resources rapidly, direct credit where it wants, and scale manufacturing faster than any peer. Its clean-tech capacity aligns with global decarbonization goals that are not going away—even where Western politics turn colder. Its defense industry can iterate platforms with impressive speed, and its research base is deep in fields like materials science, batteries, power electronics, and applied AI. The state’s capacity to execute at scale—building entire industrial ecosystems rather than just subsidizing individual firms—remains a unique political asset.
What might happen next? Four scenarios capture the plausible arc to 2035. We list them in order of likelihood as we see it today, fully aware that a single shock—financial, geopolitical, or technological—could reorder them.
Scenario 1: Asymmetric superpower
In this path, China does not replace the United States as a universal superpower but becomes the world’s indispensable industrial and green-tech backbone, with regional military dominance and selective global reach. Growth averages in the mid-to-high-4s in the near term and then glides lower, yet remains sufficient to fund defense modernization and technological catch-up in critical layers. The country cements quasi-monopolies in solar wafers, certain battery chemistries, transmission hardware, and industrial robotics, exporting not just products but standards. Trade friction remains high: tariffs and anti-subsidy actions hem in market share in the West, but Beijing offsets by deepening supply chains across Asia, the Middle East, Africa, and parts of Latin America. Financially, the renminbi’s role in payments inches up through bilateral energy and commodity invoices, yet capital controls keep its reserve share small. Militarily, the PLA becomes unbeatable within the first island chain in peacetime coercion and gray-zone tactics, while the nuclear arsenal reaches assured-retaliation levels that complicate any crisis calculus. This scenario has the texture of today—only more so. The world adjusts to a permanent condition: de-risking where it matters most, reliance where it is cheapest.
Scenario 2: High-velocity rise
This is the bullish surprise. A domestic reform burst revives private-sector confidence, local-government debt is restructured faster than expected, and a sustained productivity lift comes from aggressive service-sector liberalization, household-registration reform, and a rightsized social safety net that unlocks consumption. On the technology front, domestic semiconductor equipment matures more rapidly than anticipated, packaging advances close some of the performance gap, and Chinese AI systems prove globally competitive in applied contexts, from manufacturing to logistics. Geopolitically, Washington and Beijing stabilize a working truce that narrows the scope of controls to a tighter national-security core. The BRICS-plus architecture coheres enough to provide political cover for wider RMB trade use in energy and commodities, and a handful of major emerging-market central banks meaningfully add renminbi assets. In this world, China does not just manufacture the clean-energy transition; it sets the software, safety, and grid-integration rules for it. The United States remains militarily superior and financially dominant, but the gravitational pull of Chinese markets and standards makes Beijing a co-equal agenda-setter across large domains.
Scenario 3: Stalled giant
Here the balance-sheet recession wins. Property stabilization never quite sticks, local governments remain constrained, and households—scarred by years of asset deflation and policy whiplash—keep their savings high and consumption cautious. Foreign firms stay in China but divert fresh investment elsewhere; inbound FDI bumps along the bottom, and the “animal spirits” of entrepreneurs remain subdued under a thicker blanket of security-first regulation. Growth undershoots targets; potential falls faster than official projections concede. In this environment, industrial policy leans harder on visible capacity expansion, worsening overcapacity and provoking more foreign protection. China still wields a formidable navy and credible deterrent forces, but the military’s most demanding joint operations lag because human capital, doctrine, and trust in the chain of command cannot be procured like steel. The renminbi’s international role plateaus; CIPS keeps growing in volume, but the system’s influence remains bounded by capital controls and legal opacity. This scenario leaves China a permanent pillar of the world economy and a near-peer military power in its neighborhood—but not a rule-writer.
Scenario 4: Hard-decoupling shock
A major crisis—over the Taiwan Strait, in the South China Sea, or through an unforeseen sanctions spiral—forces rapid separation. Export controls tighten across the stack, Western buyers overcorrect away from Chinese inputs even at high cost, and Beijing counters by weaponizing choke points it does control, from critical minerals to components in the clean-tech supply chain. The world splits into incompatible hardware and standards layers. China can meet most domestic technology needs through substitution and scale, but the loss of frontier tools and software depresses productivity for years. Financially, RMB usage spikes in sanctioned corridors but remains marginal globally as risk premia soar. Militarily, the PLA absorbs lessons from crisis under contested conditions, but combat performance—if tested—ends the speculation one way or another. This is the low-probability, high-impact path: it does not “decide” superpower status so much as destroy the conditions to contest it peacefully.
Which path should we expect? Our base case is the first. China remains the indispensable asymmetric power: unmatched in industrial tempo and clean-tech scale, increasingly formidable in its region, more influential across the Global South than Washington likes, yet bounded by demography, capital flight risk, technology bottlenecks, and pushback from major markets. It is a version of superpower that reflects the world as it is—not many formal alignments, but a thick web of bilateral dependencies, contested standards, and political hedging.
Two variables could shift the odds quickly. The first is domestic policy credibility. Investors and households read not just targets but signals: the predictability of rules, the treatment of private capital, the practical space for data sharing and research cooperation, and the enforcement style of national-security statutes. A clear turn toward open, rules-bound governance would raise China’s potential more than any one mega-project. The second is technology enforcement at scale. If export controls harden into a genuinely global regime—aligned across the United States, Europe, Japan, South Korea, and Taiwan—and leakage narrows for real, the ceiling on China’s leading-edge capabilities will sit lower. If, by contrast, loopholes persist and domestic equipment makers progress faster than expected, the ceiling rises.
We should add one final observation about power that is often neglected: time. The United States remains the only state with global military logistics, a reserve currency that prices most of the world’s risk, and a sprawling alliance network. That is not undone by a few tariff tables or a sprint in battery capacity. But we have learned to take China’s compounding seriously. A country that can rewire the economics of solar and deliver entire manufacturing ecosystems in half a business cycle has levers that most democracies lack. The more the world asks for grid decarbonization, cheap storage, and electric mobility, the more Beijing’s industrial machine will matter—no matter how unfriendly the politics get.
Our judgment, then, is neither coronation nor requiem. China’s bid for superpower status will likely yield a hybrid reality: a state that defines the terms of competition in key technologies, commands regional military coercion, and shapes the agenda for much of the developing world, while still constrained by finance, demography, and the resistance of peer competitors. That is not the next hegemon in the 20th-century sense. It is the leading node in a more transactional, more dangerous, and more technologically fragmented system.
If we are wrong, it will be because one of three surprises materializes. The first is a genuine domestic liberalization that unleashes household consumption and private investment, coupled with social insurance reform—an internal rebalancing that has eluded policymakers for a decade. The second is a decisive technological breakthrough that erodes the value of foreign choke points—less a jump in raw transistor density than a new systems architecture, AI-assisted design productivity, or a leap in power electronics that plays to China’s strengths. The third is geopolitical: a broad truce with the West that narrows national-security controls and restores a measure of technology exchange at the frontier. Any of these would bend the curve toward a higher-velocity rise.
Conversely, the biggest downside risks are not exotic. A grinding property-and-debt workout that saps confidence, a policy reflex that prioritizes control over growth, and a sequence of minor crises that compound into capital flight would harden the “stalled giant” outcome. A mismanaged confrontation in East Asia would push the world toward hard decoupling and force every government to choose sides more starkly than they wish. Those are risks worth managing proactively—by Beijing most of all.
For everyone else, the practical implication is to plan for a world in which China is neither absent nor all-powerful but unavoidable. Diversify supply chains without pretending China can be amputated; compete in standards and software even when hardware dominance seems baked in; protect genuine national-security interests tightly and narrowly; and invest in domestic productivity so that efficiency, not just ideology, does the talking. Superpower is not a binary. It is a portfolio of advantages that can be eroded or renewed. China holds many of the right cards, but how it plays them—and how the rest of us respond—will decide the game.
Notes on key facts referenced in this analysis: the United States’ tariff increases on Chinese EVs and related sectors and the European Union’s EV duties frame the trade backlash; China’s unmatched solar and battery supply chains are documented by international energy research; the domestic 7-nanometer-class handset breakthrough demonstrates constrained but real progress under controls; a major developer’s liquidation marks the property unwind; demography is turning into a macro constraint; the PLAN’s fleet growth and China’s expanding nuclear stockpile shape the military balance; the renminbi’s growing role in payments contrasts with its small reserve share, underscoring financial limits.
