Opinion: How America Lost Its Edge in the China Trade Battle

America's strategy rested on outdated assumptions. US policymakers still see China through a 1990s lens - as a copycat manufacturer dependent on stolen tech. Reality tells a different story. China has transformed into an innovation powerhouse, particularly in electric vehicles and artificial intelligence. Their domestic market breeds fierce competition, producing companies that can compete globally on both price and technology.

The pandemic widened this perception gap. American presence in China has plummeted over the past six years. One expert captured it perfectly: We've gone from "two elephants looking at each other through a straw" to "two elephants looking at each other through a needle." This blindspot cripples America's ability to compete effectively.

China Races Ahead in Electric Vehicles

Take electric vehicles. While the US focused on protecting its combustion engine industry, China leapfrogged straight to EVs. Their smartphone makers morphed into car manufacturers practically overnight, creating vehicles with seamlessly integrated digital experiences. China now dominates the EV supply chain and leads in battery technology.

Failed Strategy: All Wall, No Building

The Trump administration's approach lacked strategic depth. High tariffs went up without a plan to strengthen US industries. It's like building a wall around your house without actually improving what's inside. The Biden team has shifted tactics but still emphasizes restrictions over development.

This miscalculation extends to artificial intelligence. China's highly digitized economy provides the perfect testing ground for AI applications. Their ability to deploy AI at scale could soon match or exceed US capabilities. Meanwhile, America's push to make AI "ours" risks prioritizing speed over safety.

Trust Issues: Allies Look East

Global alliances tell another story. America's unpredictable trade policies have eroded international trust. Partners hedge their bets, looking to China as a more stable economic relationship. Beijing actively courts these nations, positioning itself as the reliable alternative to US volatility.

China's Winning Formula: The Fitness Club Effect

China's "fitness club" approach keeps working. Their domestic market forces companies to compete intensely, creating strong players ready for global expansion. Government support, while sometimes wasteful, helps build dominant positions in key industries like solar panels. The rise of "dark factories" - fully automated manufacturing plants - shows China's commitment to efficiency and innovation.

The results speak for themselves. US attempts to contain China through trade restrictions have instead accelerated their self-sufficiency. American companies operating in China now stay to access cutting-edge innovation, not just cheap labor. The strategy to force China to play by US rules has pushed them to write their own.

Why this matters:

• America bet on containment while China focused on capability-building. Guess who's winning?
• The US can't compete with China using yesterday's playbook. When your opponent changes the game, sticking to old tactics guarantees defeat.