China has recently demonstrated remarkable technological feats, such as successfully launching and landing rocket boosters on land and sea, signalling its emergence as a leading space and industrial power.
With decades of rapid growth fuelled by an industrial ecosystem modelled partially on the “American system,” China was once poised to challenge global dominance, especially that of the United States.
The Globalization Crisis in China: However, despite these impressive advances, China now confronts a severe economic and social crisis rooted in debt, demographic decline, and an overreliance on exports.
This crisis is epitomized by the 2021 collapse of the Evergrande Group, the largest Chinese property developer, whose $310 billion debt burden revealed systemic weaknesses in China’s real estate-driven economy, which accounts for a large share of household wealth. Evergrande revealed systemic risks in China’s heavily real estate-dependent economy and debt structure, Mike Steger, co-founder at Promethean Action points out.
Simultaneously, prolonged COVID-19 lockdowns further weakened domestic demand, exposing deep fissures in China’s economic model. China’s model of export dependence is under pressure as global trading partners impose tariffs and reduce reliance on Chinese goods. Around 600 million Chinese citizens still live in poverty, many rural migrants lack access to urban social services, and internal consumption remains weak. The Communist Party’s desire to control the economy clashes with market realities, forcing China into a precarious balancing act between sustaining exports and avoiding social unrest.
The Globalization Crisis in China:Unlike Japan’s historical industrial rise, China’s application of the American system focused on industrial production and technology but neglected the individual and consumer base that forms the system’s “soul.”
The regime runs the economy with tight control over capital flows and does not permit the social mobility or citizen empowerment that America’s system encourages. This structural contradiction, combined with demographic decline and growing internal debt, places China in a “decay” phase, a slow decline rather than a swift collapse.
Approximately 60-70% of Chinese household wealth is tied to real estate, and with housing starts down 77% since the peak, domestic consumption is severely constrained. China compensates by flooding global markets with discounted exports, but rising tariffs from BRICS countries, Europe, and others curtail this lifeline, making China’s economic model increasingly fragile and politically sensitive.
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The Globalization Crisis in China: “China’s remarkable path of economic development over the last several decades has been made possible by a benign international environment in which other countries were eager to accept low-cost manufactured goods in exchange for efficient supply chains and consumer welfare. But that international environment has turned toxic. The political appetite for accepting the deindustrialization and critical dependencies that come with the flood of Chinese imports is finite and shrinking. As these trends continue, protectionism is likely to rise, cutting off Chinese manufacturers’ market access and thereby short-circuiting Beijing’s strategy, introduced in 2020, of “dual circulation,” which promotes both domestic economic self-sufficiency and continued engagement in international markets. The global era of globalization, of which China has been a key driver, is unravelling,” writes Foreign Affairs.
The U.S. is mobilizing a modernized version of the American system directed credit, innovative industrial policy, and citizen-led entrepreneurship, to rebuild its manufacturing base in critical sectors such as energy, semiconductors, AI-driven manufacturing, and space infrastructure.
While China borrowed American productivity methods—such as directed credit and innovation in heavy industry—it failed to transplant the fundamental cultural and institutional foundations that support individual creativity and consumer demand. This mismatch undermines sustainable economic growth because production without empowered consumers leads to overdependence on external markets and fragile internal stability.
The Trump-era shift toward economic nationalism and infrastructure investment is reversing decades of outsourcing and financialization, ushering in an industrial renaissance. Major public and private investments, including a $100 billion spaceport by SpaceX and Tesla’s semiconductor project in Texas, are emblematic of this resurgence. Crucially, the American system’s strength lies not just in government-driven credit but in unleashing the creativity and innovation of private citizens and enterprises within a culture that values individual initiative and participation.
The future global economic order will depend heavily on this American-led industrial revival to offset China’s economic decline and to replace the dismantling forces of globalization. The U.S. is the linchpin for global stability, and through renewed leadership rooted in its historic industrial methods and cultural framework, it aims to rebuild a sustainable, inclusive economic model that can support global growth in the coming decades.
The Communist Party’s top-down control inhibits necessary economic reforms, such as debt restructuring or expanding social welfare, for fear of political instability. The hukou system traps hundreds of millions of migrant workers without access to urban services, suppressing internal consumption and social mobility, which are vital for a mature economy.
The Globalization Crisis in China: Unlike China, America’s system integrates industrial innovation with individual empowerment, creating a dynamic environment for entrepreneurship and citizen participation. The strategic injection of government credit catalyzes private sector investments while maintaining a decentralized, market-driven energy that sustains long-term growth and democratic stability.
Multi-billion-dollar federal credit programs target critical minerals, clean energy, semiconductor production, AI-enabled manufacturing, and space infrastructure, reflecting a systemic commitment to restore American industrial leadership. Public-private partnerships backed by Wall Street mark a new phase of mission-oriented capitalism consistent with the American system’s historic principles.
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