America Built an Empire of Money and Weapons. China Is Building an Empire of Things

 

America still commands extraordinary financial and military power, while China has built deep influence through factories and supply chains. From Karachi Port, the two architectures of power can appear inside the same trade transaction.

From I. I. Chundrigar Road, Power Looks Different

Karachi Port sits about a kilometre from my office on I. I. Chundrigar Road. The distance is short enough for Pakistan's main financial district and its great maritime gateway to feel like parts of the same machine. Ships bring physical goods into the city; nearby banks move the money that pays for them.

I find that proximity useful when I think about China and the United States. Foreign-policy debate usually directs my attention towards aircraft carriers, sanctions and military alliances. From Karachi, another form of power keeps intruding into the argument because so many physical products moving through Pakistan's economy now connect, somewhere in their supply chain, to Chinese industrial capacity.

I can encounter both superpowers inside one commercial transaction. The payment may depend on the dollar-centred financial system, correspondent banks and financial infrastructure in which the United States retains enormous influence. The cargo being paid for may contain Chinese machinery, solar equipment or components that another country cannot supply as cheaply or quickly.

America remains deeply embedded in the money. China has embedded itself in many of the things the money buys, and I think that distinction now deserves far more attention than it receives.

My argument is uncomfortable but straightforward: America built an empire of money and weapons. China is building an empire of things.

How China Became the World's Manufacturing Power

American power after 1945 did not rest on military force alone. The United States emerged from the Second World War with enormous industrial capacity, then helped construct a financial order centred on institutions and markets in which the dollar acquired exceptional reach. Security alliances extended American influence farther still.

That architecture remains powerful. At the end of 2025, the U.S. dollar accounted for 56.77 percent of allocated global foreign-exchange reserves, according to the IMF. China's renminbi represented only 1.95 percent. Anyone announcing the death of American financial power needs to spend more time looking at central-bank balance sheets.

Military expenditure shows another gap. SIPRI estimates that the United States spent $954 billion on its military in 2025, compared with an estimated $336 billion for China. Beijing has expanded its military for decades, but Washington still possesses a global military network China has not reproduced.

I work close enough to cross-border payments to understand why financial infrastructure matters. A dollar payment can appear to be an ordinary message moving between banks until sanctions, correspondent relationships or regulatory restrictions suddenly decide whether the transaction proceeds. Financial plumbing becomes geopolitical infrastructure very quickly when somebody closes a valve.

China built its challenge somewhere else.

Deng Xiaoping's reforms after 1978 opened the economy gradually, but one date deserves special attention: 11 December 2001. China became the 143rd member of the World Trade Organization that day after 15 years of accession negotiations. The WTO itself later described China's entry as a pivotal event in the history of the multilateral trading system.

Factories moved. Foreign investment followed the opportunities created by lower production costs and a rapidly improving industrial base. Supplier networks deepened around Chinese manufacturing centres, while multinational companies discovered that producing in China could improve margins and give them access to an enormous domestic market.

The process created one of the great ironies of the post-Cold War order. The West did not merely fail to prevent China's industrial rise. The economic system it championed helped integrate China into the production networks that made the rise possible.

Western companies made rational commercial decisions. Consumers received cheaper products, shareholders benefited from efficient supply chains, and companies concentrated production where factories and suppliers could deliver at scale. National security did not disappear, but for years it sat far from the purchasing department.

Then the purchasing department became a national-security problem.

China's Dominance in EV Batteries and Solar Manufacturing

The old description of China as the world's cheap factory now obscures more than it explains. China does not merely assemble low-cost goods designed elsewhere. It occupies critical positions inside advanced industrial ecosystems.

Electric vehicles provide hard evidence. The International Energy Agency reports that China accounted for 70 percent of global electric-car production in 2025 and more than 80 percent of battery-cell production. Its share reached about 85 percent for cathode active material and more than 90 percent for anode active material used in electric-car batteries.

A battery factory does not stand alone. It depends on processed minerals and specialised components, then on equipment and engineers who understand production at industrial scale. Once those capabilities cluster geographically, moving them becomes much harder than moving money on a spreadsheet.

Solar manufacturing makes the concentration even clearer. The IEA estimates that China accounts for around 85 percent of solar supply-chain production capacity. Its share rises to about 95 percent for photovoltaic wafers.

I see the practical side of this from Karachi. Pakistan's extraordinary solar boom did not begin because ordinary households suddenly developed an interest in great-power strategy. People bought panels because grid electricity became expensive, solar equipment became accessible, and Chinese manufacturing helped drive prices down.

A shopkeeper installing panels on his roof does not need to support Beijing's foreign policy. He does not need to admire China's political system either. Price and availability can create economic relationships more effectively than ideological sympathy.

Something important happens at that point. Manufacturing stops being merely manufacturing.

It becomes dependency.

Industrial Dependency Is Becoming Geopolitical Power

I think industrial dependency provides a better way to understand China's emerging power than the loose claim that China now leads every modern technology. It does not. America remains formidable in frontier technology, advanced research and several high-value industries.

Dependency begins when replacing a supplier becomes painfully difficult.

Rare earths show how the mechanism works. China does not possess 90 percent of the world's rare-earth deposits, despite claims that circulate regularly online. The strategic concentration appears farther along the industrial chain, where refining and manufacturing matter.

The IEA identifies China as the dominant country in the refining of magnet rare-earth elements, which modern industries use in electric vehicles, wind turbines and other advanced equipment. Production of rare-earth permanent magnets is also heavily concentrated in China. Owning mineral deposits elsewhere therefore solves only part of the problem.

Ore in the ground does not run an electric motor.

Processing does.

The same logic reaches batteries. The IEA puts China's share at around 80 percent of lithium-ion battery supply-chain production capacity, with even higher concentration in some components. A government cannot erase that dependency by announcing a new factory and cutting a ribbon six months later.

Industrial ecosystems accumulate knowledge. Engineers learn production problems that never appear in academic papers, suppliers locate close to major customers, and infrastructure develops around repeated commercial activity. Reproducing the final factory without recreating much of the surrounding network can produce an expensive building instead of a competitive industry.

I would go further than many cautious commentators will. The West allowed the pursuit of efficiency to weaken parts of its strategic industrial sovereignty, and China converted those commercial decisions into geopolitical leverage.

I am not saying America stopped manufacturing. It did not. The United States retains immense high-value industrial capacity, including aerospace and advanced semiconductor design. The strategic weakness appears in particular supply chains where years of concentration made Chinese production difficult to replace quickly.

That difference matters. Deindustrialisation is too crude a word for what happened. Dependency is the sharper one.

The Factory Has Returned to Foreign Policy

An American aircraft carrier can protect a shipping lane. It cannot manufacture the cargo travelling through it, and the distinction now matters because economic security increasingly depends on specialised physical production.

Factories cannot replace armies. China itself clearly does not believe they can. SIPRI estimates that Chinese military expenditure rose 7.4 percent to $336 billion in 2025, the thirty-first consecutive annual increase.

Beijing is building military power while strengthening industrial capacity.

America approaches the contest from a different position. It retains extraordinary financial leverage through the dollar system and enormous technological resources. Washington can also restrict access to sensitive technology, as its semiconductor policies towards China have demonstrated.

Yet coercive power cannot instantly manufacture an alternative supply chain.

A government may block an export. It may impose a tariff. Creating a competitive industrial ecosystem requires capital, engineering knowledge, reliable suppliers and years of production experience, which is why industrial policy has returned so forcefully to political debate in Washington and other Western capitals.

I find the contrast especially visible in Karachi. Pakistan conducts much of its international commerce through a financial architecture in which the dollar remains central, while Chinese goods and industrial inputs occupy an increasingly visible place in the physical economy. American structural power and Chinese structural power can therefore meet inside the same import transaction.

The bank sees the currency.

The port receives the cargo.

Neither tells the whole story alone.

AI Cannot Make the Physical Economy Disappear

Artificial intelligence looks like the strongest objection to my argument. The United States remains ahead in important parts of frontier AI, and Stanford's 2026 AI Index counted 59 notable AI models from U.S. institutions in 2025 compared with 35 from China.

China is not standing still. Stanford reports that it leads in AI publication volume and citations, while the performance gap between leading American and Chinese models has narrowed sharply. American technological superiority therefore looks much less comfortable than it did only a few years ago.

More important for my argument, AI does not abolish the physical economy.

A model may appear on my screen as pure software, but the data centre behind it consumes electricity and depends on specialised hardware. Semiconductor fabrication itself relies on intricate physical supply chains. The digital economy keeps trying to escape matter, then somebody has to build the machine.

America retains major advantages here. I see no reason to pretend otherwise. But an America strong in frontier innovation facing a China that combines increasingly capable technology with extraordinary manufacturing depth presents a very different contest from the twentieth-century rivalry with the Soviet Union.

China is not the Soviet Union with shopping malls. Treating it that way produces bad analysis.

America Made China Difficult to Replace

The deepest American strategic error was not allowing China to become rich.

It was allowing China to become difficult to replace.

That distinction changes how I read the last thirty years. China joining the WTO in 2001 looked compatible with the American-led global order because trade integration promised lower costs and commercial opportunity. Few corporate decisions looked geopolitical when companies made them individually.

Put thousands of those decisions together across two decades and something different appears.

A solar wafer is not impressive to look at. Processed graphite attracts even less attention. Yet concentration in products like these gives the producing country leverage because modern industries cannot function on patents and financial capital alone.

Washington now understands the problem. Supply-chain security has entered national-security policy, while governments spend heavily to rebuild semiconductor and clean-energy manufacturing capacity. The language itself reveals what changed: industrial policy, once treated with suspicion in much of the West, has returned because governments have rediscovered that markets can produce efficient dependencies as easily as they produce efficient prices.

China did not invent globalisation.

It learned how to manufacture power inside it.

The Empire of Things

Karachi Port remains about a kilometre from where I work. I do not need a geopolitical map on my office wall to understand why that matters. The financial district and the port provide two different windows into the same struggle.

America's power appears when money moves. The dollar still dominates global reserves, American financial markets remain extraordinarily deep, and Washington retains coercive tools that Beijing cannot easily reproduce.

China's power arrives in containers.

A Pakistani buyer does not have to choose between the two systems in some grand ideological referendum. He may use dollars to pay for Chinese equipment. A bank may process the financial side of a transaction whose physical side reveals how far Chinese manufacturing has penetrated the world economy.

I do not think China has already won this contest. Its demographic decline has begun, while the property crisis has damaged confidence and local finances. Political control creates another category of economic risk that factory-output statistics cannot measure neatly.

America still possesses advantages China has spent decades trying to weaken without successfully replacing.

But military budgets and GDP tables no longer tell me enough.

From I. I. Chundrigar Road, I can encounter American power whenever international finance moves through the banking system. About a kilometre away, Karachi Port offers another measure of power, one counted in containers and physical goods.

One system still commands much of the world's financial plumbing and possesses extraordinary military reach. China has spent decades making itself difficult to remove from the physical economy that plumbing finances.

The aircraft carrier remains offshore.

The container has already arrived.