From the moment the US quietly withdrew its two carrier strike groups during the 2016 standoff in the South China Sea, the US military realised there was no chance of winning if it used force against China. The RAND Corporation advised the United States in multiple reports to avoid direct military conflict with China, emphasising “strategic de-escalation” and “risk management,” particularly on sensitive issues such as the Taiwan Strait and the South China Sea. The United States’ military resources simply cannot withstand a major power war.
Although two large-scale and prolonged military conflicts have broken out in Europe and the Middle East, their impact on the future world order is far less than that of the economic war between China and the United States. Two of the world’s three major geopolitical strategic regions have already seen war, with two of the three permanent members of the UN Security Council involved. One war exposed Russia’s true military capabilities, while the other revealed the United States’ and Europe’s military weaknesses.
East Asia has maintained relative calm despite heavy US military presence and the resurgence of Japanese militarism, largely due to China’s presence. In South Asia, India and Pakistan, having suffered significant losses in the May 7 air war in 2025, will likely remain relatively quiet, contributing to a period of stability in South Asia.
However, these wars, lacking a direct confrontation between two major powers, are localised conflicts. The two most powerful nations, in contrast, might determine the victor through economic warfare. Major economic wars between China and the US have possessed the nature of strategic decisive battles from the outset; but because they are wars without gunfire, their significance and importance are easily underestimated.
The first phase of the US-China economic war was a trade war initiated by Trump during his first term. In his second term, Trump again wielded the tariff weapon, escalating it to the level of a trade ‘nuclear’ war. At its peak, the overall tariffs reached 125-150%. China responded in kind but also used rare earth retaliation. Trump’s maximum pressure tactics hit a wall; he was unable to continue using tariffs to force concessions, nor could he achieve his goal of re-industrialising the US through tariff protection.
The tariff war put pressure on US prices, thus the Trump administration proactively lowered its stance, initiating negotiations to pause the trade war. Although the trade war is not over, the United States has already failed to force China to make concessions, nor did it achieve “re-industrialisation.” On the contrary, the tariff war has actually increased American prices.
The US tactic is to leverage the dollar’s international status to create a “dollar tide” through interest rate hikes and quantitative tightening when the dollar appreciates, global capital flows to the US, causing asset prices in other countries to fall; once the market hits rock bottom, the US then makes a surprise move, acquiring high-quality assets at low prices, completing a round of “harvesting.” This strategy has worked repeatedly for decades, reaping profits in Latin America, Southeast Asia, and Japan among others.
China’s real estate industry experienced a series of collapses, with giants like Evergrande and Country Garden facing difficulties; the financial market experienced severe fluctuations, putting pressure on the yuan exchange rate. However, ultimately, China did not experience a systemic financial crisis. As long as China holds its most crucial line of defence, not allowing free convertibility under the financial account, international capital cannot freely enter or leave China.
No matter how strong the dollar tide, it cannot affect the onshore pool of China’s assets. From the moment the Fed began cutting interest rates, the US’s attempt to systematically exploit China through conventional financial warfare also failed. The US did not achieve systematic exploitation, nor did it trigger a financial crisis in China.
Of the three major economic battles between China and the US, the technology war is the most difficult and poses the greatest challenge. In the first two, China could respond with a “defence and counterattack” strategy. The technology war is different. Any weakness in any key area could allow the US, along with its allies, to threaten China. Especially semiconductors, often called the “food” of modern industry, affect almost all high-tech industries, making them the primary target of the US’s technology war against China.
The technology war has two core battlegrounds: one is semiconductor chip manufacturing processes, and the other is artificial intelligence (AI). The United States once held an absolute advantage in these two fields and tied them together with the most advanced AI computing chips is also the focus of the US blockade against China.
The United States, through its domestic companies and its de facto control over the chip supply chain, including Japan, the Netherlands, and Taiwan, has imposed the strictest technological blockade. From 2019-26, China has basically achieved self-sufficiency in mature chip manufacturing processes (28 nanometres and above, i.e. one billionth of a metre). However, breakthroughs have not yet been made in equipment and materials for some key processes. In advanced processes, especially in chips with processes below 7 nanometres, there remain bottlenecks:
EDA (Electronic Design Automation) software is monopolised by American companies such as Synopsys and Cadence.
Advanced photoresists are dominated by Japanese companies such as JSR and Shin-Etsu Chemical.
EUV lithography machines are exclusively manufactured by the Dutch company ASML, which imposed an embargo on China. Now, ASML has also blocked the production of advanced DUV models and imposed restrictions on after-sales service.
Although China has made remarkable achievements in independent innovation and domestic substitution in recent years, they can currently only produce 7-nanometre chips using the DUV lithography process with multiple exposures. This leaves a technological gap of approximately three generations compared to the most advanced 2-nanometre process overseas.
Following the traditional “catch-up route,” even with an optimistic estimate, a break-through is not expected in EUV until 2030, and even then it will take several more years to catch up from 5-nanometre to 2-nanometre. China will remain behind and dependent on others in advanced chip manufacturing processes for many more years.
The United States’ lead in AI computing power is mainly due to the superior performance of its computing chips and the monopoly of US companies over the AI ecosystem. NVIDIA holds a 90% market share in the high-end AI training GPU (graphics processing unit) market. NVIDIA’s CUDA ecosystem (programming platform) constitutes an extremely high technological barrier, relied upon by millions of AI developers worldwide. The United States possesses approximately 75% of the world’s top AI computing power.
The United States has staked its national destiny on AI. From the government to capital, everyone is making a huge bet: whoever ignites the next AI-driven industrial revolution first will dominate the future world. However, in the first half of 2026, two landmark events occurred in the fields of chips and artificial intelligence, which may directly rewrite the course of the Sino-US technology war, or may have already determined the outcome.
In April, DeepSeek released its V4 large-scale model, boasting an astonishing 1.6 trillion parameters, a significant leap from the hundreds of billions of parameters in its predecessor, V3. Simultaneously, it achieved a revolutionary improvement in efficiency with a standard configuration of millions of token contexts, resulting in more powerful performance.
However, the most crucial aspect is not the parameters themselves, but rather its deep integration with domestic chips such as Huawei’s Ascend, and its shift to Huawei’s CANN framework in its technical architecture. For the first time, domestic AI software standards and hardware have formed a complete closed loop, establishing a comprehensive, self-reliant, and collaborative software and hardware ecosystem in China, from the AI application layer to the computing power foundation.
Although the computing chips still lag behind Nvidia in performance, and the CANN framework is not as mature as CUDA, China has already established a sustainable and iterative domestic AI ecosystem. This is a significant milestone in China’s efforts to catch up with the United States in the field of artificial intelligence.
If DeepSeek V4 broke the US monopoly on the software ecosystem, then Huawei’s “Tao Law” (τ Law) forged a new path in hardware development, completely changing the game. The core idea of ”Tao Law” is to replace traditional “geometric miniaturisation” with “time miniaturisation.” The traditional Moore’s Law (doubling transistor density every 18-24 months) follows a “geometric miniaturisation” route by continuously making transistors smaller.
This path becomes increasingly difficult, requiring extreme ultraviolet (EUV) lithography machines, with extremely fine etching technology etc.; China has been hampered in this direction. Huawei’s Tao Law takes a different path: through collaborative innovation at four levels: devices, circuits, chips, and systems. It significantly improves transistor integration density and signal transmission efficiency under the same process technology. Simply put, while others are desperately trying to “make” transistors smaller, Huawei is figuring out how to make signals “run faster and denser.”
China originally followed the mainstream Western technology roadmap, addressing every deficiency in the chip production chain, from lithography machines and etching machines to photoresist, by focusing on overcoming each weakness head-on. This was incredibly difficult. It has taken over seven years to achieve a leap forward in semiconductor equipment and materials, essentially securing a secure and self-sufficient supply chain for mature chip manufacturing processes above 28 nanometres.
Following this path, it would take four to five years to commercialise EUV lithography machines, and then another four to five years to tackle the 5-nanometre, 3-nanometre, and 2-nanometre processes. Therefore, catching up with the advanced level of chip design and manufacturing dominated by the US would take at least seven or eight years, even assuming overall progress is relatively smooth.
But with Huawei’s strategic approach, the future is different. China can break through the US blockade on advanced chip manufacturing processes more quickly and thoroughly through the new technological routes pioneered by Huawei. The Kirin 2026 chip, slated for release in the autumn of 2026, will be the first product to fully adopt logic folding technology.
According to Huawei’s plan, by 2031, high-end chips based on the “Tao Law” will achieve a transistor density equivalent to a 1.4-nanometre process. Without relying on EUV lithography machines, China’s advanced process chips are expected to catch up with or even surpass the 2-nanometre and 1-nanometre levels of traditional Western approaches within five years through a completely new design methodology.
Why has Huawei’s “Taoist Theory” caused such a significant stir in the global industry? It’s not just a specific product, but a chip semiconductor technology and industry roadmap capable of changing the world. Huawei has created a systematic methodology that cannot only alter the competitive landscape of chips but also change the course of the US-China tech war. In short, if Huawei’s technological roadmap succeeds, the US-China tech war will change direction.
The tech war has dragged on for years without ending, primarily because China has not completely broken the US blockade on chips and semiconductors, nor have they ended the US’s dominance in artificial intelligence. In recent years, the US has used its temporary lead in these two areas to preserve its hope of reversing its declining national power through winning the tech war and activating its technocratic social control system as advertised.
However, now that DeepSeek V4 has completed the closed loop of the domestic AI software ecosystem, and Tao Law has opened up a new path for the development of domestic chip hardware. These two pieces of the puzzle together mean that for the first time, China’s artificial intelligence has a complete, self-sustaining, and externally independent technical system, from the computing power foundation (Huawei Ascend) to the software framework (CANN) to the upper-level large model (DeepSeek).
Going forward, the landscape of the US-China technology war will no longer be one of passively catching up, but a truly meaningful dual-track competition based on two different technological systems.
Whoever controls the next Industrial Revolution will effectively control the future world order. The world is on the eve of a new industrial revolution. Artificial intelligence is the most important technology and industry determining the New World Order; it is the key to the next industrial revolution. Whoever obtains it first will have the hope of controlling the future.
The next industrial revolution will undoubtedly be a revolution of intelligence and automation driven by artificial intelligence. Whoever can establish a leading advantage in AI chips, large-scale models, and computing power ecosystems will dominate global economic and technological standards for the coming decades.
Military power will become secondary because when one side’s AI productivity far surpasses that of the other, the long-term economic and technological gap will eventually translate into overwhelming national strength. As in the 19th century, when there were cavalry charges, while others had already developed the Maxim machine gun, the outcome was already predetermined.
Both China and the United States have understood the playbook and is why the United States would rather give up military adventures than lose its leading position in AI and chips; China would rather invest hundreds of billions of dollars and spend seven or eight years to tackle the two toughest challenges of chips and AI.
Therefore, there’s no need to speculate about when World War 3 will break out. The real decisive battle is taking place now. In the most decisive technological war, China has moved from a “defensive counterattack” to a new stage of “strategic stalemate” and even “local counter-offensive.” With these breakthroughs, the time for China to launch a full-scale counter-offensive against the United States in its technological war is rapidly approaching.
This global competition is no longer only about technology and productivity. Artificial intelligence, combined with robotics, can massively replace repetitive physical and mental labour. Therefore, this competition is also inevitably a competition of production relations.
Private ownership could be overwhelmed by employment pressures in this competition because it cannot support the new industrial revolution. Social ownership and its corresponding distribution relations are needed to effectively solve the problem of full employment under labour substitution conditions and become the standard production relations to match the Fourth Industrial Revolution. Sources
Most people still believe the official narrative of American military strength, but the reality is that US bases are being pushed out of the Persian Gulf, and the military option cannot protect its allies https://www.naturalnews.com/2026-07-23-why-energy-crisis-is-an-engineered-collapse.html
A user’s guide to economic, political, social and cultural collapse. https://www.amazon.com/-/es/Dmitry-Orlov-ebook/dp/B00CGNQVIY/ref=tmm_kin_swatch_0
This may seem eerily similar to the Chinese Communist Party’s social credit scoring system
Quote: “It’s easy to point the finger at China and call them a totalitarian society while ignoring the fact that America is rapidly becoming just the same. China built its control grid largely in partnership with American companies, using American technology, and I believe it’s being used as a testing ground for further implementation here and around the world.”
Surveillance is no longer the unique purview of the central state; it has been fully privatised for profit by Big Tech and Corporate America
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