Could China Replace the U.S. as the World’s Arsenal?

The Sunday Essay ☕️

Today is Part Four of a series on US-China relations and the future of global influence.

Part One: Today’s Handshake is Tomorrow’s Sanctions: Why China Made a One Trillion Dollar Bet.

Part Two: Two Roads, One Goal: How the U.S. Buys Loyalty and Privilege

Part Three: Lend me a Royal Hand? America's Secret Play to Catch Up

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Part 4: Could China Replace the U.S. as the World’s Arsenal?

Let’s get into it.

Over the last three issues, we’ve explored how the U.S. and China are locked in a high-stakes contest for global influence.

We’ve observed two main strategies:

• China uses debt diplomacy — $1 trillion in loans through its Belt and Road Initiative — to build infrastructure, loyalty, and influence in 150 countries.
  
  

• The U.S. uses weapons diplomacy — selling arms and military technology to secure alliances, shape military balances, and maintain its role as the world’s dominant arms supplier. Currently, the U.S. provides weapons to 103 countries.
  

While China is building trade alliances, the U.S. holds a clear lead in military power, weapons exports, and global defence networks.

But beneath the surface, the power dynamic is more fragile.

As we mentioned in last week's issue, the U.S. relies heavily on Chinese rare earth processing to manufacture the very weapons it sells to other countries. Without China’s rare earth supply chain, America’s most advanced fighter jets, warships, and submarines would grind to a halt.

So here’s the big question we’re exploring today:

Could China become the next global arms supplier, replacing the United States as the world’s arsenal?

At first glance, the answer appears to be no.

Although China has been rapidly expanding its military, it has yet to replicate the advanced weaponry of the United States.

But remember what we covered in Part One.

In 1990, China’s GDP was smaller than that of Italy. By 2008, it was the world’s top contender for global supremacy.

In 1990, China exported goods worth $62 billion. By 2008, that number had skyrocketed to $1.4 trillion.

China’s rise has never been linear — it’s been nearly exponential.

When evaluating whether China could dominate the next arms race, we shouldn’t just look at its current standing.

We need to look at where they’re heading.

And while most American Hawks may brag about their advanced weapons supremacy, I would pose a controversial question…

Advanced weapons aside… when was the last time America won a war?

By “win”, I mean a battle where there were:

• Clear goals

• Clear victory conditions

• Unconditional surrender by the enemy

• America led the reshaping of the post-war order

I don't mean to sound insensitive to the brave and selfless warriors on the ground. However, from a military leadership standpoint, I believe the answer is World War II.

There have been some tactical victories and strategic political achievements, but the majority of warfare since 1942 has been characterized by grinding entanglements without clear or lasting resolution.

Why is this important?

Because America was not an advanced military power in 1939.

Meaning - America did not win World War II because it had the most advanced military in the world. It won World War II because it was the most advanced manufacturing economy in the world, and was able to reorient that strength into a wartime economy, outproducing its adversaries.

Famously, in 1942, the Richmond Kaiser Shipyard in California produced a cargo ship in 4 days, 15 hours, and 29 minutes — from keel laying to launch.

A ship like that would typically take months to build, but in the mid-20th century, the U.S. shipbuilding industry was the largest and most advanced in the world. At its peak, during the war, the Richmond Kaiser Shipyard was launching a new ship every three days.

The American advantage in World War II was not advanced weaponry; it was advanced manufacturing capability.

How does US manufacturing hold up today?

Sticking with the shipbuilding industry, the United States domestic shipbuilding industry now contributes less than 1% of global ship production.

China dominates this market, accounting for approximately 60% of global shipbuilding output.

For some perspective:

Last year alone, China State Shipbuilding Corporation (CSSC) produced more commercial ships by tonnage than the entire U.S. shipbuilding industry has made since World War II. Just like the Richmond Kaiser Shipyard in 1942, the CSSC could be redirected — quickly — to naval production.

China has the largest pool of skilled manufacturing workers in the world, with nearly 110 million workers, surpassing the entire population of many major countries.

The U.S. has fewer than 13 million manufacturing workers, and the number has been shrinking for decades.

China has more than 200 specialized manufacturing clusters, each focused on a specific industry (for example, electronics in Shenzhen, automotive parts in Shanghai, and aerospace components in Xi’an).

And China has been aggressively automating its factories over the last decade.

According to the International Federation of Robotics (IFR), China installs more industrial robots annually than any other country, by a wide margin.

In 2022, China accounted for over 50% of all new industrial robot installations worldwide.

These robots are concentrated in key sectors, such as automotive, electronics, metal manufacturing, and chemical processing — all critical for both civilian and military production.

So when readers ask me:

“Could China become the next global arms supplier?”

My answer is simple:

It’s not a question of if. It’s a question of when.

But there is more.

Recall from last week’s essay:

Remember that approximately 90% of processed rare earth minerals are sourced from China.

So in a strange paradox, although China currently cannot match the U.S. in advanced weapons design, the U.S. cannot produce advanced weapons without China.

This is where the rare earth struggle becomes the silent pivot point in the great power rivalry.

Rare earths aren’t rare because they’re hard to find — they’re rare because they’re hard to process. China controls 90% of global rare earth processing capacity, a dominance built over decades through long-term planning, industrial strategy, and environmental trade-offs that most democracies wouldn’t stomach.

But the real leverage isn’t just in the raw materials.

It’s in the ability to choke off supply at will.

Without Chinese rare earths, U.S. defence manufacturers — and their entire global supply chains — sit under the constant threat of a hard stop.

When I watch today’s trade war headlines, I see beyond the tariffs and diplomatic volleys.

The U.S. talks tough today. But China has time on its side.

While America cycles through political slogans and short-term strategies, China has been locked onto a long-range target since President Xi launched his “Made in China” campaign in 2015.

Xi, borrowing Mao’s words, often reminds his nation:

“Don’t fight unsure wars, and don’t fight unprepared battles.”

The moment China is confident it can match (or overtake) the U.S. in weapons manufacturing, it can cut the rare earth lifeline. And when that happens, the U.S. won’t have a technological edge big enough to close the gap.

Let that sink in.

America may still own today’s arsenal.

But China controls tomorrow’s materials, tomorrow’s factories, and tomorrow’s industrial scale.

That’s the trajectory that matters.

Not just where the balance sits today, but where the power is shifting next.

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I don’t intend for my writing to sound un-American. I love America. I love the culture, I love the people. I love the entrepreneurial energy. I will be in San Diego for the 4th of July. Hit me up.

But tectonic shifts are underway. And although specific issues can be delayed or muddled at times, the grand outcome is baked into the cake.

And it looks like a mooncake ;)

When I was very young, my mother put me in Mandarin lessons. In the early 90s, she could see the writing on the wall. I am sorry, Mom, I can count to ten, but that’s about it.

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