US Economy vs China: Power Imbalances with Louis-Vincent Gave

30th November, 2025

The US economy vs China is the defining axis along which the global economic system is now reorganizing itself. The contrast between a financialized American economy and an industrially ascendant China has become impossible to ignore, especially as global supply chains fracture and long-standing assumptions about Western dominance begin to erode.

Louis-Vincent Gave’s insights reveal a world in transition, one where industrial capacity, energy security, and manufacturing supremacy are replacing the old financial order that has governed the West since the dollar was taken off gold convertibility in 1971.

The fatalistic undertone is difficult to avoid – while the United States leans further into abstraction (debt issuance, asset inflation, and financial engineering) China continues to build the physical scaffolding of twenty-first–century power.

The result is a widening divergence that is pushing the global economy toward a structural reckoning.

The Semiconductor Embargo and the Myth of Western Control

To understand the modern global economy, you have to start with semiconductors. They are the oxygen of the digital age – embedded in every meaningful activity of industrial and social life. Without advanced chips, nothing that defines the modern world functions. They power data centers, telecommunications, electric grids, financial markets, defense systems, industrial automation, transportation networks, satellites, medical technology, and the AI systems now viewed as the next strategic frontier.

In many ways, semiconductors are the economy. The countries that control their design, production, and scaling control not just technological progress but geopolitical leverage.

This is why Washington’s semiconductor embargo on China was billed as the economic equivalent of a decisive, bloodless strike. The United States believed that by cutting China off from cutting-edge chips and EUV lithography tools, it could freeze Chinese innovation, slow its industrial momentum, and reassert Western dominance over the global technological stack. Inside the Beltway, it was celebrated as a masterstroke; an updated version of the Reagan-era tech restrictions that contributed to the Soviet Union’s stagnation.

But as Louis-Vincent Gave makes clear, this is not the 1980s and China is not the USSR. China responded not with capitulation but with acceleration. The embargo triggered the largest mobilization of industrial policy in modern history: massive subsidies for chip foundries, the forced reshoring of supply chains, a surge in semiconductor engineering graduates, and an intense focus on reaching self-sufficiency across the entire stack; from design software to advanced packaging to lithography alternatives.

The irony is that the embargo did not halt China; it clarified its national mission. What was once a globally integrated semiconductor ecosystem is now rapidly bifurcating. China's race to close the gap has compressed a decade of development into a handful of years. And in a world where the “US economy vs China” rivalry increasingly hinges on industrial capacity, energy cost, and the ability to scale physical production, the West may have overestimated its leverage.

Semiconductors were supposed to be the pressure point that held up the entire modern economy. Instead, the chip embargo revealed something uncomfortable: the West built the digital world but offshored the industrial foundations that sustain it, while China spent two decades constructing the factories, engineers, and raw-material pipelines that the United States can no longer easily replace.

The embargo was meant to constrain China. Its unintended consequence may be exposing how fragile and financialized the Western economic model has become—another reminder that the post-1971 system is reaching its limits, just as a more disciplined, industrially focused competitor rises.

Taiwan: The Fragile Center of the Semiconductor Universe

Any analysis of semiconductors must eventually confront the most precarious fact in the global economy: the world’s most advanced chips come from a single island sitting less than 100 miles off the coast of mainland China i.e., Taiwan.

Without the Taiwan Semiconductor Manufacturing Company (TSMC), the entire digital economy would seize up. TSMC alone produces the vast majority of the world’s leading-edge chips, the ultra-dense processors powering AI models, smartphones, high-performance computing, defense systems, satellites, and the cloud infrastructure that keeps the modern world running.

The over-reliance on TSMC semiconductors is an absurd strategic vulnerability – one that the West pretended didn’t exist for decades. In the pursuit of efficiency, corporations outsourced chip manufacturing to Taiwan, believing that geopolitics had been permanently tamed by global trade.

Louis-Vincent Gave explains that Washington’s semiconductor embargo has effectively forced Beijing’s hand. Taiwan represents both a chokepoint and an existential vulnerability. As long as TSMC remains the global bottleneck for advanced chips, China remains dependent on a geopolitical rival that is tightly aligned with Washington. And the United States, for its part, depends on a supply chain that could be disrupted by war, blockade, or sanctions.

In other words, the epicenter of global technological power sits in the most strategically contested territory on Earth. This is not a stable equilibrium. It is a structural flaw in the architecture of globalization.

The West now understands this, but its attempts to reshore fabrication are moving at a glacial pace. You don’t rebuild 40 years of offshored supply chains in a few years of emergency legislation. Meanwhile, China has accelerated its own domestic chip initiative precisely because it knows the Taiwan question cannot be postponed indefinitely.

Energy: China’s Advantage and America’s Blindspot

In terms of energy, the US economy vs China is again at a distinct disadvantage. Not the abstract, ESG-packaged version Western policymakers like to talk about, but real, physical, thermodynamically dense energy – the kind that powers steel plants, chemical refineries, heavy manufacturing, logistics networks, and the data centers required for AI.

You cannot build an industrial powerhouse on ideology, and you certainly cannot run one on expensive, intermittent power sources approved by the net-zero community.

Louis-Vincent Gave argues that this is where China’s advantage becomes undeniable. While the West ties itself into knots over energy policy (oscillating between environmental idealism and political self-sabotage) China has spent two decades doing something much simpler: building everything.

It now has the world’s largest network of coal plants, nuclear reactors, solar capacity, wind farms, hydroelectric dams, and long-duration grid assets. China’s energy policy is not moralistic; it is strategic. The driving question is always: What does industry need to operate at scale? And the answer is always: abundant, reliable, cheap energy.

Meanwhile, the United States has trapped itself in a contradictory posture. The political class celebrates the “energy transition” but seems unable to grasp that manufacturing requires baseload power, not virtue signals:

Natural gas remains cheap in America, but regulatory and political bottlenecks keep infrastructure expansion constrained.
Nuclear is discussed endlessly but built rarely.
Coal is politically untouchable.
Renewables, despite enormous investment, remain dependent on Chinese supply chains for critical minerals, components, and grid-stabilizing hardware.

This divergence has profound implications. Industrial policy is meaningless without energy policy. And in the existential matchup of the US economy vs China, China has already secured what the West treats as optional. Energy inputs are not just a cost; they are the lifeblood that determines whether factories run, supply chains scale, and nations maintain sovereignty over their own physical economy.

In practical terms, China now enjoys what amounts to an “energy floor” i.e., a guaranteed base of cheap, stable power, while the West lives with an “energy ceiling,” constrained by rising costs, political paralysis, and infrastructure decay.

If the next global crisis is shaped by energy scarcity or supply-chain fragility, it will not be because it was unforeseeable. It will be because the West chose not to prepare.

The Industrial Divergence Grows Wider

China’s industrial overcapacity is actually a strategic asset. In sectors like EVs, batteries, solar panels, steel, shipbuilding, rail, and increasingly semiconductors, China’s capacity dwarfs that of the United States. This is not merely scale; it is system-level dominance. China’s manufacturing ecosystem is integrated in ways the West cannot replicate: suppliers, logistics, financing, engineering talent, ports, and production networks operate in seamless coordination.

The United States, by contrast, now struggles to build even a single advanced semiconductor facility without years of delays and cost overruns. China builds industrial cities; America builds industrial PowerPoint slides.

Containment Has Failed and the World Is Realigning

Washington assumed it could slow China through export controls and supply-chain exclusion. The result has been the opposite. China has accelerated toward self-sufficiency while much of the Global South has begun anchoring its economic future around Chinese manufacturing and infrastructure.

This is quiet but profound geoeconomic realignment.

Nations do not align with moral posturing; they align with factories. They align with whoever can deliver ports, rails, energy projects, consumer goods, and financing at scale. The more the U.S. leans on sanctions and exclusion, the more it pushes the world toward a multipolar system where China’s physical economy becomes the gravitational center of global production.

The Fatalistic Trajectory of Western Economic Fragility

The US economy vs China narrative is not simply about GDP or trade flows. It exposes structural weaknesses in the Western economic model itself. A system that depends on perpetual credit expansion and asset appreciation becomes increasingly fragile when confronted with a world defined by material scarcity, supply-chain localization, and geopolitical competition.

Gave’s analysis fits a grim historical pattern: financial hegemons eventually collide with industrial reality. The next crisis in the West will not be an unpredictable shock. It will be the delayed consequence of a system that ignored its physical foundations for too long. The West convinced itself that financial architecture could substitute for industrial capacity. History suggests otherwise.

Rare Earth Minerals: The Hidden Backbone of Industry

Rare earth minerals are the quiet linchpins of modern technology, and China controls the majority of global production. China also dominates the refining process, giving it an outsized influence over industries that define the 21st-century economy.

For the US economy vs China, this creates a critical vulnerability. While the US has reserves, it relies heavily on Chinese processing and supply chains. Any geopolitical tension, trade restriction, or disruption could send shockwaves through the tech, automotive, and defense sectors worldwide.

Just as Taiwan anchors the semiconductor industry, rare earths anchor the global energy transition and high-tech manufacturing. Losing access (or even facing uncertainty) forces companies to scramble for alternatives, driving costs higher and slowing technological progress.

In essence, rare earths are not just a resource, they are another strategic choke point. Control over them amplifies industrial power in ways that no single metric of GDP or production capacity can capture.

Vulnerabilities in the Chinese Economy

While China has emerged as a formidable industrial power, there are structural weaknesses that make the “US economy vs China” comparison far from one-sided. Understanding these vulnerabilities is critical for investors, policymakers, and analysts assessing the long-term trajectory of China’s economic growth.

Real Estate and Local Government Debt - China’s real estate sector, which once fueled double-digit growth, has been a source of mounting risk. High-profile property developers, such as Evergrande, experienced liquidity crises that reverberated across financial markets. Local governments, heavily reliant on land sales for revenue, now face ballooning debt.
Demographic Decline - China’s birth rate has fallen even more sharply than in the U.S., reaching historic lows of around 9.5 million births per year. Combined with an aging population, this demographic contraction poses a long-term challenge to labor availability, domestic consumption, and pension systems.
Over-Leveraged Corporations - Many Chinese firms rely on even higher levels of debt to finance growth than their US counterparts. State-owned enterprises, private conglomerates, and local government financing vehicles carry significant leverage, making them vulnerable to interest rate hikes, slowing demand, and financial shocks.
Capital Controls and Foreign Investment Dependence - China maintains strict capital controls to manage the renminbi and domestic liquidity. While this protects against sudden capital flight, it limits foreign investment inflows and restricts China’s ability to efficiently allocate global capital.
Consumer Demand Sensitivity - Following the property market crash, many millennials and middle-class households reduced spending, prioritizing savings over consumption. This behavioral shift makes economic recovery reliant on government-driven initiatives, and the export sector.

Louis-Vincent Gave emphasizes that while China’s industrial and technological capacities are expanding rapidly, these vulnerabilities create potential volatility that can affect growth and investment outcomes. In the ongoing comparison of US economy vs China, these structural weaknesses are critical counterpoints to China’s strengths in manufacturing, high-tech niches, and export capacity.

Conclusion: The Grim Reality of the US Economy vs China

When evaluating the US economy vs China heading into 2026, the outlook is stark and unforgiving. China has carved out niches of high-tech dominance (from LIDAR and AI to semiconductors and rare earth minerals) using a capital-light, labor-intensive model the US struggles to replicate.

Taiwan’s semiconductor supremacy and China’s control of rare earth minerals are precarious linchpins; any disruption could cascade globally, exposing vulnerabilities in both supply chains and strategic industries.

Energy dependence further complicates the picture. China’s reliance on imports and the US’s geopolitical entanglements highlight that industrial power is never absolute. Meanwhile, over-leveraged Chinese corporations, demographic decline, and a fragile real estate sector threaten systemic shocks. The US, despite technological and capital strength, faces diminishing returns on investment, politically constrained industrial policy, and increasingly exposed supply chains.

The US economy vs China is a cautionary story of global fragility, where technological dominance, financial leverage, energy dependence, and strategic resources intersect with human, demographic, and geopolitical limits.

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