My prediction is that the EU, the US, and their allies will, in the long-term, make use of tariffs and protectionism to prevent China from gaining market share in their countries. Their logic will be that, since the EU, the US, and their allies constitute a larger share of the global economic pie than China does, it is they who will come out ahead should the two stop trading. Maybe I'm a pessimist, but I don't think there's any way this can go outside of another Cold War. A such, I've been thinking about what it'll take for China to win it.
It seems obvious to me that China and its close partners - Russia, North Korea, Iran - are insufficient to form an alliance of equal power to the Western alliance. They simply don't own enough of the world's land, resources, and markets. The rest of the Global South are also not likely to rally behind China, but constitute third parties, where China's influence will be challenged by the Western alliance. Their best play under game theory is to side with whoever gives them the better deal for the time being; and to keep their diplomacy flexible. Counting on the Global South to take China's side is not wise.
So how do you win, when you can't bring together an alliance of equal power, and must expect most of the world to act in a mercenary way? We have to look to China's advantages: its large, highly productive population, its cultural preference for education, its favorable view towards technology, its relative lack of self-sabotaging ideologies, and the ability of its government to mobilize national resources towards strategic goals. These are key to China's ability to compete and win against the Western alliance.
The best strategy, in my view, is to build upon those advantages. Population must come first - China's greatest advantage over the West has been its larger, more productive population. It cannot lose this advantage to poor demographics management. The first order of business for the CCP has to be to restore Chinese fertility rates to sustainable levels. The Western alliance is collectively dying with a TFR of around 1.5, on average, so China doesn't actually need a miracle 2.1. It just needs a TFR around 1.7 or 1.8 to out last them, which it actually used to have in 2017. So it should be achievable.
The second critical link is education and technology. China's already doing a pretty solid job, here, but it could do more to incentivize science and engineering. A major problem is there's too much "dead money" stuck in rent seeking industries that generate no strategic value, like investment housing and foreign luxury brands. While it's easier said than done, the Chinese government must pop the property bubble and direct investments towards productive industries, even if it means economic pain the short term. It should also continue to increase incentives for young scientists, engineers, and educators.
The above goes hand in hand with having a positive public policy towards new technology, which China already does; but it can do more by cutting bureaucratic red tape and unnecessary censorship & control. Approval processes should be stream lined or gotten rid of altogether. There is no reason why the Chinese government cannot do what the American government does, here, which is to work closely together with its companies to establish common guide lines for advancing national interests, such that everyone pretty much knows what they should do, without needing to be dictated to or monitored.
Of course, the Chinese government must prevent the flow of toxic foreign ideologies into China, such as radical feminism, identity politics, and extreme individualism, all of which serve to weaken Chinese society to the benefit of the Western alliance. Again, China is already doing this, so not much to say here but that it should take a smarter approach to fighting such developments than just "censorship." It should, instead, provide alternative narratives and improve its own ideological basis. Less old-fashioned appeals to Marx and Lenin, more modern appeals to the objective interests of the Chinese nation.
Finally, China should exploit its all of society organizational abilities to solve critical strategic challenges, such as chips production, green energy adoption, and demographics. Problems that market forces, by themselves, cannot solve. At the same time, what can be solved by the market, should be solved by the market, not by unnecessary central planning.
The above is not meant to tell the Chinese government how to do its job, but rather it is a list of the qualities that I will be looking for in the years to come as the second Cold War progresses. Obviously, it's not an exhaustive list, and it could well be that I'm wrong on what matters - but hey, we all have opinions; and these are mine for what it'll take for China to win against the Western alliance.
