Four decades ago, when Chinese Premier Deng Xiaoping advocated a policy of "hide your light, bide your time," he envisioned a gradual path for China to gain dominance and power over the West. The point was to gain power without alarming Western leaders. The ultimate goal was for China to become the "hegemon" by achieving global techno-economic dominance, with a target date of 2049.

Xi Jinping's Accelerated Timeline

However, Xi Jinping couldn't wait. In 2014, he chose to go “all in,” especially with Made in China 2025, an aggressive campaign to dominate global technology-based industries. While some in the West pushed back, the response amounted mostly to grumblings, and little in the way of meaningful action was taken. China’s main response to these complaints was to do a better job “hiding its light,” and official references to “2025” were subsequently prohibited.

Until now, Xi’s decision to up the ante on China’s techno-economic aggression—accelerating the timeline to attain global dominance by perhaps a decade ahead of the 2049 goal—appeared to be a good bet.

The Obama administration largely ignored these developments and mostly interacted with China to secure cooperation on broader international relations issues, including climate change and North Korea. It didn’t particularly appreciate China’s techno-economic aggression, but it did little to impose any pain on China in return.

Trump's first term was more assertive, making some effort to push back. But at the end of the day, the administration still pursued deals with China and was often sidetracked by globalist advisors.

The Biden administration was no better, with its overarching focus on green initiatives and DEI. While it did impose export controls to limit China’s semiconductor capabilities, those measures were only partially effective and not tied to any meaningful quid pro quo. Like the Obama administration, it remained mindful of WTO obligations and was unwilling to take bold, unilateral action.

Xi’s Miscalculation

Because of the weakness of the American and broader Western response, Xi had every reason to believe his aggressive gamble would pay off. So far, he could—and did—get away with virtually every Chinese attack: stealing intellectual property, attacking foreign firms operating in China, closing the market to outside competitors, massively subsidizing domestic companies, and more. In the absence of a barrier, his view surely was: “Let’s keep going, and even double down. The West is a paper tiger, too tied to obeying global trade rules and/or too eager to sell a few more cars in China to risk rocking the boat.”

What Xi didn't account for was the possibility of Trump returning to office, this time with a crew of top advisors who were Trumpians. And so, Trump launched Liberation Day and imposed steep tariffs on China. He warned China not to retaliate, but of course, they won’t back down. As of this writing, U.S. tariffs on Chinese imports stand at 145 percent. If these tariffs remain in place, this amounts to a radical decoupling of U.S.-China trade, costing China hundreds of billions in lost exports, including high-tech goods, to the United States. Needless to say, Xi expected Trump to fold, not raise by going all in.

Over the last 20 years, especially under Xi, China has refused to negotiate in good faith when confronted with foreign complaints about its rampant innovation mercantilism. Any pressure on China was met with feigned indignation about not being treated with respect. This was partly because it knew the West was weak and usually willing to accept verbal assurances that were never followed by real change. For example, when the Obama administration made a deal with China to halt cybertheft of U.S. intellectual property. Beijing backed off for a few months, and then promptly resumed robbing the United States with impunity.

However, there is another reason China does not negotiate in good faith, and that is its core commitment to never losing face or looking weak in the eyes of Western capitalists. Making changes would be de facto admitting that it has not played by the rules—something the Chinese Communist Party is fundamentally unwilling to admit.

Of course, in today’s fast-moving and chaotic global trade environment, it’s unclear whether Xi will offer real change at the bargaining table or whether Trump will lift tariffs without securing meaningful concessions. But it is clear that if China doesn't return to the table with real, enforceable commitments, Xi’s plan of overtaking the West in advanced industries will be set back, perhaps by as much as five to ten years. Losing $400 billion in exports to the United States is not chump change.

To be sure, absent other nations joining the United States in limiting Chinese innovation mercantilism, China will likely still prevail on the path Xi embarked on—though it might have to wait until 2049 to declare victory. But even so, the “Trump shock” will prove to be a serious setback.

Potential Paths Forward

Despite this major setback to its ambitions of global leadership, China still has several potential paths forward:

1. Weather the storm: Xi could just choose to endure four to six years of major transition as China’s economy learns to advance without access to the U.S. market. Over time, it could rebuild momentum and get back on track by forming alliances with nations likely to be alienated by aggressive U.S. negotiating tactics.
2. Position as free traders: Simultaneously, Xi could present China to the world as a champion of free trade, hoping that other nations might fall for this narrative, as they have in the past, or feel they have no choice but to align with Beijing.
3. Internal Reform: A less likely scenario would see reformers somehow rise to power, recognizing that Xi overplayed his hand and failed to “hide the light” long enough. Certainly, some in the CCP hierarchy believe this. But whether they can muster enough political support for a “palace coup” remains in doubt. If they can, China might very temporarily reduce its techno-economic aggression to avoid even more retaliation. It might lose a battle to win the war.

For now, Xi’s accelerated timeline appears to have been a strategic miscalculation. He grew overconfident, overly optimistic, and overplayed his hand. The coming years will reveal whether China can adapt its approach or suffer the consequences of this high-stakes gamble.