The following summary is excerpted from a white paper available from the Hinrich Foundation.

Executive Summary

A quarter century ago, few predicted that China would become as powerful as quickly as it has and is today. Indeed, the 2000 Central Intelligence Agency (CIA) Global Trends 2015 report argued that China would fail to sustain high economic growth, “the influence of Communism and authoritarianism weakens,” the Chinese Communist Party (CCP) might give in to domestic pressure for political reform, and that by 2015 China’s “new leaders will be even more firmly committed to developing the economy as the foundation of national power and that resources for military capabilities will take a secondary role.”

To be sure, prediction is hard. The CIA hedged its outlook with the caveat that “estimates of developments in China over the next 15 years are fraught with unknowables.” But the CIA and the experts it convened should have gotten quite a bit closer to the mark.

How Did We Get Here?

The reason the CIA got it wrong in 2000 was probably because virtually all the experts they consulted likely bought into the dominant Francis Fukuyama End of History narrative that the world was converging around US values. The CIA report envisioned 2015 to be something like this: “The networked global economy will be driven by rapid and largely unrestricted flows of information, ideas, cultural values, capital, goods and services, and people: that is, globalization. This globalized economy will be a net contributor to increased political stability in the world in 2015.”

At around the turn of the century, virtually all American policymakers drank this Kool-Aid on the unstoppable triumph of US-led globalization and democracy. In his 1999 book The Lexus and the Olive Tree, Thomas Friedman assured us all countries wanted Lexuses and the only way to get them was to become democratic free-market globalists. In a 2000 speech, President Bill Clinton said, “if you believe in a future of greater openness and freedom for the people of China, you ought to be for this agreement” to let China in the World Trade Organization (WTO), at the time viewed as the apogee of such victorious globalization.

What a wonderful, hopeful, and uplifting vision. Imagine a world today where this came true. But, alas, it did not. And the deep, raw disappointment among Western, and especially US, elites cannot be overstated. Imagine believing that integrating China into the world order would produce almost a global utopia, only to gradually realize it was not to be and instead there would be a 40- to 50-year new Cold War, with China aggressively trying to outstrip the West’s techno-economic power. America’s belief that it is the shining city on the hill, with a mission to bring that freedom to the rest of the world, and the belief that the rest of the world not only wants it, but will achieve it, has caused no end to foreign policy problems for the US, including the current dilemma the US and the West face with China.

This messianic view is why the skeptics and realists have always been ignored. Bernstein and Ross H. Munro’s The Coming Conflict with China (1997) argued that the US and China were on a collision course, that China aimed to dominate Asia, and that an America-as-enemy posture and a “grand plan” were already in place. Yet, like antibodies against a virus, the foreign policy establishment reviled it. There was no attempt to argue it out; to have blue-team, red-team exercises to see who was right. Rather, as it largely remains today, the elite consensus was ruthlessly enforced.

But Bernstein and Munro, among others, were right. Just as Stalin made clear that his goal was global communism, China’s former paramount leader Deng Xiaoping in the 1979 Four Cardinal Principles made clear that party leadership and the socialist road were non-negotiable and never to be repudiated. The doctrine of “comprehensive national power” was a stated goal of the Chinese polity since the 1980s, a long-term strategy of relative-power competition written in plain sight. Three decades later, China’s Document No. 9 names seven existential threats it wanted to combat, including Western constitutional democracy, “universal values,” civil society, and neoliberalism. The same year, Xi Jinping proclaimed that “socialism will inevitably defeat capitalism.”

This and vastly more information was there for anyone with a modicum of curiosity to see. But the foreign policy establishment chose to be willfully ignorant because embracing that reality meant giving up on their utopian dreams.

Can We Talk?

Some elites hold on to the hope that China will change. Others hold that we should just negotiate more and better with the People’s Republic of China. But the reality is that there is nothing the West can do to get China to modify its more egregious behaviors in technology exchange and global trade. That window closed at least a decade ago. In the late 2000s, the CCP instituted its indigenous innovation policies that discriminated against Western products. Coordinated pushback by the European and US corporate communities and governments caused the CCP to at least partially retreat. CCP leaders knew that they could not afford to alienate the West too much at the time and still needed its investment and technology. It no longer needs the West as much now, and so the West, especially given how divided it is, poses significantly less threat to the PRC.

To be fair, the Chinese aren’t alone in hegemonic aspirations. The United States, especially in its current us-against-the-world mode, inherited the textbook on this. But despite what the anti-American left, both in the US and around the world, says, US power was not used to dominate other nations, but rather to free them. Unlike what Trump wants, this does not mean national autarky. But it does mean allied supply chains.

Alas, the odds of this happening appear low. A key reason is that Washington is still not alive to the full extent of the threat. Few Washington elites believe that China is set to or able to dominate most advanced and emerging industries, and they don’t appreciate the fundamental shift in global power if that happens.

Techno-Industrial Needs a More Active State

As hard as it is for the globalists and China engagers to hear, it is time to create a world economy where the West insulates itself, by bifurcation where it must, from any predatory use of global trade by China to create dependencies among its importers on its exports and ultimately its power.

At the same time, not to sound like I agree with Franklin Delano Roosevelt’s theory of convergence between the US and the Soviet Union, we need some movement toward convergence of techno-industrial policy with China. There are many aspects of the Chinese system that the West would be wise to emulate or expand, particularly the overriding focus on techno-industry development and competitiveness.

Validating China’s success means we need a more active state. If the China challenge is real, we need a national techno-industrial policy. For free-market advocates, this is the worst possible sin. “We don’t want to become like China. Even if the US is a hollowed out, Jeffersonian-like economy, at least we will be free,” they might think. Perhaps, but not free from China calling the global shots.

For a large share of the left, green and social justice are the top priorities. Add on top of this the fact that both sides of the political spectrum have become averse to any kind of job loss from technology, something that will be required to raise needed productivity, makes the challenge even harder. Overall, given this refusal to see reality and embrace this challenge, the picture is quite pessimistic in terms of Washington taking action in time.

So, the most likely scenario is that the United States and the West will be good enough in some areas to keep some production capabilities, but that China will take over a growing share of the global advanced industry market. Perhaps the West just isn’t better, after all.

Access the full essay from the Hinrich Foundation.