The view from China: AI, supply chains, and the coming power transition

A new structural theory published in International Security argues that as a rising power approaches parity with a dominant one, both face structural incentives to use economic statecraft to decouple their economies. The paper, which draws on the Anglo-German power transition from 1890 to 1914 and the U.S.–China transition since 1990, finds that high-value businesses within the dominant power tend to oppose decoupling, while lower-value businesses within the rising power tend to cooperate with their state’s efforts.

The analysis reframes China’s use of global supply chains as a strategic weapon in great power competition. Rather than viewing economic decoupling as a purely defensive measure, the author shows how Beijing can weaponize supply chains against rivals — a shift with profound implications for multinational firms that rely on Chinese manufacturing and logistics. For professionals in procurement, logistics, and global strategy, the message is clear: supply chains are now geopolitical assets as much as commercial ones.

Why it matters:
The paper reveals that China’s economic statecraft is not a temporary tactic but a structural response to power transition dynamics. For investors and multinational executives, this means that supply chain resilience must now account for deliberate state-led decoupling — not just market volatility. The insight shifts the conversation from whether decoupling will happen to how businesses can adapt to a world where supply chains are both tools and targets.

Source →