Recently, one of SCMP’s Science headlines screamed: Second reusable rocket recovery failure in a month puts China 10 years behind US.
The Long March 12A, said to be China’s first state-owned reusable rocket, made its debut launch on Tuesday, but the recovery of the first stage was a failure. (The second stage of the rocket, however, performed as designed.)
Does this mean China is 10 years behind the US??? Look at the names of the authors (Victoria Bela and Holly Chik) and I am sure you can understand why such scream can appear! They are all Gordan Changs; always praying for China to fail!
But I bet you, just give them another trial or two, they will surpass Elon Musk’s.
Delusional
Donald Trump also unveiled a Trump” class battle ships on December 22. He said
“We make the greatest equipment in the world, by far, nobody’s even close. But
we don’t produce them fast enough.” A US Navy fact sheet released that day says
the Trump class will be “the most lethal warship to ever be built.”
With a length of up to 880 feet and a displacement of 30,000 to 40,000 tons, they’ll also be the biggest surface combatants the US Navy has constructed since World War II.
Yes, but on paper! Actual delivery may take another eight to ten years!
Remember, some months ago, Trump also unveiled the US’s 6th generation fighter, the F-47? He calls it the NGAD, or the Next Generation Air Dominance fighter – the usual American tall talk. And you know F-47 stand for, right? (Trump’s present term is US’s 47th presidency.)
Again, this is not even a mock-up. He is trying to show off at a time when China’s J-36 and J-50 advanced prototypes are already flying openly in Chengdu and Shenyang’s skies.
The US is feeling extremely vulnerable following China’s display of their military gears in its September 3 military parade, not forgetting that Pakistan’s China-made J10-C also shot down a couple of India’s Rafales in May.
Let’s see how China has progressed militarily…
The
People’s
Liberation Army (PLA)
is among the largest military forces in the world. China is not preparing to
conquer the globe. Its core strategic objective has long been the peaceful
reunification of Taiwan with the mainland. This, however, runs directly against
the interests of the incumbent global hegemon – the US. From Beijing’s
perspective, comprehensive military preparedness is therefore essential to
deter US intervention.
To
achieve credible deterrence, China must be unassailable on two critical fronts.
First,
it must maintain effective
nuclear deterrence
against the US. This requires a survivable land- and sea-based nuclear force
capable of striking targets anywhere on the US mainland, thereby ensuring
mutual vulnerability and discouraging escalation, hence its formidable ballistic
missile developments.
Second,
China must be able to deny US military access within the Second Island Chain to the east and
southeast, and to the choke point at the Straits of Malacca. This entails possessing sufficient air
and naval capabilities to neutralise US aircraft, surface combatants, and
supporting assets operating in forward areas. Control of this maritime and
aerial space is central to preventing US forces from intervening decisively in
a Taiwan contingency.
China’s
accelerated military procurement and modernisation efforts are therefore
anchored in these two fundamental strategic requirements.
Hence
the emphasis on the state-of-the-art warships, stealth fighters with air-to-air
missiles superior to others in terms of range, and short-to-medium range missiles
to kill enemy battleships, all with unmatched radar capabilities.
Organisationally,
the PLA is structured around a highly centralised joint command system. This system is designed to ensure firm political control
by the top leadership while enabling theatre-level joint operations in wartime.
Supreme authority rests with the Central Military Commission (CMC), chaired by President Xi Jinping. The CMC answers directly
to the Communist Party of China (CPC), reflecting the long-standing principle
that “the Party commands the gun.”
Operational
command is divided among five Theatre Commands—Eastern, Southern, Western, Northern,
and Central. Each command integrates the various service branches – Army, Navy,
Air Force, Rocket Force and support units under a single joint headquarters.
This structure is explicitly designed for joint operations rather than
single-service warfare. The individual service branches are responsible for
training, equipping, and force development, but they do not command wars
independently.
Political
control is embedded at every level of the PLA. Commanders share authority with
political officers, ensuring continued alignment with party directives.
Overall, China’s command system is optimised for regional,
high-intensity conflicts,
not global expeditionary warfare. It reflects Beijing’s assessment that
future wars are likely to be short, intense, and dominated by information,
electronic warfare, and precision strikes, rather than prolonged
mass-mobilisation campaigns.
Xi has placed particular emphasis on eliminating corruption, a process that remains ongoing. It is widely believed that of the roughly thirty full generals at the beginning of the year, only a handful survived. Casualties include He Weidong, former vice-chairman of the Central Military Commission, Maio Hua, who was the PLA’s ideological and personnel chief, and two former defence ministers who were purged in 2023: Wei Fenghe and his successor, Li Shangfu. (Nine were axed in a single day in October alone. Two have recently promoted to the rank – to head the mission-critical Eastern and Southern Commands.)
The US has some 3,700 deployable nuclear warheads. China is said to have around 600. No one can survive a full nuclear war today. Though smaller in number, China’s arsenal is designed to deter. Its delivery capability has now surpassed the US’s – its new DF-51 has a range of between 16-18,000 km and the older DF-41 has a range of 12-15,000 km range, with a top speed of 25 Mach. Both are believed to be the most advanced surface-to-surface multiple warhead ICBM. Its road mobile DF-31 is also an ICBM, with a range of some 11,000 km. It is also capable of carrying multiple nuclear warheads. Apart from these, its DF-5C is too an ICBM of 13,000 km range, capable of delivering MIRV warheads.
Its shorter-range DF-17 (1,800-2,500 km), DF-21 (1,500-2,500 km, dubbed “carrier killer”) and DF-27 (5,000-8,000 km) are also nuclear-capable.
DF-17 is a road-mobile, medium-range ballistic missile system that carries the DF-ZF Hypersonic Glide Vehicle (HGV), making it China's first operational hypersonic weapon, designed to evade existing missile defences with its manoeuvrable, Mach 5+ glide vehicle for striking high-value targets in the Indo-Pacific. Unveiled in 2019, it uses a solid-fuelled missile to launch the DF-ZF into near-space, which then glides at extreme speeds, making interception difficult for systems like THAAD and Patriot.
DF-21 is also a road-mobile ballistic missile, most famous for the D variant. It is the world's first operational anti-ship ballistic missile (ASBM), designed to hit moving aircraft carriers and naval groups with its manoeuvrable warhead (MIRV). Its sophisticated guidance system is the gravest threat to U.S. naval power in the Western Pacific.
DF-27 is a new, road-mobile hypersonic ballistic missile system featuring a manoeuvrable hypersonic glide vehicle (HGV), with a significant range of 5,000-8,000 km, allowing it to threaten targets across the Pacific, including Guam and parts of the U.S. mainland. Classified as an intermediate-range missile (IRBM), it serves dual roles for both land attack and as an anti-ship ballistic missile (ASBM) capable of targeting moving vessels, posing a major challenge to existing missile defences with its extreme speed and manoeuvrability.
DF-21D and DF-27 are carrier-killers!
China also possesses submarine-launched ballistic missiles (SLBM). JL-3 is its latest. Its range is estimated to be 10,000-12,000 km. Its launch platforms are Type 096 (Tang-class) and 094A (Jin-class) submarines.
China’s J-20 and J-35 are already being produced en-mass. Their much older sibling J-11 is also a fighter to be reckoned with, not to mention the newer J-16, with its 4,300 km range and 2,100 km/h speed.
They are equipped with the PL series of air-to-air missiles. PL-15 (Mach 5 itself) was the one used by Pakistan’s J-10C to shoot down India’s Rafales. The PL series out-ranges most of its Western peer’s BVR (beyond visual range) missiles. Its more modern ones are PL-17 and PL-21, the latter with a range of up to 400+ km. They are designed to kill without having to do a dogfight!
Its AWAC KJ-3000 AWAC has a range of some 2,000km.
Many are also wondering why China has yet to replace its aged old H-6 bombers. It is actually the result of a deliberate strategic, technological, and doctrinal choice, not so much in terms of neglect or incapacity. There is no need to depend on bombers to fly great distances to drop bombs; China’s primary conflict scenarios are regional, and missiles can serve much of the purpose.
There are a number of military aircraft manufacturers in China – Shenyang Aircraft Corporation, Chengdu Aircraft Industrial Corporation, Xi’an Aircraft Industrial Corporation, China Aerospace Science & Industrial Corporation, and Shaanxi Aircraft Industrial Corporation.
China is well ahead of others in this field.
Besides, it has drones such as GJ-11 – the world’s first ship-based stealth combat drone.
PLAN - People’s Liberation Army Navy) has also been testing extra-large uncrewed underwater vehicles (XLUUVs), which essentially are large underwater drones that can operate autonomously beneath the surface. Some of these craft are very large (over 40 m long) – comparable in size to conventional submarines – and are part of a broader effort to expand China’s undersea unmanned fleet. These underwater drones may be used for surveillance and reconnaissance, mine-laying and potentially other naval missions such as mapping seabed or covert operations. China has also been reported to develop other uncrewed underwater systems like UUV-300 or similar designs which might be armed or configured for missions such as torpedo launching. Its HSU-001 class of unmanned underwater vehicle (roughly 5 m long) intended for seabed operations, indicating a longer trend in this field.
Battleships and Ship-based Missiles
Why so many soldiers?
It is for geostrategic reasons! History has taught Chinese that you can never take your neighbours for granted!
The PLAGF is equipped with a large arsenal of land systems, including several thousand tanks (Its Type 99A main battle tanks boast of an operating range of 600 km.), armoured vehicles, artillery, and rocket systems, positioning it as one of the most formidable ground forces globally.
Recent reforms and modernization efforts have streamlined the force to emphasize mobility and technology over sheer size.
All Anchors on Electronic Warfare…
China’s near- and medium-term concerns,
especially in the Eastern and Southern Theatre Commands, are unlikely to
involve wars that require large ground troops. Electronic warfare is therefore
central to PLA doctrine. Since the 2000s, the PLA has framed modern war
as “informationized” (and more recently “intelligentized”) warfare. In that
framework:
China’s advantages include:
· * Large-scale electronics manufacturing
· * Rapid iteration in sensors, processors, and
software
· * Civil–military fusion in telecom and AI
· * Winning the electromagnetic and information
domains is a prerequisite to kinetic success.
· * EW, cyber, ISR, space, and command-and-control
are treated as integrated combat functions, not separate enablers.
China’s recent military platforms are
increasingly designed to operate within—and capitalize on—an
electronic-warfare-intensive battlespace, reflecting PLA doctrine that
prioritizes information and electromagnetic dominance. However, these systems
generally hedge against EW uncertainty rather than relying on uncontested
superiority.
China is believed to have made huge strides in the department. Warships and planes of the US and its allies are most fearful of being locked by the radar of Chinese fighters and warships.
How good is the US’s military might in the wake of China’s leaps and bounds in military gears in recent years?
China’s defence budget has consistently remained below 2 % of GDP for many years and typically around 1.3 %–1.5 %. The US, on the other hand, spends between 3.2-3.4% of GDP on its military. Notwithstanding, it appears to be more solid than the US militarily. How ironical.
The US maintains 750-800 installations in roughly 80 countries and territories worldwide. This includes major bases, long-term facilities, cooperative security locations, airfields, and other sites used for logistics, training, and force projection. It also has hundreds of military bases and installations inside the United States itself, including Army forts, Air Force bases, Navy facilities, Marine Corps stations, Coast Guard units, and Space Force installations.
These basses and assets
contained therein are in fact vulnerable to China’s medium- and long-range
missiles.
Ditto its supposedly
most formidable aircraft carrier groups – in the light of China’s carrier
killer missiles.
China may not have a
nationwide, fully integrated “Golden Dome”–style missile defence system
comparable to what the US aspires to or what Israel fields on a smaller scale.
However, it does have all the elements of missile defence.
On the detection and
tracking front, it has large over-the-horizon (OTH) radars and phased-array
radars and a growing constellation of early-warning satellites.
On missile
interception, its HQ-9/HQ-22/HQ-19 systems has capability against short- and
medium-range ballistic missiles. These systems protect specific regions or
assets but have yet to be integrated into a country-side shield. This is said
to be a strategic choice, not a technological inability. (A true national
missile defence system costs hundreds of billions; it is never lead-proof and
is vulnerable to saturation, decoys, hypersonics.)
In short, China relies
on deterrence, second-strike survivability, regional air/missile defence, and
offensive counter-intervention capabilities.
With Hegseth in-charge
of US’s War Department, you can see deteriorating morale, poor equipment
maintenance, lethargy in military research and development all round, these coupled
with its thuggery behaviours towards friends and foes alike – seizing of Venezuela,
Syria and Iran oil, and salivating for Greenland and Canada, etc – are sure symptoms
that a hegemon is about to fall. Good for the world!
If a war were to break
out in the South China Sea, numerous simulations have shown that the sea will
be the graveyard for US and its allies’ warships and planes.
How old are the US Aircraft Carriers?
The U.S. Navy operates 11 nuclear-powered
aircraft carriers, all under Carrier Strike Groups.
They fall into two classes:
· * Nimitz class (10 ships – Nimitz, Dwight D
Eisenhower, Carl Vinson, Theordore Roosevelt, Abrahim Lincolh, George
Washington, John C Stennis, Harry S Truman, Ronald Reagaon, and George H W
Bush; average age 34 years.)
· * Gerald R. Ford class (1 active, – first one
commissioned in 2017; under construction: John F Kennedy, Enterprise and Doris
Miller.)
China’s Fujian aircraft carrier (Type 003) features a domestically developed electromagnetic aircraft launch system (EMALS), placing it among the most advanced carriers in the world. It is believed that the system is superior to the U.S. Navy’s EMALS on Ford-class carriers. The Chinese Navy has publicly demonstrated launches and recoveries of various aircraft types — including J-15T, J-35, and KJ-600 — during sea trials and deck operations, showing the system works across multiple airframes. However, Fujian is still conventionally powered. China has to wait for the inauguration of Type 004 – believed to be nuclear-powered and largest in terms of displacement in the world) to firmly establish China’s naval superiority.
How adequate or inadequate is US's naval
shipbuilding capability today?
Although U.S. shipyards are said to be
able to continue to build high-quality, advanced warships and Congress has
approved major investment of about US$29 billion to revitalise shipbuilding
infrastructure and workforce, the Navy hasn’t grown its total ship count in
decades; in some years it has even declined.
U.S. shipyards face serious labour
shortages (skilled welders, fitters, naval architects) and aging
infrastructure, which slow production and raise costs.
The US Navy’s long-term plans aim to grow
the Navy to ~390 ships by the 2050s. But in the short term, numbers may drop
(e.g., 295 → ~283 ships by 2027) as older vessels retire faster than new ones
join.
China’s shipbuilding industry dwarfs the
U.S. in scale. China accounts for ~50% of global commercial shipbuilding and
has far greater capacity than U.S. yards.
Some estimates suggest China’s shipbuilding capacity is hundreds of
times larger in commercial tonnage terms.
For the U.S., most major naval
shipbuilding happens in only a few yards (HII/NNS, Bath Iron Works, Marinette
Marine, Electric Boat) — which limits how fast production can scale.
The U.S. says it builds technologically
advanced, capable warships, and retains expertise in nuclear propulsion,
complex combat systems, and large warship construction; however, this is hardly
enough. A large, high-quality navy isn’t just about having big ships, it’s
about able to build enough of them fast enough while maintaining readiness.
US Ship Maintenance Capabilities in Bad
Shape
There are real and significant maintenance
problems in the US Navy’s ship maintenance and readiness system today –
backlogs, workforce shortages, and systemic stress. Backlogs and delays are so
pronounced that some carriers and other vessels can’t leave port as scheduled
because maintenance isn’t complete. Many ships are spending years in repair
yards. This isn’t minor shipyard “bumps”; it impacts fleet readiness and global
presence timelines, especially with rising strategic competition.
The Navy doesn’t have enough trained
personnel aboard ships to perform needed maintenance while underway, slowing
even basic upkeep. Both public and private yards struggle with limited dry dock
space and insufficient skilled shipyard trades, meaning maintenance slots fill
up and ships wait longer. Poor tracking systems for parts and personnel – and older
IT systems – make scheduling and managing maintenance harder, slowing repairs.
It is now looking to Japan for help.
The F-22 and F-35 are the top U.S. fighter jets. F-22 Raptor is widely considered the most capable air-to-air fighter currently in service thanks to its stealth, agility, and sensor suite.
F-35 Lightning II is not quite as stealthy or agile as the F-22, but it is believed that it’s far more versatile and networked, making it the backbone of U.S. modern airpower.
How do they compare with China’s J-20 and J-35? The jury is still out.
China’s push to new frontiers is totally relentless and multi- and cross-dimensional – private, public, military and non-military.
A case in point is its research in Maglev technology. SCMP has just reported that researchers at China’s National University of Defence Technology have successfully accelerated a tonne-class vehicle to a record speed of 700 km/h with just two seconds on a 400-metre magnetic levitation test line and brought it safety to a stop! This test speed has set a new global benchmark, making it the world’s fastest superconducting electric maglev to date. This comes from a defence university!!!
China is advancing in every field of science and technology. There are simply too many to cover; I will just speak on a few.
China’s own EUV lithography machine has finally taken shape!
Apparently, Huawei is playing a key role in coordinating a web of companies and state research institutes across the country involving thousands of engineers.
It may
take another year or two for China to bring out the commercial version. But
China has certainly arrived.
By then, China can be more of less self-reliant on the production of 5nm or below chips.
Realizing that it is futile for him to deny China of advanced chips, Trump has recently allowed NVIDIA to sell its H200 chips to China – contingent on US export licensing and a 25% revenue share/fee on such sales. (NVIDIA’s has more later generations (like Blackwell or Rubin). No actual shipments have happened yet, due to China regulators’ reluctance to rely on US supplies.
While it is true that Huawei’s Ascend 910C AI accelerator has yet to match the Nvidia H200 in raw performance, it is only a matter of time that Huawei will catch up. Even Jensen Huang says that. However, rather than matching NVIDIA chip for chip, Huawei often competes by building clusters or rack systems that combine many of its own accelerators. This makes Huawei’s CloudMatrix 384 system — built from many Ascend chips – able to rival or even exceed certain NVIDIA rack-level systems in aggregate peak compute for some workloads, though it tends to use more power and has efficiency trade-offs. (Remember DeepSeek!)
In quantum computing, Chinese researchers have taken a major step in the global race to build practical quantum computers. The Chinese approach could offer a more efficient route than Google’s to building large, fault-tolerant quantum computer.
Who will excel? My hunch: It will be China by 2030!
Why? The CEOs of top four semiconductor giants in the US – NVIDIA, Broadcom, AMD and Intel – are all Chinese ethnically. (Jensen Huang, Tan Hock Eng, Lisa Su and Tan Lip-Su, respectively. Hock Eng and Lip-Su are ex-Malaysians.) TSMC is Taiwanese. So are many of their top brains. Even ASML has a big cohort of Chinese experts working there. And from the winners of the Olympiads, you could see much of the time it was China’s Chinese versus Yellow Bananas! It is believed 50% of the people in AI are Chinese ethnically.
The trajectory is obvious.
Much has been reported on China’s space missions. I do not propose to bore readers by repeating them, save to talk about the more recent ones and its way forward.
It has also launched the first batch of satellites for its space computing constellation, a system that could rival the most powerful ground-based supercomputers once fully deployed.
There have been reports from satellite companies on the docking of two Chinese satellites that are believed to have carried out an in-orbit refuelling some 36,000 km above Earth.
Obviously, we know who is winning the space race.
China’s bio-medical sector is strong and growing rapidly, with deep historical roots in medicine and a rapidly modernizing biomedical and biotech research ecosystem.
Traditional Chinese medicine has thousands of years of herbal, acupuncture, and holistic medical practice. It provides a unique pharmacological knowledge base for modern drug discovery.
China has a long tradition of Western-style medicine, dating back to early 20th century reforms. There are over 150 universities offering strong biomedical programmes; top tiers include Tsinghua, Peking, Fudan, Zhejiang, Shanghai Jiao Tong, plus Hong Kong universities. China produces more than 100,000 biomedical PhDs annually, making it the largest biomedical workforce globally in some categories.
Its pharmaceutical and biotech industry is also making waves – Sinopharm, Fosun Pharma, Jiangsu Hengrui Medicine, WuXi AppTec lead in drug development, manufacturing and clinical research.
China is a global leader in population genomics, cancer genomics, and prenatal screening.
Notwithstanding, it continues to build world-class translational medicine infrastructure, regulatory sophistication, and original drug discovery.
Human Capital
China has more than 3,000 universities and
colleges, both public and private institutions, across all disciplines. There
are plenty of the broader science/engineering-focused universities. Many
research universities (e.g., Tsinghua, Beijing Institute of Technology, Harbin
Institute of Technology, ShanghaiTech, Southern University of Science and
Technology) are major science/technology producers. Examples of the more
renowned names explicitly labelled “科技大学 /
Science and Technology University” are University of Science and Technology of
China, Huazhong University of Science and Technology, Qingdao University of
Science and Technology, Shaanxi University of Science & Technology,
Liaoning University of Science and Technology, Chongqing University of Science
and Technology, just to name some. According to the THE World University
Rankings 2026, 5 mainland Chinese universities are in the global top 100 –
Tsinghua, Peking, Fudan, Zhejiang and Shanghai Jiao Tong. Hong Kong has five –
the University of Hong Kong (HKU), the Chinese University of Hong Kong (CUHK),
the Hong Kong University of Science and Technology (HKUST), City University of
Hong Kong and the Hong Kong Polytechnic University (PolyU).
According to a recent analysis, China
produces roughly 3.5 million STEM graduates per year across bachelor’s and
other degree levels. A study by the Georgetown University Center for Security
and Emerging Technology (CSET) projects that by 2025, Chinese universities will
produce around 77,000 STEM PhD graduates per year. For comparison, U.S.
universities are projected to produce roughly 40,000 STEM PhDs annually by 2025
— about half of China’s projected output, not to mention many of them are
ethnically Chinese.
STEM fields make up a majority (≈57 %)
of all doctoral graduates in China, underscoring how focused doctoral education
has become on science and technology areas.
On top of that, thanks to anti-Asian
policies and sentiments, American and European Chinese are also returning. Many
are most renowned in their respective fields; just to name a few: Wang Zhonglin
(from Georgia Tech) in nanotechnology and materials physics, Liu Chang (from
Princeton) in nuclear physics, Yu Guolin (from Cambridge) and Gao Huajian (from
Brown) in physics, and Chen Hudong (from Dassault) in computational physics
(from Dassault). Other notable returnees include mathematicians like Lin Huaxin
and Liu Kefeng,, number theorist like Sun Song, and other academics like Chen
Huayi, Ruan Yongbin (geometer/mathematics), Liu Yifei (number theory) Zhang
Yitang (mathematics), Sun Shao-Cong (cancer immunology), Zhang Xiaoming
(anatomy & biomedical education), Wang Yijuan (mathematical
biology/interdisciplinary research), Yang Dan (Neuroscience), computational and
AI experts like Song-Chun Zhu, Quan Guocong, Fu Tianfan and Guo-Jun Qi, science
and engineering luminaries like Xie Yimin, and twin researchers Donghan and Ma
Dongxin and Liu Jun. The list is by means exhaustive; ming-boggling indeed!
Many thanks to Trump!
In recent years, several well-known
Western and Japanese scientists and medical/technical experts have moved to
China to take up research, academic, of leadership roles at Chinese
universities and research centres. This trend has accelerated as Chinese institutions
expand funding, facilities and opportunities as some Western research
environments become more constrained.
Belgian neurologist Steven Laureys, French
physicist and Nobel laureate Gérard Mourou, former chair of Harvard’s Chemistry
Department Charles M Lieber, Japanese expert in geometry Kenji Fukaya and
Cambridge’s biotech professor Nigel Slater are some headline-making examples.
I have already argued in my earlier article China is not the world’s second largest economy as the Western-biased would want us to believe. Its true size is well beyond the commonly quoted $40 trillion figure in PPP terms.
Yes, China is not without problems. Chinese business by nature is a dog-eat-dog theatre. Real estate lapses are a big drag on its economy. Me-too forays are a norm. The country is littered with thousands and thousands of abandoned apartments, thanks to its no-tomorrow, debt-ridden developers. Xi foresaw the danger, but it was too late when the state began to intervene. It might take a decade to clean up these developers’ messes. Many EV manufacturers, likewise, will go under during the next couple of years.
The government is determined to transform – to high-value products and services. Given its absolute power in supply chains in virtually everything, including rare earths and other critical minerals, infrastructure, especially in electricity generation, and most importantly, human capital, its economy remains resilient and will persevere, come what may.
The Global South accounts for roughly 40 %–50 % of total global trade volume. The South-South merchandise trade, that is trade among developing and emerging economies, accounted for about 23 %–24 % of global goods trade in (2023 estimate).
China’s export market share (goods) was about 14.2 % of global exports and its import market share (goods) was about 10.6 % of global imports (2023). They are significantly bigger today, despite US and its allies’ tariffs.
Following US and its allies’ sanctions and denial of SWIFT facilities to Russia and several other countries, China and the BRICS grouping (minus India, in some) have been developing de-dollarisation and non-SWIFT alternative payment architectures over the last couple of years. Some are already in service.
a. China’s Cross-Border Interbank Payment System (CIPS)
It is a renminbi-centric settlement
system that processes cross-border payments and clears transactions in RMB.
It’s designed to facilitate international trade and investment in yuan and
reduce reliance on dollar-based messaging and clearing routes.
Participation has expanded significantly:
by mid-2025, direct participants exceeded 170 institutions and indirect
participants over 1,500, with coverage in around 186 countries.
However,
CIPS still typically uses SWIFT messaging for information flow in tandem with
its own settlement layer – so it’s not yet a stand-alone replacement for SWIFT
globally, but rather a parallel option especially for RMB transactions.
b. BRICS
Pay (BRICS Payment System)
BRICS
Pay is a multilateral initiative among Brazil, Russia, India, China, and South
Africa (plus expanding membership) to create a joint cross-border digital
payments infrastructure. Its aim is to simplify payments among member states
and promote local currency use, reducing settlement in US dollars.
The
system is intended to support multiple currencies – potentially including RMB,
rupee, rand, real, and ruble — for direct settlement, improving efficiency and
lowering costs of transaction chains involving third-party dollar-denominated
clearing.
There
is discussion of integrating digital technologies (e.g., blockchain or CBDC
interfaces) to enhance transparency and security, but full deployment is still
in progress and not yet at global scale.
c. SPFS
(Russia’s Financial Messaging System)
Russia’s
System for Transfer of Financial Messages (SPFS) was developed after 2014
sanctions pressures aimed at reducing dependence on SWIFT. It functions as a
domestic messaging network for financial transactions and has been offered to
foreign partners to expand its reach.
SPFS has been brought into discussions of alternative infrastructures alongside
CIPS and BRICS Pay, though it remains comparatively small and largely regional.
d. Central
Bank Digital Currency (CBDC) Platforms & mBridge
The
mBridge project, led by the Bank for International Settlements (BIS) and
participating central banks – incluing the People’s Bank of China – is a
multilateral CBDC settlement network to support cross-border payments in
multiple digital currencies.
mBridge
has piloted cross-border transactions that demonstrate the feasibility of
settlement without traditional correspondent banking and potentially without
intermediating in dollars.
Saudi
Arabia, Thailand, UAE, and other partners have joined test or participation
phases, reflecting broader interest beyond BRICS.
There are also other bilateral and regional currency settlement agreements in place, especially between China and trading partners to settle trade directly in local currencies (e.g., RMB vs Rupee, Yuan vs Ruble), bypassing the need for settlement through the US dollar.
These initiatives respond to concerns about the use of SWIFT as a geopolitical tool and the dominance of the US dollar in global finance. They now have the clout to de-dollarise.
US Sanctions and Tariffs
US sanctions on China did not start with
Trump, but Trump marked the first systemic, economy-wide escalation, and Biden
largely continued and institutionalised it, especially in technology.
After
Tiananmen, EU and US imposed limits on arms sales. Chinese firms had been sanctioned
for dealings with Iran, North Korea and Pakistan. But there were no broad
tariffs, no tech sector decoupling and no attempt to cripple China’s industrial
upgrading. Trump era (2017–2021): sanctions become systemic. He fundamentally
changed US policy, shifting sanctions from behaviour-based punishment to
strategic competition and containment. In his Trade War 1.0, he imposed 25%
tariffs on about $370 billion of Chinese imports, citing IP theft, forced
technology transfer and trade imbalance as excuses. This was the first time the
US used tariffs as a geopolitical weapon against China. He also cut off
advanced chips, software, etc to Huawei and ZTE. He banned US investments in
PLA-linked firms. He even imposed visa restrictions on Chinese researcher and
students, albeit selectively.
Under
the pretext of bank fraud and violation of US sanctions against Iran, the US
caused Canada to detain Huawei’s Meng Wanzhou while she was transiting at the
Vancouver airport on 1 December 2018. Trump gloated that “If I think it’s
good for what will be certainly the largest trade deal ever made… I would
certainly intervene.”
China
retaliated by detaining two Canadians. Relations between China and Canada
collapsed.
Fortunately,
in 2021, then under Joe Biden’s administration, US dropped extradition request
and Meng returned to China.
Biden took office in 2021, but he did not
reverse Trump’s sanctions. Instead, he expanded the policy. With his hoodlums,
he intensified technology controls, trying to freeze China at a certain level
of technological capability.
In a nutshell, Tump fired the opening shot
and Biden built the siege.
Trump’s second terms bring havoc to the
world – in the form of tariff threats. But now China was well prepared.
In early 2025, the US introduced
a special tariff related to fentanyl-precursor concerns, initially 10%, later
raised to 20% on all Chinese goods. Soon after, the Trump administration
announced “reciprocal tariffs” on imports from many countries, including a 34%
tariff on Chinese goods, on top of existing duties. Under this package, peak effective rates were reported as
high as the 100%-plus range on some categories, though diplomatic negotiations
later scaled many back.
Following talks between Chinese and US officials,
both sides agreed to lower reciprocal tariffs to around 10% for 90 days
(extended through late 2026).
Meanwhile, some earlier tariff suspensions
were agreed as part of limited “truce” agreements to contain escalation.
But the threat is still looking,
especially on chips and technology. It has announced plans for new tariffs on
Chinese semiconductors and technology goods, but enforcement has been delayed
until mid-2027, as part of ongoing negotiations.
Tariffs are taxes; sanctions and export
controls are restrictions on financial and technology flows for security or
foreign-policy reasons.
The US continues to use export controls to
limit China’s access to advanced technologies (especially semiconductors, AI,
quantum computing, and military-relevant dual-use items). These controls are
part of a broader effort to slow Chinese development of high-performance
computing, semiconductor fabrication tools, and other sensitive technologies. Under
the Global Magnitsky Act, the US also sanctions Chinese officials and entities
over make-belief human rights violations in Xinjiang,
China counters with an “Unreliable Entity
List” on US defence and arms companies.
US actions have heightened China’s push
for self-reliance and de-dollarisation efforts. It now invests heavily in
semiconductors, aerospace and military-civil fusion activities. In Beijing’s
view, US sanctions and tariff threats are no longer about behaviour; they are about
preventing China from reaching peer-status.
But the US leadership is a thoughtless
lot. China’s one action alone – the restriction of rare earths and critical
minerals – makes them run for cover. It is also disposing of the US Treasuries,
albeit gradually, which has prompted Treasury Secretary Auntie Bessent to lose
sleepless nights over its ability to run the country, given its huge national
debt and the consequences of high tariffs Americans have to face. All so very
ironical!
Political Social and Cultural Strength
As Kishore Mahbubani has repeatedly pointed out, to Western
media China is always Communist China. Obviously, their intent is
to add a Stalinist flavour to the country. That China is a totalitarian state
to the core is engraved in their brains. They don’t bother to learn that it is
in fact a meritocracy of the highest order. (Of course, there are many
corrupted officials, but corruption is also rampant in all the so-called
democracies. And the form of Liberal Capitalism that is being practised in the
West is actually exploitation of the naïve minds. Selfish individualism is
always packaged as “human rights”. It is corruption and hypocrisy of the worst
kind!
Many scholars, including hitherto China critic John
Meashermer, have already conceded that there is much strength in China’s
political system and societal/cultural norms and practices.
China’s is socialism has got a certain characteristic that
can hardly be transplanted to other economies or cultures. China fully
understands this and they had never attempted to do this after Mao Zedong.
China has undergone some three millennia of ups-and-downs. The
years of humiliation by the West and Japan are etched in their bones, not to
mention the pigtail they had to wear under the Qing rule. Chinese have
developed a unique form of collective memory which make them think long-term in
everything they do.
I used to dread the form of pseudo-capitalism and the level
corruption that was rampant after Mao and before the Xi years.
Xi has transformed China. He has helped bring some 800
million out of poverty. He deserves Nobel Prize many times over, if it truly champions
what it believes.
His continuous purge of the corrupt has given rise to a
great deal of negative reports in the West, which is most ironical. Xi knows
Chineseness; corruption is tolerated throughout China’s history – as long as
one delivered much more than what he received privately. But the scale of pre-Xi
corruption is humongous – billions in many cases. Xi knows this if left
unchecked will destroy China. Hence his uncompromising attitude, even if they involve
his close associates.
He is bent on building a bureaucracy that can outlive his tenure!
End
Credit: Written with facts and figures obtained from ChatGPT
No comments:
Post a Comment