China’s first trade war with the United States in 2018 may have done more than disrupt global commerce. According to the latest issue of The China Leadership Monitor (CLM), it marked a turning point in how Chinese leaders understood their country’s external environment and the nature of its relationship with Washington. In the years that followed, Beijing began moving towards a grand strategy centred less on economic efficiency and more on national security, reduced vulnerabilities and the long-term balance of power.
The shift was not instantaneous. Chinese leaders had long expressed concern that the United States and its allies might seek to contain China’s rise. Deng Xiaoping warned senior leaders in September 1989 that “many in the world want us to do better, but there are also plenty of people who want to do us harm” (整我们). Jiang Zemin and Hu Jintao issued similar warnings. Xi Jinping continued that tradition after taking power, warning in January 2014 that the discomfort of the U.S. and other Western countries was increasing and that they were escalating efforts to “westernize and divide us”.
Yet those concerns did not initially translate into a fundamental restructuring of China’s grand strategy. The blueprint for the 13th Five-Year Plan, released in 2015 and followed by the full plan in 2016, still portrayed the international environment as relatively benign and placed economic development at the centre of the Communist Party’s agenda.
That changed after the first U.S.-China trade war.
The contrast between Xi’s political reports to the 19th party congress in 2017 and the 20th party congress in 2022 is particularly revealing. In 2017, before the trade war, Xi described China as being in “a period of important strategic opportunity” and said that “the momentum for peaceful development is irreversible”. Five years later, his assessment was markedly darker. China, he said, had confronted “external blackmail, containment, blockades, and maximum pressure”.
The transformation is also visible in the language used by Xi. Expressions such as “complex and severe external environment” and “stormy seas and ferocious waves” did not appear in his published speeches before the first trade war. The phrase “decoupling” emerged in June 2019, during the height of the conflict. Xi referred to a “new cold war” for the first time in January 2021, and between April 2021 and April 2026 used the term on twenty-two separate occasions.
Technology became another central concern. Although Chinese anxiety about “chokepoint technologies” predated the trade war, Xi used the phrase only once in 2013 and then revived it in 2018. It subsequently became a recurring feature of his arguments for technological self-sufficiency.
The party’s blueprint for the 14th Five-Year Plan, approved in October 2020, reflected the broader change. Whereas the previous plan had been development-centred, the new blueprint established a security-centred direction. The release of the U.S. National Security Strategy in December 2017 and the first trade war most likely prompted Chinese leaders to begin developing a strategy that placed security ahead of efficiency.
The intellectual foundations of that strategy, as examined by CLM, reach back much further.
One important influence is Mao Zedong’s doctrine of protracted warfare. Developed through Mao’s 1938 lectures later published as “On Protracted War”, the doctrine describes how a weaker power can gradually alter an unfavourable balance of power. Rather than seeking immediate decisive confrontation, the weaker side mobilises domestic resources, builds political support, develops external partnerships and waits for the relative position of the adversary to deteriorate.
The doctrine divides a prolonged conflict into three stages: strategic defence, strategic stalemate and strategic offence. The first occurs when the adversary holds the advantage; the second when power becomes more evenly balanced; and the third when one side has gained sufficient superiority to seize the initiative.
Recent Chinese policy appears, according to the analysis, to correspond broadly with the logic of the first stage. Since 2020, Beijing has concentrated heavily on reducing vulnerabilities. The dual-circulation strategy seeks to reduce dependence on Western demand, while the drive for technological self-sufficiency aims to limit the ability of the United States and its allies to use export controls as leverage.
China’s strengthening relationship with Russia represents another component of this approach. Xi’s decision to establish a “no-limit friendship” with Vladimir Putin in February 2022, followed by support for Russia’s war in Ukraine, can be understood through the logic of shifting the balance of power. At the same time, the strategy has not meant seeking confrontation everywhere. China has resisted becoming entangled in conflicts in places such as Venezuela or Iran, despite those countries forming part of its partnership network.
Domestic mobilisation is equally important. Xi has made friendly overtures towards the private sector, while a nationalist narrative has portrayed the United States as determined to prevent China from becoming strong and prosperous. Supported by China’s propaganda apparatus, that narrative appears to have gained public traction, according to an opinion survey released by the Carter Center in March of this year.
Yet nationalism alone cannot sustain the strategy. Economic growth remains central to Beijing’s calculations, reflected in Xi’s repeated call for “concentrating our energy on doing our own things well” (集中精力办好自己的事情).
The second intellectual source identified by CLM is the Cold War itself, although its influence is less clear. Since the Soviet Union collapsed in 1991, the Chinese Communist Party has devoted extensive attention to understanding why it happened. Chinese scholars and think-tanks have debated whether the Soviet defeat resulted primarily from ideological collapse, resistance to reform, economic stagnation, strategic overreach or isolation from the global economy.
Xi’s own interpretation places particular emphasis on ideology. He has argued repeatedly that the Soviet Communist Party lost its ideological commitment and therefore lost control over its organisation and military. That interpretation has reinforced the importance Beijing places on censorship, social control and ideological discipline.
But Chinese leaders also appear to have drawn different lessons from the Soviet experience. Beijing has sought to avoid the strategic overreach that characterised Soviet competition with the United States, while simultaneously resisting economic isolation. The dual-circulation framework does not envisage China withdrawing from the global economy. Instead, domestic and external circulation are presented as interconnected, with Chinese technological capabilities intended to strengthen the country’s competitive position internationally.
The result is an emerging strategy that combines security, economic resilience, technological self-sufficiency, external partnerships, domestic mobilisation and continued international economic engagement.
Whether it will work remains uncertain.
The latest CLM analysis suggests that China may now believe it has moved from strategic defence towards a strategic stalemate. A temporary calm in Sino-American relations, distractions created by the Ukraine war, the war in Gaza and the U.S.-Israeli war with Iran, changes in the trade policy of the Trump administration, China’s restrictions on U.S. access to China-made rare earth materials and advances in technological self-sufficiency may have strengthened that perception.
But Mao’s own framework contains a warning: the movement between stages is neither automatic nor irreversible. The balance of power is constantly changing, and strategic setbacks can reverse previous gains.
China also faces economic difficulties. Despite striking achievements in Artificial Intelligence, electric vehicles and clean energy technologies, stagnation in the broader economy could make it harder for Beijing to narrow the gap in “comprehensive national power” with the United States.
There is also a deeper problem in Xi’s reading of Soviet history. If the collapse of the Soviet Union is understood primarily as an ideological failure, the resulting emphasis on ideological purity can encourage repression, purges and discrimination against the private sector. Such policies could undermine the domestic strength that the doctrine of protracted warfare itself regards as essential.
The central question, therefore, is no longer simply whether China has developed a new strategy. The evidence presented by The China Leadership Monitor suggests that it has. The more difficult question is whether Beijing can implement that strategy without repeating the very mistakes it believes brought down the Soviet Union.
For now, China appears to be preparing for a prolonged contest rather than seeking an immediate decisive confrontation. Its strategy is built around patience, resilience, technological independence, economic connectivity and a gradual attempt to alter the balance of power.
But the strategy’s greatest vulnerability may lie within its own assumptions. The transition from strategic defence to strategic stalemate can be reversed, economic strength cannot be taken for granted, and ideological certainty can produce strategic miscalculation. A more coherent Chinese grand strategy may therefore make the competition with the United States more durable without necessarily making its eventual outcome more predictable.
