Over the last 25 years, we have become dependent on goods from China because American manufacturers outsourced manufacturing of parts, components, and assemblies to China to save money and increase their profits. Then, they transferred the manufacturing of whole products to China more money even though they had to agree to transfer their technology to their Chinese partners. Finally, they invested into setting up their own manufacturing facilities in China to make whole products.
American industrial participation, joint ventures, and dual-use technology transfers that began in 2002 have China was allowed to join the World Trade Organization in 2001 have aided China’s technical base, while Beijing systematically executed a multi-decade military transformation.
American Manufacturers and Technology Transfer
Under early joint-venture rules, American firms shared industrial know-how with Chinese partners, such as:
- General Motors: Formed joint ventures like Shanghai GM, transferring advanced automotive production, metallurgy, and precision machining expertise that boosted local dual-use vehicle and mobility manufacturing.
- Intel: Supplied microprocessors and server architectures utilized across Chinese
- commercial and institutional clients with state ties.]
- Cisco Systems: Partnered with Chinese networking firm Inspur in a $100 million venture to build information technology infrastructure and data centers.]
As a result, our trade deficit with China was $83.1 billion in the year 2000 to a high of $418.2B in 2018. Our deficit dropped to $344.3B in 2019 and down further to $310.2B in 2020 because of the effect of the Trump Administration’s Phase One trade deal tariffs on certain goods and the COVID pandemic disruptions and shutdowns. The trade deficit was back up to $352.8B in 2021, $382.2B in 2022 before dropping down to $279.6B in 2023. It went back up to $297B in 2024 before dropping to $202.6B in 2025 due to increased tariffs by the Trump administration. The trade deficit year-to-date through May is only $58.3B so this year’s deficit may end up as low as $140B.
A November 12, 2019 article titled, “China’s Grand Plan To Take Over The World” in Forbes, by John Mauldin states: “In The Hundred-Year Marathon, Michael Pillsbury marshals a lot of evidence showing the Chinese government has a detailed strategy to overtake the US as the world’s dominant power. They want to do this by 2049, the centennial of China’s Communist revolution.”
Mauldin comments, “Xi’s vision of the Chinese Communist Party controlling the state and eventually influencing and even controlling the rest of the world is clear. These are not merely words for the consumption of the masses. They are instructions to party members.”
He adds, “Over the last 20–30 years, we have equipped the Chinese with almost everything they need to match us, technologically and otherwise. Hundreds of billions of Western dollars have been spent developing China and its state-owned businesses.”
We are now seeing the results of these hundreds of billions of dollars in the form of a massive buildup of China’s military power.
China’s Peoples Liberation Army Military Buildup (2010–2025)
Between 2010 and 2025, China’s People’s Liberation Army Navy (PLAN) and Air Force (PLAAF) shifted from regional defense forces into advanced power-projection structures capable of challenging the U.S. military in the Western Pacific.
- Structural and Organizational Overhaul: Initiated sweeping 2015 reforms under Xi Jinping that cut 300,000 ground troops, established five unified Theater Commands, and created dedicated high-tech branches later reorganized into Aerospace, Cyberspace, and Information Support Forces.
- Naval Expansion (PLAN): Expanded shipyards to build the world’s largest naval force, commissioning advanced guided-missile destroyers, amphibious assault ships, and multiple aircraft carriers to enforce Anti-Access/Area Denial (A2/AD) in regional seas.
- Strategic and Hypersonic Capabilities: Accelerated production of medium-range ballistic and hypersonic glide vehicles (such as the DF-17), alongside a major expansion of its nuclear warhead inventory past 600 operational warheads by 2024.
The Evolution of Chinese Naval Power (PLAN)
The PLAN executed a massive shipbuilding program, constructing the world’s largest navy by total hull count with more than 700 vessels.
PLAN Major Surface Combatant Modernization (2010 vs. 2025)
- Carrier Strike Group Development: China expanded from zero carriers to three. The evolution progressed from the ski-jump Liaoning and Shandong to the Fujian, a supercarrier featuring advanced Electromagnetic Aircraft Launch Systems (EMALS). “With far greater launching power than Liaoning’s ski jump, catapults will enable larger aircraft and payloads…” as noted by the U.S. Naval War College via LinkedIn.
- Surface Firepower & VLS Expansion: China rapidly closed the maritime missile gap by aggressively fielding Vertical Launch System (VLS) cells. The crown jewel of this effort is the Type 055 guided-missile destroyer, which acts as a heavy air-defense and anti-ship platform armed with hypersonic YJ-21 “carrier-killer” missiles.
- Logistics and Blue-Water Reach: To sustain long-range operations outside the First Island Chain, the PLAN commissioned large Type 901 integrated supply ships and built its first overseas naval base in Djibouti.
The Evolution of Chinese Air Power (PLAAF)
The PLAAF transitioned from a legacy fleet dominated by 3rd-generation Soviet clones to an independent, high-tech force built around 5th-generation stealth architecture and integrated networks.
- Stealth Fighter Maturation: The J-20 “Mighty Dragon” stealth fighter advanced from its 2011 maiden flight into a mass-produced backbone fighter. Early models relied on Russian engines, but by 2025, China mass-produced them with indigenous WS-10C and next-generation WS-15 high-thrust engines, scaling the fleet toward an estimated 500 active airframes.
- Carrier-Based Aviation: To support its new EMALS-equipped carriers, China developed the J-35 stealth fighter (analogous to the U.S. F-35C) alongside the KJ-600 Airborne Early Warning (AEW) aircraft, giving carrier strike groups localized radar and command superiority.
- Strategic Bombing and Power Projection: The PLAAF upgraded its bomber fleet with the H-6N, capable of carrying air-launched ballistic missiles. It also massively scaled up tactical airlift via the indigenous Y-20 transport aircraft, vastly improving its rapid deployment capabilities.,
- Force Consolidation: In a sweeping reorganization, the military transferred the majority of the Navy’s shore-based fighter-bomber and radar units directly into the Air Force, allowing the Naval Air Force to focus strictly on aircraft carriers and maritime unmanned aerial vehicles (UAVs).
Sources: Policy Paper No. 35 by TRENDS Research & Advisory titled The Evolution of the Chinese Navy: People’s Liberation Army Navy in the Age of Great Power Competition
https://thediplomat.com/2026/01/the-growth-of-chinas-navy-past-present-and-future
Between 2018 and 2026, U.S. export control policies underwent a historic shift, transitioning from traditional narrow restrictions to an aggressive, sweeping strategy meant to directly sever China’s military-civil fusion network and limit its progress in advanced semiconductor manufacturing and artificial intelligence.
Phase 1: Institutional Overhaul & Entity Blacklisting (2018–2021)
The opening phase focused on targeting specific corporate threats and restructuring the legal authority governing trade barriers.
- The Export Control Reform Act (ECRA) of 2018: Signed into law to give the Department of Commerce statutory power to permanently regulate “emerging and foundational technologies” critical to national defense.
- Targeting Telecom Giants: The U.S. weaponized the Bureau of Industry and Security (BIS) Entity List, adding tech giants like Huawei and ZTE, effectively cutting them off from receiving critical U.S. software, electronic components, and Google services.
- Blocking EUV Machinery: Beginning in 2018 and ramping up through 2019, Washington pressured the Dutch government to restrict ASML from exporting its Extreme Ultraviolet (EUV) lithography systems to China’s leading semiconductor foundry, SMIC, preventing Beijing from printing sub-7-nanometer silicon.
Phase 2: Chokepoint Controls & AI Restrictions (2022–2024)
Instead of just blacklisting individual firms, the U.S. government enacted structural, industry-wide restrictions.
- The October 2022 & 2023 Rules: The BIS instituted rules that banned the export of advanced computing chips (such as Nvidia’s AI chips) and sophisticated semiconductor manufacturing equipment to China based on compute thresholds.
- The Foreign Direct Product Rule (FDPR): The U.S. asserted extraterritorial jurisdiction, stating that any advanced chip or equipment built anywhere in the world using U.S. software or machinery could not be shipped to China without a U.S. government license.
- Restrictions on U.S. Persons: For the first time, U.S. citizens and green card holders were legally banned from supporting, servicing, or facilitating the development of advanced chip manufacturing at Chinese facilities without explicit government permission.
Phase 3: Loophole Closures & Geopolitical Bargaining (2025–2026)
Recent actions have focused on blocking workarounds, policing global subsidiaries, and utilizing export laws as diplomatic leverage.
- Targeting Global Subsidiaries (June 2026): The Commerce Department closed a persistent gap by mandating that export controls on advanced AI chips apply to all Chinese-owned subsidiaries and affiliates operating globally (including the Middle East and wider Asia). This prevented firms from bypassing mainland embargoes by renting or routing cloud compute power through international branches.
- Shift to Annual Fab Approvals (January 2026): The U.S. eliminated broad, sweeping waivers for non-Chinese semiconductor firms operating mega-facilities inside China (like Samsung, SK Hynix, and TSMC). These were replaced with a tighter year-by-year approval framework to monitor hardware flow closely.
- Mandatory U.S. Testing (Early 2026): The BIS instituted rules requiring advanced semiconductors bound for international trade to undergo independent, third-party testing labs inside the United States to confirm they do not reduce global production capacity or support unauthorized end-uses.
- The BIS “Affiliates Rule” Debate (Late 2025–2026): In late 2025, the BIS announced a strict rule automatically blacklisting any unlisted foreign firm that was at least 50% owned by an entity already on the U.S. Entity List. “The new BIS Affiliates Rule prohibiting dealings with companies that have 50%+ ownership ties to blocked parties on pause through November 2026 due to the U.S.-China Deal.” as noted by Benesch Law. This implementation was subsequently suspended for one year until November 2026 as a key negotiating chip during trade talks, prompting China to temporarily pause its retaliatory export bans on critical rare earth minerals.
These steps are a good beginning to address China’s threat to our national sovereignty and freedom. However, it’s time for all Americans to wake up to the danger of continuing our dependence on goods from China. We must decouple our economy from China’s economy, change our trade policies, and rebuild our manufacturing base to the point that we are self-sufficient again.
While there is no simple solution, there are some immediate actions that can be taken:
Manufacturers: Stop offshoring manufacturing to China and stop investing in facilities in China. Instead return manufacturing to America using the free Total Cost of Ownership worksheet provided by The Reshoring Initiative.
Consumers: Stop buying Made in China products wherever possible.
Many more suggestions are contained in my book, Rebuild Manufacturing – the key to American Prosperity, published in 2017 and available on Amazon. My book outlines how to rebuild American manufacturing through reshoring, new trade and tax policies, and workforce training and development. Now, it’s not just time to create prosperity; it’s time to save our national sovereignty and freedom.