America Must Build—and Use—Leverage Against Beijing
Ely Ratner and Nick Danby
July/August 2026 Published on June 10, 2026
The U.S.-Chinese trade war of 2025 lasted barely a month, but the strategic deficit it exposed had been festering for decades. On April 2, his so-called Liberation Day, U.S. President Donald Trump imposed sweeping tariffs on dozens of countries, including China, which suddenly faced average levies of nearly 75 percent. But while most governments struggled to respond, Chinese leader Xi Jinping was poised to retaliate. Two days later, Beijing not only announced comparable duties but also raised the stakes by introducing export controls on seven rare-earth elements that power everything from smartphones to fighter jets. Because China commands 90 percent of rare-earth processing worldwide, the move threatened severe disruptions to American manufacturing and the U.S. defense industrial base.
Shaken by China’s leverage, the Trump administration quickly folded, realizing that soaring U.S. tariffs were no match for Beijing’s stranglehold on critical minerals. A temporary truce in May gave way to summer negotiations, which Beijing punctuated by further tightening its licensing rules in October, a clear signal that future controls could bite even harder. Weeks later, when the two leaders met in South Korea, Trump walked back his tariffs and shelved U.S. port fees targeting China’s dominance in global shipbuilding, among other concessions. In return, Beijing offered a one-year reprieve from its rare-earth restrictions, which Washington knew could be reversed at any time.
This looming threat recast U.S. policy toward China. In the ensuing months, the United States softened its approach on issues important to Beijing, dialing back support for Taiwan and loosening controls on advanced technology. Reflecting an effort to avoid re-escalation, the Trump administration outlined its pursuit of “strategic stability” in the 2026 National Defense Strategy. China, meanwhile, had more than survived the confrontation. Beijing had reset the terms of the relationship in its favor, narrowing Washington’s strategic options right through Trump’s May 2026 visit to China.
It did not have to be this way. China’s success in cornering the Trump administration was not simply a result of the United States’ failure to secure its supply chains. It reflected a profound failure of U.S. strategy. As the scholar Thomas Schelling famously observed, “The power to hurt is bargaining power.” Whereas Beijing had spent years identifying where it could squeeze Washington hardest and then built the capabilities to do so, the United States was not ready to exploit the anxieties that keep China’s leaders up at night—even though there is no shortage of them.
The U.S.-Chinese trade war of 2025 lasted barely a month, but the strategic deficit it exposed had been festering for decades. On April 2, his so-called Liberation Day, U.S. President Donald Trump imposedstiff headwinds: weak domestic demand, mounting local debt, a depressed property market, high youth unemployment, and an aging and shrinking workforce. Its military, the People’s Liberation Army (PLA), is corrupt and untested, and the regime has grown increasingly reliant on repression, digital surveillance, and propaganda to maintain social control. Abroad, the country is locked in sovereignty disputes with most of its neighbors, touts North Korea as its only formal treaty ally, and remains heavily dependent on the United States and its partners for energy, capital, industrial inputs, advanced technology, export markets, and the dollar itself.
This litany of liabilities foretells neither China’s imminent collapse nor its inevitable decline. It does, however, suggest that Beijing is susceptible to strategic pressure. Yet the United States has too often failed to press on China’s pain points or even develop options for doing so. When Xi called Trump’s bluff, he laid bare this foundational gap in Washington’s China strategy: the absence of competitive leverage over its foremost rival.
BLIND SPOT
This strategic deficit did not emerge overnight. U.S. policymakers in both parties have long avoided exploiting or deepening China’s weaknesses, viewing such efforts as unnecessary or counterproductive, if not beyond the bounds of fair play. When Washington did consider serious economic or diplomatic pressure on China, it was often in service of other foreign policy priorities, such as enforcing sanctions on Iran or North Korea, rather than as part of a deliberate strategy to compete with Beijing. Recent moves against China’s telecommunications and semiconductor sectors marked a welcome shift but remained too episodic and detached from a broader approach. Instead, successive U.S. administrations have largely focused on a combination of amassing military power, investing at home, building coalitions of like-minded allies, and respecting guardrails to prevent inadvertent escalation with China.
This approach may have served Washington well in an era of unrivaled American power, but it is insufficient to contend with a competitor that has demonstrated the will—and increasingly the capability—to challenge vital U.S. interests. Consider how few consequences Beijing has faced for its massive theft of U.S. intellectual property, its incessant provocations in the Taiwan Strait and South China Sea, its relentless cyber-intrusions into U.S. critical infrastructure, its economic coercion of American allies, and, more recently, its weaponization of critical minerals. In each instance, Washington’s response has been modest, predictable, and ineffective at steering Beijing away from an aggressive and threatening posture.
China, by contrast, has been a clever practitioner of finding the gaps and seams in American power. Through industrial policy, anticompetitive trade practices, and forced technology transfers, Beijing has exploited the U.S. market economy to accelerate its own development at the United States’ expense. The PLA has pursued cyber-capabilities and space technologies, backed by an arsenal of missiles, with the express intent of challenging and eroding the U.S. military’s ability to deploy and sustain forces in the Western Pacific. And it has leveraged the open Internet in the United States to target civilian infrastructure and siphon vast quantities of trade secrets and private data, including the 2015 hacking of the Office of Personnel Management that compromised the personal information of 22 million federal employees.
Xi’s decision to weaponize critical minerals should clarify the way forward for Washington. The United States must surely do more to secure supply chains and reduce its reliance on China, as most policymakers and experts now agree. But many of those efforts will take years at best. Meanwhile, Beijing continues to sharpen its tools of coercion and is likely to find new targets to exploit faster than Washington can shield them. This means that a purely defensive approach—one that focuses only on “de-risking,” self-sufficiency, and resilience—will not be enough. The United States must also be ready to go on offense.
THE ART OF THE SQUEEZE
Leveraging an adversary’s vulnerabilities may sound aggressive or destabilizing, but the goal is not regime change or all-out confrontation. It is to protect and advance U.S. national interests through calibrated and proportional means. To avoid a scattershot approach, which would risk escalation and dilute the compounding power of coordinated pressure, the United States must follow a coherent and disciplined framework.
To start, policymakers should ask whether exploiting a particular weakness will afford the United States a substantial and sustained competitive edge. The vulnerabilities worth pursuing should be important to China’s leaders and difficult for them to resolve. Beijing’s own policy priorities offer such a road map. Xi has spent his tenure trying to shore up China’s fragilities: corruption, domestic instability, excessive reliance on exports, and dependence on other countries for food, energy, and technology. Although he has made some headway, his continued spending of financial and political capital on these problems underscores how exposed China remains. It also illuminates where American pressure is most likely to pay off. By accentuating existing insecurities, the United States can compel Beijing to do more of what it is already doing, but at greater expense and with lesser effect, ideally forcing it to divert resources away from other, more threatening initiatives.
The United States should also zero in on vulnerabilities that are susceptible to outside pressure. Not every Chinese weakness can be exploited. Demographic decline, for instance, may sap China’s strength, but there is little the United States can do to accelerate or shape its trajectory. Instead, Washington should target vulnerabilities that its policy instruments can demonstrably affect. This requires assessing whether unilateral action will suffice and, if not, whether the United States can build a coalition to prevent, for example, “sanctions spoilers” from undermining U.S. pressure campaigns.
Finally, before putting a vulnerability in their sights, American policymakers should be confident that the expected returns outweigh the costs and risks. If they get this calculus wrong, it could harden Beijing’s resistance, invite retaliation, or nudge the competition toward the conflict it is designed to prevent. Ethical concerns matter, too. Actions that inflict needless civilian suffering, such as aggravating China’s food insecurity, could cross legal and moral lines and corrode Washington’s standing with essential allies and partners.
SMALL YARD, UNFINISHED FENCE
Rather than inflicting indiscriminate pain, the aim of a competitive strategy is to apply sequenced and proportional pressure that builds and sustains Washington’s advantages. To that end, the United States must operate across multiple time frames and prepare for multiple scenarios. It must start by constraining China’s ability to threaten the United States. It must then prepare credible options for deterring Chinese escalation and aggression. And while doing both, it must devise ways to convert China’s coercive strengths into weaknesses by exposing its malign and covert practices.
Most immediately, the United States must constrain China’s ability to amass power and capabilities that could directly threaten vital U.S. interests. Washington has already devoted considerable attention to this objective, most notably by limiting China’s access to advanced semiconductors. Without these chips, China cannot build or deploy AI systems, precision weapons, or the offensive cybertools that would be integral to its military modernization. The prospect of recursive self-improvement—AI systems capable of autonomously enhancing their own capabilities—further raises the strategic stakes; whichever power reaches that threshold first could enjoy an enduring and compounding advantage, making the size of that lead as important as having one.
The critical nodes of the semiconductor industry remain outside Beijing’s control, with U.S., Japanese, Dutch, and Taiwanese firms dominating each layer of production. And although China has been trying to onshore its semiconductor supply chain for more than a decade—to the tune of more than $150 billion—it has seen limited success: China’s advanced chips still lag several years behind the frontier in scale, yield, and performance.
The Biden administration’s “small yard, high fence” approach restricted China’s access to advanced chips, chip-making tools, and related high-end technologies, while tightening outbound investment restrictions and export license requirements for certain foreign-made equipment produced with U.S. technology. Critics have charged that these controls accelerated China’s technological self-reliance at the cost of U.S. corporate revenues. But that conclusion misses the bigger picture: Beijing had already resolved to establish its own technology base. The controls may have validated or even expedited that drive, but they also forced China to pursue its ambitions on worse terms. It had to spend more money, time, and effort to reproduce what its companies had once purchased abroad. Meanwhile, constraints on China’s computing power hamstrung the development of its domestic AI models. This is textbook competitive strategy: get the rival to do more for less in the areas that matter most.
Yet the job is not done. China continues to leverage chip-smuggling networks, overseas data centers, and model distillation, a technique that exploits access to frontier AI models to replicate their capabilities. New policy measures should target the channels China uses to acquire restricted chips and supporting architecture, including shell companies and unlisted subsidiaries, as well as cloud-based access to U.S. computing power and servicing arrangements that keep older semiconductor manufacturing equipment operational. Equally urgent is synchronizing U.S. export restrictions with those of the Netherlands and Japan, whose companies—ASML and Tokyo Electron—control critical chokepoints in the advanced semiconductor supply chain. Although both governments began strengthening their own policies in 2023, their controls on equipment sales, servicing, and subcomponent exports to Chinese fabrication plants and toolmakers fall short of U.S. restrictions. Washington should press The Hague and Tokyo to close these gaps. If diplomacy fails, it should consider invoking the Foreign Direct Product Rule, which extends the extraterritorial reach of U.S. export controls to restrict products made with U.S. software or technology.
At the same time, the United States should not unwind its hard-fought gains by licensing the export of advanced AI chips to Chinese companies, as the Trump administration did when it approved the sale of Nvidia’s powerful H200. There is little strategic sense in restricting China’s access to chip-making equipment while allowing the chips themselves to flow freely. Moreover, American AI labs and cloud providers are already computationally constrained, meaning advanced chips exported to China directly displace domestic capacity. Congress should codify stronger export restrictions to prevent any administration from trading away this decisive advantage for ephemeral gains.
OVEREXTENDED
China’s dependence on foreign export markets gives the United States similar leverage. Its outsize manufacturing sector—which accounts for nearly 25 percent of GDP (compared with a world average of 15 percent)—is enabling China’s military growth as well as its economic aggression. Nearly a third of all goods worldwide are made in China. This is not by accident: Beijing has turbocharged manufacturing with state subsidies and an undervalued currency to bolster employment and economic growth, build national champions, reduce foreign dependence, and dominate strategic industries. Today, China installs more than half of the world’s industrial robots and produces more electric vehicles than the rest of the world combined.
If these trends continue, Beijing’s control over critical sectors would displace manufacturers in the United States and U.S.-allied countries, erode their defense industrial bases, and leave them dependent on a strategic rival for the technologies that underpin both economic prosperity and military power. At a meeting of the G-7 in 2025, European Commission President Ursula von der Leyen warned that China’s industrial policies were creating a “pattern of dominance, dependency and blackmail.”
Most of China’s oil passes through vulnerable chokepoints.
But China’s huge export market is also a liability. Because domestic household consumption has not kept pace with industrial output—it lingers around 40 percent of GDP, compared with a global average of roughly 60 percent—China’s economy relies on overseas markets to sustain employment and growth. Beijing is well aware of the problem: every five-year plan the Chinese Communist Party has produced since 2006 has called for boosting domestic consumption. Nonetheless, the requirements for a genuine rebalancing, including reforming social safety net programs, pursuing income redistribution, and reducing state dominance of the economy, have proved exceedingly difficult to achieve given vested interests in state-owned enterprises, fears of unemployment, and the CCP’s insistence on maintaining political control over the economy. So instead, China has redoubled its reliance on exports: in 2025, it posted a record $1.2 trillion trade surplus worldwide, nearly 20 percent more than the previous year and the largest ever recorded by a single economy.
Washington thus has a unique opportunity to press on this pain point. It should push back against China’s export surge by bringing advanced economies facing deindustrialization together with developing countries whose own manufacturing aspirations are being displaced. This coalition could then coordinate trade measures to protect their industries, including steel, shipbuilding, batteries, and drones. Alongside tariffs, the United States could pursue high-standard trade agreements that institutionalize requirements for subsidies, state-owned enterprises, and forced technology transfers that China cannot meet. Like-minded partners could also create an anticircumvention regime by strengthening rules of origin, sharing customs data, and imposing penalties on goods routed through third countries to avoid trade restrictions. They could further impose outbound investment screening to prevent companies or individuals in the United States and allied countries from financing Chinese capabilities that the controls seek to limit.
China would no doubt try to peel off more vulnerable members of the coalition, but Washington and its partners can anticipate and combat this with affirmative incentives for developing countries, including expanded market access, supply chain investment, and industrial development financing. Such coordinated pressure on China’s export-driven growth model would reassert fair trade rules, revive market competition that has been crushed by China’s industrial policy, and deny Beijing a virtual monopoly over sectors that are critical to American security and prosperity.
DOLLAR DETERRENCE
Curbing the most threatening elements of China’s power is an immediate goal, but the United States must also build competitive leverage to support a second objective: deterrence. This leverage need not be deployed right away, or even during a trade war, but developing the tools now would ensure that the United States is ready to impose unacceptable costs on Beijing during a more intense crisis or conflict to deter Chinese aggression or escalation.
Because the U.S. dollar touches nearly every dimension of China’s international economic activity, it is one of Beijing’s most significant and exploitable vulnerabilities. Nearly 70 percent of China’s international trade is dollar-denominated or passes through dollar-based financial institutions. China carries around $900 billion in dollar-denominated debt (roughly 40 percent of its total external debt), and an estimated 50 percent of its foreign exchange reserves are held in dollars. Dollar dominance is self-perpetuating because of powerful network effects: importers hold dollars, exporters invoice in them, financial institutions clear transactions using them, and central banks reserve them. If China wants to trade with most of the world, it must operate within this system.
Were Washington to restrict China’s dollar access—moving from sanctions on banks supporting PLA activities to broad limits on dollar transactions in advanced technology and military manufacturing—it could impose severe costs on Beijing, disrupting Chinese financial markets and potentially triggering wider economic instability. Xi has sought to reduce this dependence by internationalizing the yuan, but progress has been incremental. China’s Cross-Border Interbank Payment System, for example, offers a partial workaround to the dollar-clearing system and may ease the bite of U.S. sanctions, as it did for Chinese-Russian trade following the imposition of U.S. and allied sanctions on Russia for its full-scale invasion of Ukraine in February 2022. Yet this has done little to resolve China’s broader reliance on the dollar-based global financial system. The only way Beijing can establish a credible path to reserve status for the yuan is to loosen capital controls and enact legal and institutional reforms that would satisfy foreign investors, steps the CCP has consistently resisted because they would weaken the state’s command over the financial system. China cannot simultaneously maintain a tightly controlled financial system and a globally trusted reserve currency, making any genuine attempt at de-dollarization more aspirational than achievable for the foreseeable future.
Of course, major financial action against China’s largest banks would send shock waves well beyond Beijing. The United States would have to accept real economic risks, and the assets and personnel of U.S. and allied firms operating in China would become likely targets of retaliation. Washington must prepare for this scenario by first communicating unambiguously that only severely destabilizing acts would trigger consequences of this magnitude: for example, large-scale cyberattacks on critical U.S. infrastructure, Chinese export restrictions that seriously imperil the U.S. economy, or an armed attack against U.S. allies and partners.
Critically, Washington must also rally its allies to support these thresholds, so that Beijing faces a unified front rather than opportunities to arbitrage between jurisdictions. And to help ensure that the United States can act decisively without paralyzing its own economy or forcing allies into impossible choices, policymakers should stress-test U.S. financial institutions for exposure to Chinese firms, coordinate liquidity arrangements with allies’ central banks to prevent cascading market disruptions, and fortify supply chains against potential Chinese retaliation. No set of measures could fully insulate the American economy, but together these steps would strengthen the credibility of U.S. financial retaliation as an option of last resort.
CRUDE LEVERAGE
China’s reliance on energy imports offers another vulnerability that, if targeted during a crisis, could present Beijing with unacceptable risk. China imports roughly three-quarters of its crude oil, with approximately 90 percent arriving by ship and transiting the vulnerable chokepoints of the Strait of Malacca and the Lombok and Sunda Straits in Indonesia. Although cars and trucks in China are increasingly powered by electricity and liquefied natural gas, the country remains by far the world’s largest importer of crude oil, which serves its vast industrial base, including the production of plastics, synthetic fibers, and high-tech components that drive its growth.
Beijing has long recognized that a major disruption to maritime energy flows would strain the country’s infrastructure, manufacturing, transportation, and military readiness. Decades of mitigation efforts have reduced but not resolved this dependence. Strategic and commercial petroleum reserves, for instance, would last for more than 100 days, and China has seemingly absorbed the energy disruptions from this year’s Iran war. But a short-term shock emanating from the Middle East is different from a sustained blockade with China as the primary target. In a protracted conflict with the United States, alternative energy sources, strategic reserves, and Russian overland imports would be unlikely to offset China’s loss of seaborne supply. As Xi weighs the costs of aggression, such latent pressure could prove a potent deterrent.
China’s industrial base could be easily disrupted.
But to make the threat credible and enhance its deterrent value, the United States should prepare an array of plausible options for imposing costs. For starters, the U.S. intelligence community should examine China’s response to recent disruptions in the Strait of Hormuz to assess specific areas of continued vulnerability. Below the threshold of a full blockade, the U.S. Treasury Department, through the Office of Foreign Assets Control, can use maritime sanctions to dissuade shipping companies, insurers, brokers, and banks from supporting prohibited shipments. Pressure on insurance, port access, and flag registration would raise costs and create uncertainty for China-bound tankers without requiring direct military action.
The Pentagon should nevertheless demonstrate its ability to disrupt or interdict China’s seaborne energy imports by exercising U.S. naval control over key chokepoints along energy trade routes. Given that Washington’s Asian partners depend on many of the same shipping lanes, the United States should expand intelligence sharing so that it can better identify ships supplying its friends and prioritize developing alternative energy sources and routes to protect energy flows to its allies during periods of crisis.
Energy, however, is not China’s only commodity dependence. China imports roughly 80 percent of its iron ore, a foundation of its steel industry, predominantly from Australia. And most of its copper and lithium inputs, which are critical to battery and defense manufacturing, come from Australia, Chile, the Democratic Republic of the Congo, and Peru. As with oil, these dependencies offer additional pressure points that can be leveraged to strengthen deterrence and compound China’s challenges across multiple sectors simultaneously. If Australia were prepared to restrict exports of iron and lithium ore, and the United States and its partners had a plan to tighten access to copper and cobalt, they would send a message to China that its industrial base could be easily disrupted and its defense production capacity degraded if circumstances warranted.
Beyond commodities, the United States should also coordinate with partners on potential restrictions in key defense-related sectors in which China has deep asymmetric dependencies, such as aerospace. China’s state-owned manufacturer, Comac, seeks to rival Boeing and Airbus with its newest passenger jet, the C919, but more than 60 percent of the aircraft’s components, including engines and flight controls, still come from foreign suppliers. Countries that hold genuine leverage over China’s industrial base may be reluctant to exercise it without significant diplomatic investment by the United States. Negotiating contingency plans, drafting legal authorities, and aligning allied arrangements before a crisis is precisely the kind of groundwork that competitive leverage demands. Done right, especially when combined with combat-credible military deterrence, this kind of preparation would make any major escalation even costlier for Beijing.
THOSE IN GLASS HOUSES
Beyond limiting immediate threats and deterring escalation, the third goal of competitive leverage is to turn Beijing’s strengths into weaknesses by exposing its most destabilizing covert and coercive practices. China’s authoritarian system has projected power abroad through overseas influence operations, information control, and subversive economic and military tactics. Yet each instrument works best when it is kept out of sight. China’s hidden yet powerful hand is therefore a vulnerability, and one Washington has yet to fully illuminate.
China’s efforts to shape global opinion have served two broad objectives. The first is to shield the regime from international criticism and interference in what it considers its internal affairs, especially its designs on Taiwan and its repressive policies in Xinjiang, Tibet, and Hong Kong. The second is to shape the foreign and domestic policies of target countries in ways that advance Beijing’s strategic interests, including building coalitions in UN bodies to abstain from voting against China and cultivating sympathetic politicians who soften their governments’ positions on Taiwan, trade, and human rights. The aim is not merely favorable perceptions of China, but a world in which Beijing’s preferred outcomes on major international issues are treated as inevitable and legitimate by the governments and institutions that matter most, often at the direct expense of U.S. influence.
China’s vast overseas influence operations are a central component of these efforts, particularly in countries that lack detection mechanisms and independent media. Beijing has built a sprawling overseas infrastructure of front organizations, diaspora networks, media partnerships, and elite cultivation programs, including in advanced democracies. Consider Linda Sun, the former deputy chief of staff to the governor of New York, whom the U.S. government accused, in 2024, of serving as an undisclosed Chinese government agent, allegedly blocking Taiwanese officials’ access to the governor’s office and aligning official messaging with Beijing’s wishes. In Canada, meanwhile, authorities investigated Chinese consulate officials for allegedly mobilizing international high school students to vote for Beijing’s preferred candidate in a 2019 local party election.
China’s influence campaigns are not confined to the covert. Beijing pours billions of dollars annually into its state media, overseas broadcasting, and social media operations worldwide to influence other countries’ public narratives in ways favorable to China. Across Africa, Chinese state media outlets such as Xinhua and CGTN have signed extensive content-sharing agreements with local broadcasters and newspapers, enabling Beijing to distribute prepackaged, pro-Chinese narratives through trusted domestic outlets at scale. Since these efforts are often uncontested, cash-strapped news organizations increasingly rely on free or heavily subsidized Chinese content to fill coverage gaps, allowing China to broadcast its messaging on issues such as unification with Taiwan or Uyghur human rights in Xinjiang or China’s relations with African countries.
Yet the benign image Beijing projects belies its grim oppression of minorities at home, harassment of dissidents abroad, cyberattacks against foreign critical infrastructure, collusion with organized crime, and illegal fishing that depletes fish stocks in the world’s oceans. These activities threaten the welfare and national security of numerous countries and can spark political and diplomatic backlash when exposed.
The Philippines, for instance, has pioneered an effective transparency campaign against Chinese maritime coercion. In 2023, Manila began releasing footage of Chinese coast guard vessels harassing its ships in the Philippines’ exclusive economic zone. The imagery had major domestic and international impact: it transformed what had often been abstract territorial disputes into vivid, emotionally resonant evidence of Chinese intimidation. Public opinion in the Philippines hardened sharply against China, strengthening support for a more assertive maritime posture and deeper alliance coordination with the United States. Allied governments and international media disseminated the footage widely, putting Beijing on the diplomatic defensive.
The United States possesses vast untapped potential to turn China’s malign activities into sustained reputational liabilities. To better detect and expose this behavior, the U.S. government should designate a lead agency to strengthen and synchronize information competition efforts, which to date have been insufficient and bureaucratically scattered. In addition to coordinating international messaging campaigns against especially egregious Chinese activities, the United States should work with allies and partners to identify, attribute, and expose CCP-backed influence operations. It should also support journalists, scholars, and researchers who can independently uncover and amplify China’s malign activities. After public disclosure, relevant government agencies can ensure accountability through criminal prosecutions, sanctions, diplomatic measures, and official attribution.
The CCP’s greatest vulnerability is perhaps its simplest: it cannot bear to be seen for what it is. Exposing China’s destabilizing international behavior would force Beijing to divert time and resources toward damage control, tarnish its carefully cultivated image, and erode the tenuous international standing on which its great-power ambitions depend. A world that sees China’s behavior more clearly is a world more resistant to its pressure campaigns, more skeptical of its false narratives, and more favorable to American interests and leadership.
THE RECKONING
Over the last decade, China has grown stronger, more assertive, and more confident, militarizing the South China Sea, harassing and intimidating U.S. treaty allies such as Japan and the Philippines, and waging economic and political war on countries that betray its preferences. During this period, U.S. officials and strategy documents have rightly identified China as the United States’ foremost challenge, but too often, subsequent actions have proved less competitive than the rhetoric might suggest. Beijing’s weaponization of critical minerals put this shortfall in stark relief. Although the United States must continue working to reduce its dependence on China and rebuild U.S. and allied strength, that alone is not enough. Washington must also build and wield its own competitive leverage.
Acquiring that leverage serves three clear purposes: to limit the ways China can coerce and threaten the United States and its partners, to make aggression and escalation more costly, and ultimately to improve the prospects for restraint and stability. The recommended measures for achieving this must be carefully timed and sequenced. Some, such as imposing controls on advanced semiconductors and devising more collaborative trade initiatives, should be deployed immediately; others, such as weaponizing China’s dependence on the dollar, oil, and other commodities, should be held in reserve for crisis or conflict. All the while, the United States should find ways to weaken and expose Beijing’s subversive activities, whether in foreign capitals, media outlets, or contested waters. In most cases, no single measure will suffice. Real leverage comes from compounding pressures across multiple domains. This is why American policymakers must not only build leverage to target China’s current dependencies but also look to tomorrow’s chokepoints in quantum computing, biotechnology, and energy technologies.
The CCP cannot bear to be seen for what it is.
Capitalizing on China’s vulnerabilities carries real risks of escalation and retaliation, which is why options must be developed and stress-tested now, not improvised under pressure. Much of this effort will demand close coordination with allies still committed to countering China’s most predatory practices. Building these coalitions requires eschewing the language of all-out confrontation and instead adopting a defensive frame tailored to foreign partners’ core national interests: defending sovereignty, protecting domestic industries, and strengthening national resilience. The Trump administration’s disruption of long-standing partnerships and its war in Iran have complicated prospects for collective action, but allied frustration need not outweigh what are still shared interests in addressing the economic and security threats China poses. For its part, Congress can help lock in this more competitive architecture by codifying the core frameworks and initiatives necessary to build leverage over China. This includes multiyear funding of pertinent offices and initiatives and stronger oversight of technology controls and investment restrictions.
The United States has navigated great-power rivalries before, but never by competing with one hand tied behind its back, leaving its adversary’s vulnerabilities largely untouched. China is squarely focused on this century-defining competition. It has grown more confident in testing the United States, punishing U.S. friends, and turning American dependencies into bargaining chips. Meeting that challenge requires a U.S. strategy that pairs domestic renewal with competitive leverage. Together, these reinforcing efforts will help Washington tilt the competition in the United States’ favor.
