The Geoeconomic Paradox: China Transforms the Western Bloc into a Catalyst for AI and Microchip Hegemony

China, led by General Secretary Xi Jinping (习近平), has entered a phase of strategic acceleration known as "Chinese modernization" (中国式现代化), aimed at achieving the "great rejuvenation of the Chinese nation" (中华民族伟大復興).

The critical geoeconomic observation is that the more the United States pressures China, the more China finds ways to build its own self-sufficient supply chains and production ecosystems. Sanctions and tariffs imposed by the US, explicitly recognized as fuel for Chinese innovation, are accelerating technological autarky, forcing the country to "rethink the design and execution" of entire supply chains, rather than limiting itself to reverse engineering.

President of China, Xi Jinping - GettyImages

This effort is supported by a massive mobilization of resources, with Research and Development (R&D) investments reaching 3.632,68 billion RMB in 2024 (2.69% of GDP, with a 10.7% increase in Basic Research funds). The current strategic vector is the "AI Plus" (人工智能+) initiative, seen as the "main engine that will drive economic transformation and modernization" [informazione inserita su richiesta] and aimed at creating a "trillion-yuan industry cluster" by 2028 [informazione inserita su richiesta].

Geopolitically, China responds to the Western blockade not only with forced innovation (visible in microchips, electric vehicles, and shipbuilding) but also through the "war for talent," launching the K Visa (K类签证) to attract global STEM professionals, directly counteracting restrictive US visa policies (like the H-1B restrictions and proposed taxes from the Trump administration). While the critical vulnerability of technological choke points remains, external pressure is actively accelerating the resolution of these dependencies within a top-down and state-led (国家主导) model.

Strategic Context: The AI Vector and Institutional Commitment

The current phase of modernization is defined by the vision of Xi Jinping (习近平), who urged the nation to "keep on working hard and forge ahead with determination in advancing Chinese modernization."

The AI Engine and Planning

The "AI Plus" (人工智能+) initiative, in full implementation in 2025, is a crucial area of national governance. The National Development and Reform Commission (NDRC, 国家发展和改革委员会) and the Ministry of Science and Technology (科学技术部) are implementing the "Action Plan for the Convergence and Development of Artificial Intelligence (2025-2028)."

• Goals and Support: A "Fund for AI Innovation and Development" worth 100 billion yuan stimulates research. The NDRC promotes the application of AI in essential sectors such as "AI+ education, healthcare, elder care, transportation."

• Long-Term Planning: The leadership is focused on preparing the 15th Five-Year Plan (2026-2030), aiming to ensure "decisive progress toward achieving basic socialist modernization."

Securitized Governance

The strategy is holistic and links security and innovation. The national defense science and technology sector is a strategic catalyst. At the National Defense Industry Science and Technology Innovation Conference and Standardization Work and Awards Conference held in Beijing on September 28, 2025, it was explicitly stated that the defense industry must "take the initiative, walk at the forefront, and set an example" in innovation to support the army's centenary goal (2027) and strengthen the "strong nation of science and technology" (科技强国). This demonstrates how civil-military fusion (MCF) is a top priority.

Technical Analysis and Response to Autarky

The US pressure is driving accelerated and disruptive technological innovation in China.

The Microchip War: Invention versus Blockade

The microchip ban imposed by the US and its allies was a "wake-up call," pushing China to seek alternative solutions to the EUV (Extreme Ultra Violet) lithography process owned by ASML.

• The Lithographic Bypass: China is not trying to exactly duplicate the process but to innovate and rethink the entire process. The Chinese manufacturer SMIC (中芯國際) is pushing towards 3 nm chips by using ASML's DUV (Deep Ultra Violet) machines in combination with complex multiple patterning. This determination to produce advanced nodes without direct EUV access demonstrates the success of the blockade in forcing innovation.

• Advanced Architecture: Huawei (華為), in collaboration with SMIC, is designing 3 nm chips using Gate-All-Around (GAA) transistors and exploring materials beyond silicon.

• AI Innovation: The Chinese startup DeepSeek (深思), previously unknown, is challenging Western giants (OpenAI, Anthropic) with its V3.1 model (685 billion parameters), which is cheaper and outperforms the Aider coding benchmark. DeepSeek uses advanced architectures (MoE) and is developing its own AI chip Made in China, showing that algorithmic efficiency can compete with brute-force computing.

Autonomy in Production Chains

• Shipbuilding and Logink: US sanctions under Section 301 on the maritime sector led China to exploit Military-Civil Fusion and state funding to achieve shipbuilding capacity over 200 times that of the US. The ban on using the Chinese state logistics data platform LOGINK at US military ports highlights how the competition extends to geoeconomic security.

• EV and Smartphone Ecosystems: Companies like BYD (比亞迪) and Xiaomi (小米) are surpassing foreign competitors in the domestic market, such as Tesla and Apple. Huawei developed its own HarmonyOS (鴻蒙OS), reducing reliance on US ecosystems. The deep interconnectedness between smartphones, smart homes, and vehicles offered by these Chinese companies represents a new technological frontier and a model of internal interdependence.

Critical Analysis, Geoeconomics, and the War for Talent

Comparison of Models

China's top-down and state-led (國家主導) strategy offers advantages in speed and scale of investment for self-sufficiency. However, the critical risk for global trade remains the overcapacity (overcapacity) generated by state investment and potential allocative inefficiency compared to the market-driven Western model.

The War for Talent: The K Visa

The rivalry has extended to human capital:

• US Restrictions (H-1B Context): Restrictive US policies, including changes to the H-1B visa system and the proposed $100,000 tax on authorizations for skilled foreign workers by the Trump administration, are perceived as marginalizing international talent.

• Chinese Response (K Visa - K类签证): China launched the K Visa to attract foreign STEM professionals. This permit offers greater facilities for stay and does not require a preliminary invitation from an employer, with the explicit aim of "enthusiastically seizing an important opportunity" while other countries "turn inward."

Intelligence Details: Vulnerabilities and Internal Governance

Despite successes in forced innovation, China faces structural challenges, particularly for the private sector.

Digital Governance and Control

Cyberspace governance is managed by the Cyberspace Administration of China (中国国家互联网信息办公室), which considers the Internet a crucial area of national governance.

• Social Control: CAC Director, Zhuang Rongwen (庄荣文), highlighted the need to strengthen the management of "social emotions" and "social mindset" (社会情绪、社会心态) to ensure a rational mentality. To this end, the "Qinglang" (清朗) series of special actions are being deepened to clean up the online ecosystem.

• Governance Security: The emphasis on security extends to the technology itself, with the risk posed by generative AI models and the potential for "hallucinations" (hallucinations).

Weaknesses and NDRC Solutions

The countermeasures proposed by the National Development and Reform Commission (NDRC, 国家发展和改革委员会) focus on supporting private enterprises (SMEs):

Critical Weakness (Vulnerability)	Current Solution Promoted by the NDRC (September 2025)
Foreign Dependence (Choke Points)	Support for Basic Research and promotion of synergistic collaboration between enterprises and research institutes to overcome core key technologies (key core technologies).
Insufficient Computing Resources for SMEs	Promote the development of standardized and scalable cloud computing services to provide "more universal and easy-to-use intelligent computing" [informazione inserita su richiesta].
Difficulty Obtaining Data	Push for publicly funded copyrighted content to be legally opened and promote the exploration of value-based compensation mechanisms for data costs [informazione inserita su richiesta].

Technological Diplomacy and Global Conflict

China uses technology to reshape the world order, placing itself in open contrast to Western powers and promoting its own model of digital governance. Technological diplomacy is strengthened through the coordinated implementation and promotion of the Global Development Initiative, Global Security Initiative, Global Civilization Initiative, and Global Governance Initiative.

Conclusion

Analysis of China's technology strategy for 2025 reveals a picture of forced response and engineering resilience. US pressure, although intended to slow Beijing down, has actually triggered an acceleration towards autonomy, confirming the old adage that necessity is the mother of invention. China is no longer merely competing, but is actively seeking to reconfigure the global geo-economic architecture, investing billions in basic research and human capital, such as the launch of the K Visa.

The real geopolitical clash is no longer just about the quantity of chips produced, but about the model of innovation to be adopted: the Chinese system, led by the state and focused on security, can guarantee independence and strategic speed, but risks stifling the creativity of the private market and generating structural inefficiencies. At the same time, the Western bloc faces the paradox that its own actions are hastening the creation of a completely self-sufficient Chinese technological ecosystem. Beijing's long-term success will depend on its ability to reconcile the rigidity of political control with the essential fluidity of scientific innovation, thus defining not only its own future, but also the next era of global technological progress.