The geopolitical neighborhood the United States inhabits—with Canada and Mexico as longtime friends and generally good neighbors—is fundamentally more favorable for long-term security than China's neighborhood, which is surrounded by powers that will challenge China militarily, politically, and diplomatically over time.

The US economy continues to outperform other OECD countries and most of the rest of the world, and the US has advantages in innovation ecosystem rewarding entrepreneurship, financial markets four times the size of Europe's (the next largest), and world-class universities that attract global talent; these structural advantages should make the US cautious about copying Chinese industrial policy.

The US has historically not been good at industrial policy and is learning slowly; even when implementing industrial policy for legitimate reasons (reducing dependencies, aiding stockpiles, reducing supply chain vulnerabilities), the US is inducing economic distortions.

Both China and the US are running fiscal imbalances 'as far as the eye can see to ever diminishing effect'—these deficits are severely crimping China's economic growth (probably 2–3% in real terms last year, probably less than that this year) but have not yet exerted gravitational pull on the United States economy.

China studied the US military very closely after the 1996 Taiwan Strait Crisis and has learned three key things: (1) prevent the US from piling up iron (military hardware) anywhere near China's shores, (2) avoid building fixed infrastructure that the US can readily target, and (3) be ready to seize Taiwan very quickly if possible.

General Secretary Xi Jinping has set a goal to have military capability to take Taiwan by 2027, but he is unlikely to achieve this goal by that date; the task is extraordinarily difficult (an amphibious operation across 100 miles of water) and Xi likely lacks confidence in success at this moment.

The US historically exports the ideas of free trade, human rights, state sovereignty, and people finding their own way; if the US does not compete with China, China will export a different set of values to the world, including surveillance authoritarianism (requiring citizens to check an app confirming Xi Jinping thought) and absence of freedom of speech, assembly, and petition.

Jim Baker and his office (Office of Net Assessment at the Pentagon) were early to recognize China as a potential competitor to the US, beginning extensive research on China as a competitive threat in 1999 while the rest of the Pentagon was focused on global counter-terrorism wars.

The best long-term outcome for US-China relations would be a 'transmutation' in how the Chinese Communist Party and ruling class regard themselves and their duty to citizens, similar to the historical transformation that occurred between Britain and France after centuries of warfare—from adversaries to partners—though such an outcome is highly unlikely in the near term.

Catastrophic outcomes to avoid are: (1) China's internal collapse or civil war, which would cause global recession and create risks of loose nuclear weapons; (2) a new Cold War mentality that ignores economic interdependence between US and China and assumes a binary 'we win, they lose' outcome, which is unrealistic given mutual economic ties.

Long-term demographic and economic trends favor the United States over China: the US will remain 4% of world population in 2100 just as it is today, while China will decline from 18% to 6%; the US has maintained 25% of global GDP by market exchange rates for decades while China's share has declined from 75% of US GDP to less than 66% over recent years.

Nobody in this room is required to check an app and confirm they are reading Xi Jinping thought; nobody wonders if someone they just met will report them to the government for critical statements; this panel discussing implicit critiques of administrations doesn't exist in Beijing; the freedoms of speech, assembly, and petition that Aspen represents do not exist in the Chinese order.

Both the US and China are running fiscal imbalances as far as the eye can see with ever-diminishing effect: this severely crimps China's economic growth to probably 2-3% in real terms last year and probably less this year, and does not yet seem to be exerting much gravitational pull on the United States.

The Office of Net Assessment was very early to identify China as a potential competitor to the United States; starting extensive research on China in 1999 while the Pentagon was focused on global counterterrorism operations, providing early warning of the China challenge.

The best long-term scenario for US-China relations would be some form of 'transmutation' (internal change) in how the Chinese Communist Party and ruling class regard their duty to citizens, similar to how Britain and France eventually ended centuries of antagonism; the US has not had war plans against the UK for roughly 100 years.

The United States has superior geopolitical neighborhood conditions compared to China, being surrounded by longtime friends and good neighbors (Canada and Mexico) who present no military, political, or diplomatic challenge, whereas China faces multiple potential military challengers over time.

The notion that the US should emulate parts of the Chinese system is not novel; FDR was fascinated by German economic policies in the 1930s and attempted to adopt some, illustrating the temptation to adopt successful-seeming policies from other systems.

The danger of seeking to emulate parts of the Chinese system is that the US might forget who it really is and what it is really good at; historically, the US has not been particularly effective at industrial policy and is learning slowly, with the risk of inducing distortions in the economy.

The United States economy continues to grow and outperform every other OECD country and most of the rest of the world, demonstrating ongoing competitive strength even without adopting Chinese industrial policy approaches.

The United States maintains several structural advantages that continue to drive economic success: an innovation ecosystem that disproportionately rewards entrepreneurship, very deep financial markets four times the size of Europe's, and world-class universities that continue to attract global talent.