WSJ What’s News: The Military-Industrial Battle Between the U.S. and China

Episode Release Date: June 1, 2025
Host: Alex Osola
Guest: John Eamont, Senior Reporter, The Wall Street Journal

Introduction

In the June 1st episode of WSJ What’s News, host Alex Osola delves into the escalating military-industrial competition between the United States and China. The discussion centers on China's strategic investments over the past decade that have significantly bolstered its manufacturing capabilities, positioning it as a formidable rival in both economic and potential military confrontations. Osola is joined by senior Wall Street Journal reporter John Eamont, who provides in-depth analysis of the current dynamics shaping this critical geopolitical rivalry.

China's Industrial Ascendancy

Strategic Investments and Manufacturing Dominance

China has methodically invested in key strategic industries, ranging from basic chemicals to advanced machinery, essential for both economic supremacy and wartime readiness. Over the past decade, under the leadership of Xi Jinping, China has poured substantial resources into sectors like shipbuilding, mining, and the processing of critical minerals. This push has enabled China to become the world's largest shipbuilder, outpacing South Korea and Japan, while the United States has lagged significantly behind.

John Eamont [02:16]: "They're really well equipped. It's hard to think of a country that would be better equipped."

One notable example of China's manufacturing prowess is its drone industry. Chinese drones are not only widely used but are also favored for being both effective and cost-efficient in prolonged conflicts.

John Eamont [02:30]: "These are good drones. These are cheap drones. These are exactly the drones you would want if you were having to wage a long, protracted conflict."

Additionally, China has significantly increased its naval capabilities, producing more destroyers than the United States since 2000. The ability to deploy ships with advanced weaponry, such as cruise missiles, underscores China's growing maritime strength.

John Eamont [03:10]: "One Chinese shipbuild last year produced more commercial ships by tonnage than the entire United States has made since World War II."

Economic Contradictions Within China

Balancing Industrial Growth with Economic Challenges

Despite China's remarkable advancements in manufacturing and strategic industries, the country faces internal economic challenges that could impact its long-term sustainability and military readiness. Issues such as deflation and high youth unemployment rates present significant hurdles.

John Eamont [05:29]: "On the other hand, economic numbers aren't so good. It's wrestling with deflation, which is typically not a sign of a thriving economy. There's a lot of youth unemployment."

These economic strains suggest that while China excels in specific sectors, there may be underlying vulnerabilities that could hinder its overall economic health and, by extension, its military-industrial capabilities.

The United States' Industrial Lag

Critical Gaps in Manufacturing and Resource Production

In stark contrast to China's industrial surge, the United States has experienced a decline in manufacturing prowess, particularly in areas vital for national defense. Key sectors where the U.S. lags include shipbuilding, rare earth magnet production, and microelectronics.

John Eamont [08:05]: "China produces something like 92% of the world's rare earth magnets today. And the United States produces a teensy, teensy bit today."

Rare earth magnets, crucial for modern military equipment and electric vehicles, exemplify the U.S.'s dependency on imports for essential materials. Additionally, the decline in domestic shipbuilding capabilities means the U.S. has fewer trained workers and less manufacturing infrastructure to rapidly scale up production in times of conflict.

John Eamont [09:36]: "The size of the population, the fact that it controls such a huge share of the world's manufacturing and has for decades. That's one answer. The second is that America has been de-industrializing manufacturing as a share of the economy has declined for decades."

These factors collectively highlight significant vulnerabilities within the U.S. defense industrial base, making it challenging to match China's output in a potential conflict scenario.

Impact of U.S. Trade Policies

Assessing the Role of Political Decisions on Industrial Competitiveness

U.S. trade policies, particularly those implemented during President Trump's administration, have had a profound impact on the country's ability to compete industrially with China. Actions such as imposing tariffs and taxes on Chinese goods aim to reduce dependency on Chinese manufacturing and encourage domestic production.

John Eamont [10:36]: "He has a plan to levy a major tax on Chinese ships that deliver convert goods to U.S. ports. That would definitely cause a lot of disruption to the economy."

However, these policies also have mixed results. While they may reduce imports from China, they can strain alliances with other global manufacturing powerhouses like Japan and South Korea, potentially diverting trade to these nations instead of fostering a robust domestic industry.

John Eamont [10:27]: "The United States, it's really hard to imagine is ever going to be able to out-produce China. But potentially, if it has a tight web of alliances and is able to coordinate work closely with countries like Japan and European countries that do have strong manufacturing bases, you can imagine it could put up a much better fight."

These trade strategies aim to reorient the U.S. manufacturing landscape but may not be sufficient to bridge the substantial gap left by decades of industrial decline.

Future U.S.-China Relations and Industrial Implications

Sustained Geopolitical Rivalry and Mutual Industrial Preparations

The relationship between the United States and China is poised to remain highly competitive, with both nations recognizing each other as primary geopolitical rivals. This enduring rivalry drives both countries to continuously assess and strengthen their industrial capabilities to mitigate vulnerabilities.

John Eamont [11:47]: "What's clear is both countries see the other as their main geopolitical competitor. And it's hard to imagine that changing anytime soon."

Efforts to build indigenous capacities in critical industries are expected to intensify, even if they come at higher costs, as both nations seek to ensure self-sufficiency in the face of potential trade disruptions or blockades.

Additionally, the ongoing tension surrounding Taiwan remains a focal point for monitoring the U.S.-China relationship, as any conflict in the region could have significant implications for global trade and military alliances.

Alex Osola [11:43]: "And where does the U.S. china relationship go from here?"

Conclusion

The June 1st episode of WSJ What’s News provides a comprehensive overview of the evolving military-industrial competition between the United States and China. While China continues to expand its manufacturing capabilities and strategic industries, the United States faces significant challenges in bridging the industrial gap. U.S. trade policies under President Trump have sought to address some of these issues, but the results are mixed and may impact global alliances. As both nations prepare for sustained rivalry, the balance of industrial power remains a critical factor in their geopolitical strategies. The episode underscores the importance of manufacturing strength in modern warfare and the intricate interplay between economic policies and national security.

Produced by Charlotte Gartenberg, Supervising Producer Michael Kosmides, and Deputy Editor Chris Sinsley. For more insights and updates, stay tuned to WSJ What’s News.