The US is Breaking the Game Itself? Global Landscape Reorganized Favorably for China

Summary

Martin Wolf discusses China's geopolitical ambitions, the reassessment of global order under Trump, the EU's struggle with Chinese competition, the UK's relative fiscal stability, and the risks of an AI investment bubble. He argues that China seeks a hierarchical regional order without direct military conquest, while the West is losing competitive cohesion. He highlights the UK's better fiscal position versus the US, gradual de-dollarization led by yuan and euro, and cautions that AI infrastructure overspending may not yield commensurate returns.

• China aims for a Chinese-style hegemonic order in Asia, not a global military empire, but expects deference.
• US under Trump is an interventionist isolationist, weakening Western alliance and allowing China to divide and conquer.
• EU sees China as a trade threat but lacks resources and joint strategy with US, leaving the West at a disadvantage.
• UK fiscal position is far more sustainable than US, with smaller deficits, market calm, and no risk of a Truss-style crisis.
• The pound has been stable, and gilts are not in crisis; UK economy growing modestly.
• De-dollarization is gradual: trade may shift to yuan, but dollar remains dominant; euro is a bigger long-term threat.
• AI investment boom parallels the telecom fiber boom: many will lose money despite real technological impact.
• US-Iran conflict damages petrodollar credibility and pushes some countries toward yuan settlement.