China’s rise since the end of the Cultural Revolution has been impressive. But its influence on global affairs did not become significant until the second term of President Xi Jinping. His concerted effort to simultaneously bolster domestic confidence in China’s capabilities and gain influence and leverage throughout the world has transformed China into a formidable presenceon the international stage. China is now a force to be reckoned with, but one that remains unfamiliar to those who have held the reins of global power for the past few centuries; the West. It represents the first near peer competitor to the USA in both military and economic terms and a challenge America’s position as the single most powerful country in the world.
Looking at any one aspect of China can be misleading because China is a nation of contrasts. A narrow lens risks distortion. For policymakers, business leaders, and others charged with shaping strategy, it is worth looking at the many faces of China in order to make more informed assessments and sound decisions.
This essay aims to provide a snapshot of key aspects of this massive and complex nation by focusing on seven arenas that together contribute to a clearer picture of the People’s Republic of China.
The Military
China today commands the world’s largest navy by vessel count. It possesses the world’s largest undersea cable cutting ship. It has significantly advanced its nuclear capabilities in recent years, focusing on modernizing its missile systems and expanding its nuclear arsenal. Key developments include the deployment of advanced Intercontinental Ballistic Missiles (ICBMs), the expansion of submarine-launched ballistic missiles (SLBMs), and the creation of hypersonic weapons. China is also strengthening its nuclear triad, including land-based missiles, submarines, and strategic bombers. At the same time, it has been modernizing its nuclear command and control systems. These advancements enhance China’s nuclear deterrence and retaliation capabilities, ensuring it can respond effectively to both nuclear and conventional threats. The country’s nuclear strategy remains centered on a no-first-use policy, but its growing capabilities reflect its desire for a credible and survivable nuclear deterrent.
From this perspective, China comes across as a serious challenge to the U.S., with global reach and growing military ambition.
To focus only on its sharp trajectory in force projection distorts the picture. For much of modern history, the People’s Liberation Army (PLA) was not built for global conflict; it was designed for domestic control. Until recent years, Chinese soldiers were not preparing for war so much as maintaining internal stability, with many spending their time competing in local sports competitions rather than training for combat.
The shift to a modern warfighting force required not only a full overhaul of China’s military organization, new ships, planes, and weapons, but a complete overhaul of mindset. Revamping the PLA has meant reorienting a massive institution from domestic policing to international power projection. This effort is still very much in progress.
That progress, however, has not been smooth. Corruption has long plagued the PLA. Once considered unthinkable, purges have included generals sitting at the very top of the Central Military Commission, the body that oversees China’s armed forces. The PLA Rocket Force, responsible for China’s nuclear and missile arsenal, has seen repeated leadership shake-ups, with commanders suddenly removed under opaque circumstances. In the October 2025 4th Plenum gathering of the Communist Party of China, many more military purges took place. These purges highlight the multi-decade history and speak to the entrenched nature of the military’s power structure facing off with Xi Jinping’s determination to enforce loyalty despite the underlying fragility of military cohesion.
Another countervailing force to China’s sharp military rise is Beijing recognition that conventional war carries devastating risks, as made clear by the wars in Ukraine and Gaza. This is likely why China has leaned heavily into gray-zone tactics—actions that fall short of open conflict but still shift the balance of power. These include aggressive maritime patrols, use of fishing boat fleets and coast guard water cannons as well as island-building in the South China Sea, and cyber operations. By operating in gray spaces, China advances its goals while avoiding the unpredictable costs of full-scale war. These actions also test the range and level of aggression that the U.S. refrains from countering.
Contributing to the transformation of China’s military mindset, President Xi rallies the Chinese troops by very publicly, calling for them to prepare to fight and win, ensuring this is reported in the press. Notably, such rallying calls are not heard where troops are battle hardened such as in the U.S., Ukraine or Israel. To project power for deterrence and for war, as well as to use military shock and awe tactics such as sending scores of warplanes over the Taiwan straits, Beijing pours resources into military modernization, even at socio-economic costs. For policymakers, the danger is that if China is viewed only as a belligerent military rival, it is possible to miss the complexities that inform its decision-making and overlook vulnerabilities in other dimensions that could lead to non-military solutions.
China’s Domestic Economy
As the most solvent central government on the planet, is China’s overall economic strength trulysolid? Beijing has placed its bet on technology and the plan to capitalize on ‘new productive forces.’ This includes future technologies, current cutting edge 4th industrial revolution technologies but also all aspects of traditional industry and manufacturing that are to be upgraded through innovation and advanced industrialization.
Beneath the surface of Shanghai’s glittering skyline lies a more complex reality informed not only by economics, but also by deep cultural and psychological factors.
While areas of the tech sector are contributing to China’s economic growth, traditional markets such as the property sector continue to struggle. With China lacking a comprehensive social safety net, property was long-seen as the safest investment to ensure one’s security in old age. Since the 2021 real estate liquidity regulations, most developers have been unable to complete construction and households have lost their savings and future security. Housing prices continue to slump.
Chinese households save at some of the highest rates in the world, not because they lack purchasing power, but because they lack confidence in the future. A thin social safety net, limited pensions, and uneven healthcare make precautionary saving a necessity.
Youth unemployment has remained at troubling levels over the past four years, leaving an entire generation with higher education but fewer opportunities. Meanwhile, the great export numbers have begun to slow. Until recently they masked domestic market stress due to involution wheregrowth is being driven by industries forced to cut prices and operate on thinner margins. The results of unrealistic competition have a ripple effect, adding pressure to employment weakness across the country. This, in turn, affects the already weak domestic consumption.
Culturally, thrift is valued, and debt—especially consumer debt—has historically been seen as risky or irresponsible. Psychologically, centuries of political and economic uncertainty have reinforced a preference for security over spending. At the same time, there is a notable section of the consumer population that is deep in debt—having borrowed during the good times and now facing impossible deadlines that sometimes lead to people taking their own lives.
China’s economy is vast, innovative, and deeply integrated into global markets. But it is also shaped by structural vulnerabilities and enduring cultural patterns that raise questions about its bottom-line success and whether the ‘new productive forces’ can pull the economy forward.
International policymakers would do well to view China not only through the lens of its export power and newfound tech capabilities. To do so is to misread both its domestic constraints and the anxieties that shape its long-term growth. Sound strategy requires seeing not just the numbers, but also the cultural logic and the priorities of the leadership that drive them.
A Pressure Cooker of Competition
Competition is healthy. But when it becomes too intense, it follows the law of diminishing returns, as seen in China, where competition is a pressure cooker in everything from business to healthcare, from job searches to corporate survival. The sheer scale of a hard-working population creates an environment where scarcity and ambition collide.
At just fifteen, students sit for the Zhongkao, the high-stakes exam that determines entry to the best high schools. Families devote years of savings and countless hours of tutoring to prepare for it. From there, the Gaokao, China’s national university entrance exam, decides not only university placement but career prospects, family honor, and in some cases marriage opportunities.
This culture of relentless striving is rooted in Confucian tradition, where academic achievement was the pathway to advancement for centuries. The Imperial Exam system, established during the Sui Dynasty, 1,400 years ago, strove to create an educated bureaucracy, laying the foundations for the concept of scholar-advisor—a system that informed SIGNAL Group’s original strategy in its Israel-China policy work.
The intense competition to publish among PhDs and young faculty at 2nd- and 3rd-tier universities, looking to secure a long-term position, is leading some to commit suicide. The pressure of competition has spread to government departments. Team leaders wanting to show their commitment and loyalty convey expectations so that staff put in extra hours. Other teams see this and feel the need to meet those standards or surpass them, leading to government workers being found unconscious at their desks.
In business, entrepreneurs often look overseas not because foreign markets are easy, but because in some ways they are less brutal than China’s hyper-competitive domestic market. E-commerce price wars have driven goods like coffee or ride-hailing services to near-zero margins, crushing small firms. Even access to healthcare is competitive: patients line up overnight in big cities just to see leading doctors.
This environment fuels innovation, explaining China’s rapid advances in fields like e-commerce, fintech, electric vehicles, and AI. But the returns are diminishing. Fatigue, anxiety, and disillusionment are growing.
The tang ping (“lying flat”) phenomenon—where young people quietly opt out of the race—and bai lan (“let it rot”) reflect the quiet rebellion of a generation unwilling to push endlessly against the current.
For policymakers and business leaders abroad, it is clear that China’s competitive intensity is not just structural, it is cultural and psychological. To deal effectively with China, one must understand how this pressure cooker shapes its people’s approach to risk, innovation, and resilience.
The Two Faces of Chinese Infrastructure
China’s state-led development is unmatched in speed and scale. Nowhere is this more visible than in its infrastructure. High-speed rail lines crisscross the country with fast, affordable transport.
The rail network reaches remote provinces and crosses hazardous terrain, carving through mountains, climbing to great heights, skirting jagged cliffs, and spanning massive chasms with bridges and tunnels that are marvels of engineering.
One of the most dramatic examples is the Qinghai–Tibet Railway, which climbs to the “roof of the world.” Scaling elevations above 5,000 meters, it is a triumph of modern engineering, designed to withstand oxygen-starved air and extreme weather. Such feats demonstrate extraordinary engineering prowess. Each year, its universities graduate over 600,000 engineers with 250,000 specializing in civil and structural engineering, far more than any other country.
The achievements are staggering. China now operates a high-speed rail system with over 40,000 kilometers of track—more than the rest of the world combined. It has built over 1 million bridges and countless tunnels, many in some of the most treacherous terrain on earth. In a single decade, China consumed more cement than the U.S. in a century.
But infrastructure in China is more than concrete and steel; it is cultural. For millennia, Chinese rulers measured their legitimacy by their ability to unify the empire through roads, canals, and monumental works. From the Great Wall, built to secure the realm, to the Grand Canal, which stitched north and south together, infrastructure has always been a symbol of order, ambition, and centralized authority.
Today’s high-speed railways and mega-bridges are the modern expression of this cultural tradition: proof of the Party’s capacity to bind a vast land and diverse people into a single, functioning whole. For the public, they are a source of national pride after centuries of humiliation.
Yet there is another side to the story. A number of rail lines operate at a major loss. Overcapacity in cement and steel has left China with vast surpluses and factories with no domestic market. These “zombie companies” survive on subsidies and loans, weighing down the economy.
China has been confounded by its own success, achieving its infrastructure goals so quickly the market had no time to adapt and transition from the less productive heavy-industry companies to new markets. Closing these factories would promote sounder economics but the cost in jobs risks sparking the very social unrest the Party seeks to avoid.
China’s infrastructure is both a dazzling feat of speed and scale and rife with structural inefficiencies and social risks. It is a showcase of competence and a reflection of deep cultural traditions and the pitfalls of centralization and control.
Admiring the bridges, tunnels, and trains without recognizing the economic and social costs leads to a distorted picture.
Rule of Law: A Work in Progress
China governs as much outside the formal legal system as within it. Social credit mechanisms, extrajudicial controls, and haphazardly enforced restrictions on protest all reveal a system where underlying the order and stability is a requirement to continuously adapt to changes and adjustments in rules and regulations but also when and to what extent they are implemented.
From the Chinese perspective, the most basic “rights” are not freedom of speech or assembly, but the right to food, shelter, and protection from chaos, with stability as the ultimate guarantee of wellbeing. “Rule of law” in the Chinese context often serves the Party’s priorities as much as legal consistency. To understand this, one has to look back at Chinese history.
For most of China’s past, there was no enduring tradition of rule of law in the Western sense. Law was seen as a tool of the ruler, a mechanism to enforce order from above rather than a shield protecting the individual. Dynastic cycles reinforced this pattern: emperors and their courts governed by decree, while ordinary people relied on other means to survive and resolve disputes.
Out of this environment emerged guanxi (关系), the dense web of personal connections, obligations, and reciprocal favors of Chinese society. Where impartial institutions and predictable legal remedies were absent, guanxi offered security and opportunity. For example, in a business transaction, one’s word was backed not by contract enforcement but by social pressure. To renege on a promise risked exclusion from valuable networks. A person known to betray guanxi protocols was cut off from opportunities and access. In this way, guanxi not only substituted for formal law but created its own system of accountability.
Guanxi flourished because it secured transactions where the legal system could not, and it persists today, shaping politics, commerce, and social life. This reliance on relationships over formal rules also colors how China manages its international image.
In January 2015, China’s Vice Minister of Justice, Zhao Dacheng, visited Israel. The Chinese Embassy asked SIGNAL Group to organize an academic seminar for him—an unusual request that underscored Beijing’s determination to cultivate understanding beyond formal diplomacy. Just as guanxi allowed Chinese society to function without dependable institutions, so too did this seminar represent an effort to build trust and credibility through carefully managed exchanges. The Embassy explained that China was seeking feedback on issues relating to law, the Communist Party, Xinjiang, Tibet, and the philosophy of Chinese foreign policy. The goal was not to invite critique but to ensure that China’s decision-making process was seen, and ideally accepted, on its own terms.
Rule of law in China has always been less about codified statutes and more about preserving order through relationships, obligations, and perception.
China as Tech Innovator
Moving China from being the “World’s Factory” to the “World’s Innovator” was the commitment made by the Chinese Communist Party in 2010. In 2015, Beijing gave this vision a roadmap with Made in China 2025 to transform manufacturing, reduce dependence on foreign technology, and establish China as a leader in the Fourth Industrial Revolution (4IR).
2025 is here. The results are striking and mixed, reflecting China’s system of state backing and culture of fierce competition.
Striking successes:
• Mobile payments: China skipped the credit-card era, creating a cashless society in its major cities.
• Artificial Intelligence: A global leader in facial recognition and computer vision; AI underpins security, transport, and payments. China produces the largest volume of AI research.
• Robotics: Adoption has soared in factories. In Q1 2025, China’s government announced plans for a long‐term robotics/AI/innovation fund of nearly 1 trillion yuan (~US$138 billion) over 20 years, to strengthen the robotics ecosystem.
• Metamaterials: Researchers push boundaries with radar-deflecting cloaks, nanolattice structures with record energy absorption, and AI-designed thermal emitters.
• IoT and 5G: Huawei and ZTE rolled out the world’s largest 5G networks, integrating IoT into smart cities and logistics.
• Quantum computing/communications: Landmark projects include the Micius quantum satellite and functioning quantum communication networks.
• Electric vehicles: BYD and peers outpace foreign competitors, setting price points and reshaping global markets.
• Alternative energy: Over 80% of global solar panel production is Chinese; wind and battery storage industries are also dominated by Beijing.
• Deep-sea Cable Severing: China has developed the world’s most advanced deep-sea cable-cutting device capable of severing heavily armored undersea communications and power cables at depths of up to 4,000 meters.
Continued limitations:
• Semiconductors: Reliance on U.S., Dutch, and Taiwanese technology for advanced nodes.
• Aerospace: The COMAC C919 flies but depends on foreign engines and avionics due in part to reliability, durability, and materials/ manufacturing precision.
• Pharma: Breakthrough drugs are scarce; global trust in standards is limited.
• AI frontiers: China still lags the U.S. in breakthrough discovery
• Ultra-high precision manufacturing: China continues to lag in developing high-end machine tools where foreign firms dominate due to Chinese issues with quality control, brand reliability, standardized production, and industrial ecosystem maturity.
President Xi is betting on technology to solve many of China’s problems, including a clean exit from the middle-income trap. Culturally, China excels at mobilization, replication, and scaling, turning proven models into national systems at unmatched speed. But the ultimate challenge is whether this system can also spark the unpredictable originality that defines enduring innovation hubs.
Cultural History: The Operating System
Flawed conclusions and failed strategies result from analyzing China’s data, statistics, charts—and especially its actions—without cultural context.
Perhaps the most important single thing needed to build effective policies and strategies in connection to the PRC is to take into account, as much as possible, the mindset of its leaders. This mindset is shaped by a long history of the centrality of China on the world stage, thousands of years of centralized governance, a Confucian tradition that emphasizes hierarchy and order, and a strategic culture that prizes patience, indirectness, and the long game. It is influenced by perceived threats of liberal democratic ideas penetrating the PRC and is informed by its trust in and fears of the Chinese people.
One result of this mindset is the comprehensive controls imposed across the board on Chinese society. For example, China’s surveillance camera culture is not just about technology, but also about governance philosophy, social order, and public psychology all guided by the leadership’s mindset. China is, by a wide margin, the most heavily surveilled country in the world.
Estimates suggest hundreds of millions of cameras — over 600 million by 2024 — covering streets, subways, schools, factories, housing compounds, and even classrooms. This omnipresence means that being under a camera is not seen as unusual; it is part of the physical and mental landscape. This camera culture is rooted in the Communist Party’s social compact with the people to provide social order. In other words, social order is the foundation of Party legitimacy.
Control is also found in the academic community. In recent years, universities must attain permission from on high to host any and all foreign visitors on campus, with more strenuous bureaucracy applied to those who will give lectures to students. Senior academic experts are limited in their ability to travel abroad, subject to approvals and are dissuaded from using VPNs, necessary to conduct comprehensive research on innumerable topics.
The influence of the unique mindset of China’s leaders becomes especially clear when it comes to risk. To outside observers, the PRC is deemed a risk-averse society. Yet its leadership will take extraordinary risks depending on the kind of risk, the alternatives, and the larger goal.
Consider the ongoing drive to build indigenous, cutting-edge semiconductor fabrication plants. Billions of yuan have been poured into this effort, despite corruption scandals and massive losses. Why continue? Because the overarching prize of technological self-sufficiency outweighs even systemic failures along the way. The calculation is about security and leverage as much as economics.
At the individual level, the same paradox appears. In earlier years, becoming an entrepreneur carried risk but promised status and wealth that made the gamble worthwhile. Today, by contrast, the vast majority of university graduates are applying for secure government jobs, where stability and predictability are valued above upside potential, in part because that potential has been greatly reduced. Since 2021, when China’s leadership indicated that it did not approve of the massive success of corporate leaders such as those heading Ten Cent, ByteDance, Pinduoduo, or Alibaba. From that point, it was understood that there is a glass ceiling to success and its height is determined in Beijing.
When governments and analysts around the world are looking at China, cultural intelligence can be the missing ingredient when turning raw information into actionable strategy. Numbers and data show what is happening, but history and culture help explain why it is happening and how it is likely to evolve. Without this dimension, it is easy for governments and businesses to misread signals and misjudge intentions.
Policymakers, and business leaders engaging with China, will benefit from recognizing that China’s leadership shapes how that data is interpreted and acted upon based on mindset as much as facts. Many aspects of Chinese culture are embedded in the nation’s operating principles. Policy and strategy informed by cultural intelligence are resilient.
