Weapons of Cold War 2.0 + 'People's War' Invasion Fleet
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Double-edged swords in the US-China Cold War
A guest post by the excellent Kyle Chan of the High Capacity substack.
The US and China are in a cold war, not a trade war. This is something much bigger than tariffs and trade deficits. It is much bigger than Taiwan or semiconductors. And it began long before Trump or Xi. The US and China are locked in a global contest of power that is playing out along every dimension: economic, technological, military, cyber, soft power, global prestige. Both sides are searching for any tool, any weapon, any piece of leverage they can use against the other—short of direct military action.
There is no such thing as escalation dominance. Trump thinks the US will win in a trade war because China sells more to the US than the other way around. A tit-for-tat escalation on tariffs means the US will always be able to tariff more Chinese goods than vice versa. Adam Posen has recently argued it’s actually China that has “escalation dominance” (a RAND concept in nuclear deterrence) because China has other ways of escalating beyond tariffs, including potentially denying Americans access to Chinese-made goods from smartphones to medicines. However, the reality is neither side has escalation dominance because both sides have already gone far beyond trade measures. If you’re looking at the full range of actions beyond trade tools, there’s virtually no limit to how far each side can go.
The US and China are posturing as if they have escalation dominance, which makes the problem worse. US Treasury Secretary Scott Bessent said on CNBC that China had made a “big mistake” in retaliating against Trump’s tariffs because China was “playing with a pair of twos.” China’s Ministry of Commerce has said that China would “fight to the end.” While there are already signs that Trump is backing down, the confidence that each side feels—or at least tries to project—only fuels a downward spiral of recklessness and emotion-driven bravado.
Double-edged swords
Every weapon in the US-China Cold War is a double-edged sword. Because the US and China are so deeply integrated—both in terms of bilateral ties and as parts of a highly integrated global economic system—any action that one country takes will end up hurting both sides to some degree. The question then becomes: what is the balance of pain? Are you able to inflict more pain on your opponent than you would on yourself? It’s useful to map out the different tools and weapons in terms of the relative costs to each side, as I’ve tried to do in the diagram at the top. Which tools fall into which quadrants?
Both sides are searching for asymmetric weapons where the damage caused to the other side far outweighs the harm to oneself. China believes critical minerals are one such asymmetric weapon (top-left quadrant). The US believes semiconductor export controls are one of its asymmetric weapons (bottom-right quadrant).
There are weapons that would blow up both sides (top-right quadrant). For example, if China cracks down too hard on US companies operating in China, this would have a severe chilling effect on all foreign companies in China. Or, as Trump is now learning, imposing extremely high tariffs on all Chinese goods can have huge costs for US consumers and producers. An act meant to pressure China has backfired spectacularly. CEOs of major US retailers recently warned Trump of possible goods shortages. The US basically placed an embargo on itself.
Tools and Weapons
It’s useful to think about the tools and weapons that China and the US are using in terms of categories of goals:
Trade tools: Conventional policy tools aimed at shaping trade flows, including tariffs, import licenses, quotas, local content requirements, and other non-tariff trade barriers.
Competition tools: Policy tools designed to insulate domestic firms from competition and slow down the other side. For example, US-led export controls on semiconductors and semiconductor manufacturing equipment to China are designed to slow down China’s AI progress, among other goals.
Human rights sanctions: Punitive measures meant to punish the target country for human rights violations. For example, various US bans on solar and textile products due to concerns over the use of forced labor in Xinjiang.
Defensive national security tools: Defensive measures that are meant to prevent or mitigate potential national security risks, such as the US ban on Huawei telecom equipment or China’s “delete A” (i.e., delete America) campaign to remove US hardware and software from major state-owned enterprises.
Offensive military degradation tools: Measures aimed at constraining the military capabilities of the other country. For example, China’s export controls on heavy rare earths, which are key inputs for US weapons systems. Or US controls on advanced chips and computing hardware to limit China’s ability to improve its missile systems.
Pain tools: Tools aimed at causing outright economic or material pain among the population. For example, China reducing purchases of US agricultural goods to cause economic pain for American farmers. Or the US imposing an extra round of retaliatory tariffs meant to increase the economic pain for Chinese producers.
Blurred lines
The lines between trade, geopolitical competition, and national security are becoming increasingly blurred. The actions taken by both sides in the US-China trade war have already spilled over into areas far beyond trade. For example, the surprise arrest of Meng Wanzhou, the CFO of Huawei and daughter of the company’s founder, over alleged sanctions violations was treated by Trump during his first administration as a bargaining chip in negotiations with China. China’s export controls on critical minerals are a move that extends far beyond trade, targeting key inputs into America’s defense industry and power infrastructure. And of course, lurking in the background is an ongoing cyber war, including China’s successful cyber infiltration of US critical infrastructure and telecom networks.
Different policy goals are increasingly mixed together. For example, the Biden administration effectively shut out future Chinese EV imports through tariffs and a national security ban. These actions mixed together several different goals: leveling the trade playing field, protecting US automakers from Chinese competition, and addressing security issues around espionage and even remote control for “connected vehicles.” Mixing tools and goals together might seem like a way to kill two birds with one stone, but it ends up diluting their effectiveness. While this was a problem in past administrations, that pales in comparison to the blind hammer-throwing of this one.
Timing and sequencing
One curious pattern has emerged in all this. Both sides seem to be preempting the other side’s actions by implementing some of these same actions in advance.
Nvidia H20 chips: For a while, the US seemed on the verge of banning Nvidia’s H20 chips from China. But before this happened, China’s NDRC released new energy efficiency rules that would have effectively banned Nvidia H20s. (The US has now gone ahead and effectively banned the H20 chip for China.)
BYD Mexico plant: BYD’s plans for building a new EV plant in Mexico were put on hold after Trump got re-elected. Then suddenly in March, China’s Ministry of Commerce jumped ahead and withheld approval for BYD’s Mexico plant, arguing that BYD’s technology might get “leaked” to the US (which doesn’t make any sense given the many BYD plants popping up all over the world).
Critical minerals: A few days after China imposed export controls over heavy rare earth elements, Trump signed an order to look into imposing tariffs on critical minerals.
One explanation for this pattern of actions is a battle over symbolic control. Rather than getting hit by a ban by the other side, it looks like you have more control when you jump ahead and implement the ban first yourself. It’s like the classic line: “You can’t fire me—I quit.” The end result is the same but the sense of agency switches.
Another factor is control over timing and sequencing. As each country tries to find chokepoints to use against the other side, they’re also trying to patch up their own vulnerabilities. Each country would prefer to do so at a pace and manner of their own choosing. For China’s semiconductor industry, this means retaining access to some foreign equipment and components while gradually substituting in domestic firms for pieces of the supply chain—when they’re ready. For the US, this means gradually reshoring or friendshoring critical parts of its supply chains to reduce dependence on China.
Both countries are trying to avoid powerful shocks that are unexpected and sudden, like the first Trump administration’s export ban on ZTE, which nearly destroyed the company. Even anticipated disruptions can cause near-term pain when they mess up a country’s timing. For rare earths, it’s true that the US can eventually scale up production from domestic and other non-Chinese sources to a certain extent. But this still takes time, and US supply chains could suffer significantly from shortages in the interim, as a set of US agencies have recently warned.
Fear cycle
Lastly, as the US-China cold war escalates and spills over into new domains, each side’s actions increasingly reinforce the other’s fears. China’s rapidly expanding military capabilities, which it often trumpets loudly, and large-scale cyberattacks on US infrastructure feed right into American fears of a growing Chinese geopolitical threat. A Chinese spy balloon floating over the US in 2023 certainly didn’t help matters.
China, in turn, sees a US bent on trying to contain it internationally and suppress its development. [Jordan: well, this is something many in the Chinese system have believed for decades now, and you can find Xi speeches from way back in 2013 saying that “international hostile forces are intensifying their plot to Westernize and split China”] Recent US actions that feed into this belief include efforts to get other countries to do trade deals that shut out China, increasingly stringent semiconductor export controls, and even the Biden administration’s AI diffusion framework, which sought to restrict China’s access to US chips by restricting the entire world’s access to US chips.
These mutual fears may have become too deeply entrenched to roll back. But the US should recognize how its actions may in fact bolster the CCP’s legitimacy and validate Xi’s focus on security and national strengthening. And China should recognize how its growing assertiveness is directly fueling a bipartisan backlash in the US.
Overcoming a Chinese Dual-Use ‘People’s War’ Invasion Fleet
A guest post from Joseph Webster, senior fellow at the Atlantic Council’s Global Energy Center and Indo-Pacific Security Initiative and editor of the independent China-Russia Report. This article represents his own personal opinions.
There has been plenty of coverage of how China could use an armada of civilian ships during a Taiwan contingency (see here, here, and here).
But even if civilian ships aren’t used to transport troops, they could be used as launchpads for PLA drone operations. In a Taiwan contingency, Beijing could mobilize dual-use industrial resources, including its maritime, drone, and battery capabilities, to support military operations.
This article explores how China’s vast civilian maritime fleet — supported by unmanned platforms powered by next-generation batteries and AI — could enable a distributed, real-time radar and sonar sensor network around Taiwan and conduct drone strikes, mine-laying, and other operations.
The Chinese shipbuilding-drone-battery nexus
Just as China has a long-standing military-civil fusion program for science and technology, it also employs a whole-of-society doctrine for military industrial capacity. In particular, the Chinese military’s authoritative study reference on doctrine and strategy holds that a “people’s war” 人民战争 entails “the mobilization and the participation of the whole nation in the war and can maximize the war potential of the nation and countries” 具有实行全民动员、全民参战的政治基础，能最大限度地发挥民族和国家的战争潜力.
China is easily the world’s largest civilian and military shipbuilder, accounting for over half of all merchant vessels constructed in 2023, as measured by gross tonnage. Its fishing fleet is estimated to exceed 560,000 vessels, with its deep-water fishing fleet comprising about 3,000 ships. It has also constructed 50% more tons of military ships over the last decade than the United States, according to analysis from US Navy Captain (ret.) Thomas Shugart.
China’s unmanned drone capabilities are also formidable. Global drone production is concentrated in China: a single Chinese company, DJI, controls 70% of the global drone market, including the first-person view (FPV) drones used widely by both sides in the war in Ukraine. And as seen in Russia’s invasion of Ukraine, cheap, mass-produced, one-way attack (OWA) drones are revolutionizing warfare. While lithium-ion-powered FPV drones have a limited range (about 5 to 20 kilometers), they can be produced in astonishingly large quantities. Michael Kofman estimates Ukrainian annual drone production in 2024 will total between 1.5 and 1.6 million drones, mostly FPV drones. China’s output could dwarf these figures, owing to its greater industrial capacity. Moreover, the distinctions between nominally civilian and high-end military drones are becoming increasingly blurred — China could and would repurpose consumer drone-production lines in the event of a conflict with the US-led coalition.
Alarmingly, China’s quantitative industrial advantages in drones and ships stand to be amplified by qualitative improvements in battery technologies.
Next-generation batteries — like lithium-metal or solid-state — could vastly improve drone range and payload, potentially shifting the military balance of power. Shifting from existing lithium-ion-based battery chemistries to next-generation batteries could improve energy density, enabling drones to fly or swim farther, as well as carry greater payloads. As Brian Kerg notes, it may become increasingly difficult to distinguish drones from a precision-strike munition regime, and the PLA’s “close-in, low-cost, attritable precision strikes at scale” could support a Chinese amphibious landing force.
Not only will better batteries further blur the lines between drones and precision strikes, they will also present significant implications for electronic warfare: advanced batteries can allow drones (and manned systems) to “out stick” — that is, out range — opposition force systems, or enable a “targeting mesh.” As a RAND analysis notes, a targeting mesh’s redundant sensors offers superior performance over a kill chain: “unlike a [kill] chain — which can be rendered useless by the failure of one link — a mesh can retain structural integrity even when multiple elements fail.” A drone network of sensors and electronic warfare systems, powered by advanced batteries, could enable such a PLA targeting mesh.
Given their military implications, including for meshed networks, a quiet but deadly serious competition in advanced batteries is underway. Several Chinese ministries, including the Ministry of Industry and Information Technology, have ordered their top battery companies — including CATL, Geely, BYD, and Beijing WeLion — to work together on next-generation solid-state batteries, while also banning Chinese companies from supplying batteries to Skydio, the largest drone maker in the United States. These efforts may lead to technological breakthroughs for Chinese companies. For example, BYD claims it will begin deploying solid-state batteries in SUVs by 2027. Meanwhile, the US Department of Defense has designated China’s leading battery manufacturer, CATL, as a military company — a move which may indicate that China is developing a diesel-electric submarine with the help of CATL’s advanced batteries.
Drones, batteries, and ships could comprise a “People’s War Fleet”
In wartime, China’s vast and distributed civilian maritime fleet could be repurposed as drone carrier ships, anti-submarine warfare vessels, or radar and sonar collection platforms.
China may deploy drones on civilian vessels, leveraging first-person view, one-way attack drones’ low cost, light weight (often below 3.5 kg/8 lbs), and ease of use. Even civilian fishing vessels could likely carry several dozen drones. At a production cost of only $400, FPV drones can destroy $2 million tanks, with operators able to become proficient in months rather than years. Embedding AI and employing bigger, more advanced batteries on these drones would increase their lethality by making them less susceptible to electronic warfare (albeit while increasing costs).
The Chinese deep-sea merchant fleet is large and growing. Some analyses hold that the China-owned merchant fleet now stands at one-sixth of the world total; China also constructed over half of all new merchant vessels in 2023. To be sure, China’s interest in deep-sea merchant shipping is unsurprising — after all, China is the world’s largest trading nation. But China’s large, growing civilian fleet could nonetheless have important military implications.
To be sure, a Chinese unmanned drone swarm would admittedly face significant challenges. The Taiwan Strait has high-speed winds for most of the year (with spring and especially summer proving to be partial exceptions), impacting drone operations. Similarly, flying in an oceanic, salt air environment can lead to corrosion or necessitate operational adjustments for drones. Moreover, drones launched at sea will be unable to use “visual navigation” or tap onboard cameras and terrain features for navigation. Russia’s full-scale invasion of Ukraine demonstrates that drone swarms continue to face significant risks from enemy electronic warfare jamming, and friendly signal interference.
But drone warfare will evolve. Electronic interference can be overcome, to an extent, with better onboard AI software (albeit at higher complexity and costs, not to mention other AI-related risks). And improving battery chemistries could improve drones’ communications and electronic warfare systems, enhancing the platform’s lethality.
China’s civilian fleet also holds latent subsurface military potential, as it could launch potentially thousands of unmanned underwater vehicles (UUVs). These UUVs could employ active sonar capabilities to monitor the Taiwan Strait and nearby waterways for submarines, as well as conduct mine-laying or mine-countermeasures missions. This is not a far-fetched scenario: China is already using nominally civilian cargo ships to target subsea fiber optic cables around Taiwan. (China’s larger deep-sea vessels are better suited for launching UUVs, which are heavier and bulkier than airborne drones.)
Finally, the Chinese civilian fleet could enable a targeting mesh for the Chinese military by providing real-time radar data. While shipborne civilian radars are weaker than military-grade radars, their open-array radars nonetheless range from 64 to 96 nautical miles; larger ships with greater on-board power and higher mastheads can “see” farther. Next-generation solid-state radars — distinct from solid-state batteries — offer significant performance improvements over traditional magnetron radars. While each civilian vessel has only limited radar coverage, the Chinese navy could theoretically aggregate information from each ship to build a real-time, composite picture of maritime domain awareness, especially when used in conjunction with other platforms like commercial satellite imagery. This information could enable the PLA to track and target coalitional surface fleets.
Overcoming the People’s War threat
While the primary and most serious military challenge facing the coalition remains conventional PLA forces, a People’s War threat adds another potential threat vector. Luckily, many of the capabilities the coalition would use to deter and, if necessary, defeat China’s conventional forces can be repurposed against a dual-use People’s War fleet.
Given the significant risks the Chinese maritime fleet poses in the aerial, subsurface, and surface domains, coalitional militaries should monitor their fleet carefully. As Lonnie Henley wrote in a recent analysis, China struggles to maintain accurate information on its maritime militia — meaning any overhauls to China’s data-management practices may be an early warning indicator of changes in Chinese military tactics. China is unlikely to achieve strategic surprise in any Taiwan contingency. Still, insights into the Chinese civilian fleet’s operations could provide critical hints about the Chinese navy’s tactics in any quarantine, siege, or invasion of Taiwan.
To that end, US and friendly militaries should establish a baseline of Chinese civilian-fleet behavior to identify potential military-related anomalies; they should especially intensify monitoring of civilian vessels operating near sensitive military installations like Guam and Okinawa. And challenging Beijing’s South China Sea claims and highlighting China’s illegal, unreported, and unregulated fishing practices would limit the potentially dual-use Chinese fishing fleet’s size and operational scope, reducing its potential military intelligence collection capabilities and giving coalitional navies more freedom of maneuver in a contingency.
The United States and other coalitional partners must rebuild atrophied shipbuilding capabilities. A CSIS analysis found that a single Chinese firm, COSCO, constructed more commercial vessels by tonnage in 2024 than the entire U.S. shipbuilding industry has built since the end of World War II.
Scaling-up coalitional drone industrial capacity and technological know-how will be critical. Sending a clear, consistent demand signal to industry would help galvanize the sector and enable economies of scale. Given the growing strategic importance of dual-use drones, the United States and other markets should consider emplacing additional tariffs on Chinese drones, helping spur the rise of a domestic sector that could produce items in a military contingency.
Taiwan must invest substantial resources in its own military capabilities. Taiwan must scrap its Public Debt Act, which hampers critical security-related investments. Crucially, greater drone-manufacturing capabilities can ensure sustained production in the face of severe disruptions, while integrated drone operations at the conscript and reservist levels will bolster the ROC’s warfighting potential.
To maintain its military technology edge, the US-led coalition must lead battery innovation. Advanced batteries could give battery-powered and hybrid coalition drones superior range and capabilities, including in electronic warfare and kill-chain operations via a meshed network. Next-generation batteries could unlock directed-energy weapons and ultimately revolutionize warfare through low per-shot costs, unlimited magazine depth, and the ability to engage multiple drones or even missiles. Less than 1% of federal battery funding currently supports next-generation solid-state batteries, according to a Carnegie analysis. Incentivizing next-generation battery research via R&D tax credits, government prizes, and guaranteed DoD contracts could prove fruitful. The United States must also work closely with major international battery players — especially South Korea, Japan, and Taiwan — while ensuring robust domestic manufacturing capabilities.
The United States must pursue both defensive and offensive strategies for technological and industrial advantage in batteries and AI. This includes preventing dual-use technology transfers (eg. advanced batteries, solid-state radars for civilian craft, image-resolution processing used for drones, etc.) and tightening semiconductor controls with allies to curb China’s military advancements. Simultaneously, and given that China has stolen considerable amounts of Western intellectual property, the United States should acquire cutting-edge Chinese-developed technologies, especially in advanced batteries.
Finally, rapid AI development must continue. AI potentially offers sizable economic and societal benefits. Its military benefits are also considerable, as it will make coalitional drones more survivable in drone-on-drone warfare and enable human-machine teaming. Accordingly, the US-led coalition should remove power-sector bottlenecks constraining US development of electricity-intensive data centers required for AI. Cutting red tape surrounding electricity transmission and ensuring an all-of-the-above energy strategy inclusive of natural gas, nuclear, solar (which has significant complementarities with batteries), wind, and geothermal will ensure the United States and others are able to power electricity-intensive data centers. (Open AI’s ChatGPT requires nearly 10 times as much energy as a standard Google search.)
Policymakers must grasp the potential threat of a People’s War invasion fleet, provide substantially more resources to counteract the problems posed by China’s active and latent maritime threats, and act across a disparate, complicated set of interlocking issues, including drones, shipbuilding, batteries, and artificial intelligence. Congress must pass legislation to expand military and civilian shipbuilding, including via the bipartisan SHIPS Act. As ever, working with partners will be a force multiplier for the United States and its military. Overcoming the nexus of China’s drone-making complex, battery capabilities, and potentially dual-use civilian fleets will prove difficult, but the coalition must overcome this challenge.
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Excellent work
Great post!