By Todd G. Buchholz & Michael Mindlin, Project Syndicate | May 14, 2025
The military calculus that defined American supremacy for decades has quietly been inverted, handing China a potentially decisive advantage in any future war. American leaders must wake up and make the investments needed to catch up in three key areas.
SAN DIEGO – In Raiders of the Lost Ark, Harrison Ford gets his biggest laugh when a desert assassin twirls a scimitar with menacing bravado. Following this brief performance, Ford’s character cracks a wry smile, takes out his pistol, and shoots the man dead. In a potential contest with China, the United States looks more like the medieval assassin, deploying young sailors and soldiers equipped with perilously outdated, vulnerable technology.
Aircraft carriers and fighter jets look a lot less stealthy in a world of limitless drones and autonomous submarines. But the problem is not just the weapons. China’s strategists are targeting the nodes that allow America to project power: satellites, logistics, and command networks. China need not worry about a Navy destroyer’s specifications if the captain can’t talk to his superiors, access his satellites, or get refueled and restocked with artillery. At that point, the destroyer might as well be a Carnival cruise ship without the lounge singers.
The military calculus that defined American supremacy for decades has been quietly, and perhaps catastrophically, inverted. While the US showcased its “shock and awe” dominance in the 2003 Battle of Baghdad – broadcasting videos of pinpoint missile attacks – China was conducting a forensic analysis of US vulnerabilities. Now, the People’s Liberation Army is armed with YJ-18 supersonic anti-ship cruise missiles and DF-26 “carrier killers” that can turn their targets into $13 billion shrimp reefs. Just as the Chinese firm DeepSeek recently sent shudders through Silicon Valley with its cheaply made large language models, China’s attack missiles pose a lethal threat at a bargain price.
The Ukraine-Russia conflict has given China a master class in modern warfare. Events on the ground are overturning the conventional wisdom of defense, as $400 commercial drones disable $4.5 million tanks with the drop of a grenade – a return on investment that would make the most aggressive venture capitalist blush. As it happens, China already mass-produces attack drones, as well as anti-drone barrage shields. Just as Chinese apparel companies can roll out “fast fashion,” Chinese weapons makers can quickly conjure new equipment, making the country both quick and patient.
While US Secretary of Defense Pete Hegseth arm wrestles with Congress over his budget proposal for 2026, Chinese President Xi Jinping’s strategists are optimizing their spending and decision-making for 2049, their target date for achieving comprehensive naval power. They are perfectly willing to absorb costs that Western analysts dismiss as irrational (admittedly, this is much easier when you don’t have to worry about electoral votes, muckraking journalists, or social-media pests).
Given that the US boasts unparalleled technological breakthroughs at Elon Musk’s SpaceX and Palmer Luckey’s Anduril, it is absurd to be fielding military systems designed back when M*A*S*H was still on television (1972-83). The US Defense Information Systems Network resembles a buggy corporate intranet of yore, whereas Chinese forces are deploying quantum-encrypted communication systems. No wonder Musk warns that the US could “lose the next war very badly.” Recognizing the burden of a slow-moving Pentagon bureaucracy, Hegseth is directing a 20% cut in the number of four-star generals and a 10% reduction across all flag officers. Since World War II, the ratio of generals-to-troops has jumped fourfold.
To regain a competitive edge, three fundamental investments are needed. First, the US military needs resilient energy and power, which means cutting the “fuel tether” constraining Pacific operations. Today, conventionally powered ships escorting carriers require refueling every 3-4 days. A single combat-logistics ship burns through 100,000 gallons of marine diesel daily. It is like trying to drive across the country while towing a gas station. The Pentagon should fast-track the deployable micro-reactors developed at Project Pele, and invest in fuel cells capable of powering bases for months.
The second priority is to develop predictive, autonomous logistics networks. Predictive algorithms allow Amazon and Walmart to ensure same-day deliveries of the most trivial goods, yet US soldiers wait a perilously long time for crucial supplies – and Chinese generals know it. Autonomous platforms – such as the Navy’s Orca submarine drones and unmanned surface vehicles like DARPA’s Sea Trains – must become the backbone of military logistics, creating distribution networks that can withstand targeted disruption and deliver supplies through contested zones. Without such a shift, the Pacific strategy is not so much a strategy as it is the crossed fingers of Uncle Sam.
Lastly, the US needs an AI-enhanced decision-making advantage. Modern conflicts have compressed timelines. When Chinese hypersonic missiles like the DF-17 can travel at Mach 5+, every millisecond matters. The US must leverage AI to dominate every step in the OODA loop (observe, orient, decide, act). Projects like DARPA’s Linchpin and the Air Force’s Advanced Battle Management System must evolve from promising start-ups to core operational capabilities – and fast.
While it would be easy to focus only on China’s might, the People’s Republic, too, faces existential threats, whether from population decline, economic stagnation, or rebellion against authoritarian rule. Still, the algebra of defense has shifted, and US strategists must confront new risks. Forget the hardware; America’s defining advantage was never the iron of its ships and the circuits of its warplanes, but its restless ingenuity – the unique capacity to reinvent when the situation demands it. The country that planted a flag on the moon was not built for managed decline. When facing adversity, America must not just compete; it must reinvent the game.
Todd G. Buchholz, a former White House director of economic policy under President George H.W. Bush and managing director of the Tiger hedge fund, is the recipient of the Harvard Department of Economics’ Allyn Young Teaching Prize. He is the author of New Ideas from Dead Economists (Plume, 2021), The Price of Prosperity (Harper, 2016), and co-author of the musical Glory Ride.
Michael Mindlin is a private equity investor focused on energy, software, and defense and industrial technology. He previously served in the US Marines Corps.
Copyright Project Syndicate
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