The era of disorder
The global order is shaking. Disorder has become the new normal. Free trade is retreating before protectionism, conflict is no longer exceptional, and international law and institutions are increasingly ineffective. Globalization is fragmenting, geopolitical instability is weighing on growth, and global liquidity is flowing toward safe-haven assets such as gold.
Multilateralism is fading as unilateralism rises. Multilateralism rests on shared rules and collective decision-making through international institutions. Unilateralism, by contrast, prioritizes national interest over cooperation and increasingly takes the form of hegemonic behavior.
Like a typhoon rattling every branch, the force reshaping today’s global order is the struggle for dominance between the United States and China. China is challenging U.S. leadership, while Washington is determined to prevent Beijing’s ascent. The dynamic recalls the 1985 Plaza Accord, when Japan’s GDP approached 70 percent of the U.S. level and coordinated intervention helped curb its rise. Today, China’s GDP has reached nearly 77 percent of that of the United States, triggering a far more complex and prolonged contest.
Unlike in the late 20th century, the two powers now appear more evenly matched. The United States is unlikely to subdue China quickly, and China is equally unlikely to force the United States to yield. Their rivalry will persist, embedding geopolitical risk into the global system.
Four fronts in the U.S.-China rivalry
The U.S.-China contest is unfolding across four main fronts. Understanding these arenas is essential for governments and businesses seeking to navigate an era of sustained uncertainty.
First is resource dominance. China has prepared systematically for a long rivalry by tightening control over strategic materials essential to automobiles, robotics, defense equipment and semiconductors. It dominates the global rare-earth supply chain, from mining and refining to permanent magnet production, and exerts outsized influence over nonferrous metals critical to electric vehicles, data centers and renewable energy. As a result, the United States has become dependent on China not only for rare earths but also for lithium, aluminum and copper.
When Washington uses tariffs as leverage, Beijing responds with resources. During President Donald Trump’s second term in 2025, China raised the prospect of restricting rare-earth exports in response to U.S. tariff pressure. The message was received. The U.S. government designated rare earths as strategic materials, backed MP Materials — its only rare-earth producer — with equity investment and price support, and accelerated efforts to secure supply chains through partnerships with Saudi Arabia and Australia. MP Materials now mines and refines at Mountain Pass, California, and produces neodymium magnets in Texas for U.S. manufacturers, including General Motors.
Second is technology.
The rivalry is increasingly visible in global marketplaces and at trade fairs such as CES and MWC. China is rapidly closing the gap in artificial intelligence, robotics, electric vehicles, autonomous driving and semiconductors, while the United States is striving to maintain its lead. According to the OECD, U.S. R&D spending reached US$955.6 billion in 2023, compared with China’s US$477.0 billion.
The United States still leads in semiconductors and data-center capacity, but China is pushing aggressively to overtake it, seeking to engineer another “DeepSeek moment” that could reshape global perceptions. While the United States graduates about 820,000 science and technology majors annually, China produces tens of millions. When factoring in Chinese engineers trained in the United States and experienced in U.S. tech firms, it is far from certain that American technological leadership will remain unchallenged. China has already surpassed the United States in AI paper output and patent filings, underscoring the intensity of the competition.
Third is currency. The United States continues to benefit from the dollar’s reserve-currency status, but China is actively challenging that privilege. The yuan’s share of global foreign-exchange markets has risen from virtually zero in the early 2000s to 8.6 percent in 2025, and its role in trade settlement and overseas investment is expanding. The yuan has effectively emerged as the fourth major reserve currency, following the dollar, euro and yen.
To support this push, China launched the Cross-border Interbank Payment System (CIPS) in 2015 as an alternative to the U.S.-centered SWIFT network. As of 2025, CIPS had 193 participating banks and processed roughly US$170 billion in annual transactions. A parallel contest is unfolding in digital finance: The United States is promoting dollar-based stablecoins, while China is deploying a central bank digital currency to internationalize the yuan. Washington has moved to ban CBDC use domestically, while Beijing has prohibited stablecoins.
Recent tensions involving Venezuela and Iran can be viewed through this lens. China relies heavily on energy imports from both countries, while Washington seeks to maintain energy dominance as a geopolitical tool.
Energy competition overlaps with other fronts. It intersects with currency power through the “petrodollar” system, established after the collapse of the gold standard in the 1970s, when oil trade was anchored to the U.S. dollar. Today, as the world’s largest oil importer, China is pressing producers to accept yuan settlement. Energy is also tied to technology, as AI leadership depends on massive data centers, whose electricity demand still relies heavily on thermal power generation.
South Korea’s response
Disorder has become the global baseline. South Korea must adapt accordingly.
First, it must strengthen defense and security systems. Economic stability cannot exist without security. As geopolitical rivalry intensifies, South Korea needs stronger domestic defense capabilities and reinforced military alliances. The United States is expanding defense spending, while China is reportedly building a massive military complex in Beijing. The geoeconomic rivalry shows no sign of abating.
Second, South Korea must pursue diplomatic balance. While firmly aligned with the United States on security, it cannot afford to sever economic ties with China or emerging BRICS economies. A clear separation between security policy and economic strategy is essential. With nonaligned countries, active diplomacy is needed to prevent geopolitical tensions from spilling over into trade and investment.
Third, South Korea should prepare for a prolonged U.S.-China rivalry by seizing opportunities in the global defense industry. Advancing the defense sector should become a national priority, supported by joint research between defense firms and private industries in AI, mobility and information technology. At the same time, policymakers must plan ahead to minimize economic shocks from sanctions, supply-chain disruptions and semiconductor-related restrictions.
In an era defined by disorder, resilience — not prediction — will determine survival.
* The author is the head of economic research at the Institute for Korean Economy and Industry.
About the author:
△Adjunct professor at Hanyang University △Former senior researcher at Samjong KPMG Economic Research Institute △Former senior researcher at Hyundai Research Institute
* This article, published by Aju Business Daily, was edited by AJP.
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