Understanding that divergence is critical to understanding the future of global competition.

America ’s military-centred economy

Since World War II, the United States has developed what economists occasionally refer to as a “military Keynesian” system—an economy where defence spending significantly influences macroeconomic policy.

The origins of this structure are rooted in history. Massive wartime production helped pull the United States out of the Great Depression, showing that large-scale government spending on defence could boost growth and jobs. When the Cold War started, high military spending became a lasting part of the American economy rather than just a temporary wartime measure.

Today, the United States spends more on defence than any other country in history. Its military budget makes up about 40 percent of the world's total defence spending. The defence industrial base includes hundreds of thousands of companies and supports millions of jobs nationwide. Defence-related research funding has also fuelled technological innovation—from aerospace engineering to the digital technologies that form the backbone of today’s global economy.

Over time, this system has built strong political coalitions. Defence contractors, research institutions, military commands, and congressional districts reliant on defence jobs all have a vested interest in preserving large military budgets.

The result is not just a powerful military—it is a political economy that naturally leans toward using military tools in foreign policy. Alliances, overseas bases, security guarantees, and arms sales become key parts of the country's international strategy.

The result is not just a powerful military—it is a political economy that naturally leans toward using military tools in foreign policy. Alliances, overseas bases, security guarantees, and arms sales become key parts of the country's international strategy.

China’s commercial strategy

China’s economic trajectory has followed a very different path. For decades, Chinese growth mainly relied on exports and manufacturing. But since the late 2000s, Beijing has aimed to shift the economy toward domestic consumption, services, and higher-value industries. The change has been slow but meaningful. China’s middle class has grown significantly, consumer spending has increased, and the service sector now makes up the largest part of the country’s economic output.

Despite markets playing a central role in this transformation, the Chinese government still guides economic development through industrial policies , state-owned financial institutions, and long-term planning. The political goal of this strategy is clear: sustained economic growth is crucial for maintaining social stability and the legitimacy of the Communist Party's rule.

That imperative naturally promotes a foreign policy focused more on economic strategies than military power—trade agreements, infrastructure investment, development finance, and supply-chain integration. China’s Belt and Road Initiative, which funds infrastructure in dozens of countries, clearly reflects this strategy. Instead of showing power through military bases and alliances, Beijing often influences other nations with ports, railways, energy networks, and business partnerships.

Two different toolkits

These economic foundations produce two different foreign policy toolkits. The United States has unmatched hard power: global military bases, strong alliances, and advanced weapons systems. Its influence is supported by a security framework built over many years.

China’s power, on the other hand, relies increasingly on commercial connectivity—trade links, infrastructure projects, and investment networks that connect foreign economies to Chinese markets.

Both systems generate influence. However, they function through different methods.

The United States generally exerts power via security relationships, while China primarily uses economic integration.

Why Washington and Beijing misread each other

Because the two countries operate under different economic principles, they often interpret each other’s actions through the wrong lens. American policymakers often see Chinese infrastructure investments or technology exports as strategic moves aimed at expanding geopolitical influence.

Chinese policymakers frequently view U.S. military deployments and alliances as efforts to contain China’s economic growth

In reality, both countries may simply be acting based on the incentives built into their own political economies.

The shape of future competition

The emerging U.S.-China rivalry may therefore be less about ideology and more about two different models of global influence. One model relies on military alliances, security guarantees, and defence technology. The other depends on markets, infrastructure, and commercial integration.

Both are powerful—and both have their limits. The United States maintains unmatched military capabilities and a vast alliance network. Meanwhile, China continues to grow its economic reach across much of the developing world.

The strategic competition between the two nations will likely play out not just in military contests but across trade, infrastructure, technology, and finance. In other words, the future of global power might be determined not just by who has the stronger military, but by which economic system proves more sustainable and influential over time. 

The opinions and thoughts expressed in this article reflect only the author's views.

Dean Tavakoli is an analyst and a senior executive who possesses over a decade of extensive global quantitative investment experience. He is the CEO of Sea Enerji, a petrochemical trading company based in Turkey and has also served as a strategic advisor for the Middle East Oil and Gas.

The push follows a brief but intense conflict with Pakistan in May 2025, during which Indian forces relied heavily on satellite imagery to track military movements. Officials said the confrontation exposed blind spots in India’s surveillance capabilities, particularly at night and in bad weather.

To address this, India plans to upgrade its satellites with synthetic aperture radar, a technology that allows imaging in darkness and through cloud cover. The government is also working on systems that enable satellites to share data directly, reducing reliance on ground stations.

The first batch of 52 satellites, under a programme known as Space-Based Surveillance-3, is being fast-tracked and could begin launching as early as April 2026, according to earlier reports by Indian media .

India is also considering building overseas ground stations in regions such as the Middle East, Southeast Asia and Scandinavia to speed up data transmission, though these plans would require approval from host governments.

During the 2025 standoff, satellites played a key role in identifying targets, while China reportedly helped Pakistan adjust its satellite coverage, according to an Indian defence research body.

India currently has more than 100 satellites in orbit, compared with about eight operated by Pakistan, according to satellite tracking data.

Speaking at the ceremony, Milei argued that the F-16s represent more than a military upgrade, presenting them instead as a symbol of national strength in what he called an increasingly unstable global environment. He said a country aiming for sustainable development must be able to command respect internationally, linking military readiness with his broader narrative of economic revival and national restoration. Flyovers across Buenos Aires — including the Casa Rosada and the Obelisk — were staged to showcase the new fleet, which he referred to as “guardian angels” and “custodians of Argentine airspace.”

Milei’s emphasis on defence spending has drawn criticism from opposition groups, who denounced the jet purchase as unnecessary amid deep cuts to public services. The president, however, framed the acquisition as part of Argentina’s overdue modernisation and argued that strong deterrence is essential to securing long-term prosperity. His government has increasingly aligned its defence agenda with Washington and its NATO partners, positioning the deal as part of a broader shift in Argentina’s foreign policy .

The aircraft began its journey in Denmark earlier this week, stopping in Zaragoza and the Canary Islands before crossing the Atlantic. The transfer was supported by US Air Force aerial refuelling and involved mixed Danish-Argentine crews. The Río Cuarto base will become the fleet’s first operational hub, with Argentine pilots expected to transition to the F-16 system early next year.

Footage from the General Factory Jose Maria Cordova (Fagecor) in Bogota shows workers at the state-owned Military Industry (Indumil) designing and producing rifle prototypes and 3D models. The initiative, which has been in development for roughly five years, follows specifications provided by the Colombian Armed Forces, including barrel lengths, ambidextrous systems, fixed sights, and folding or extendable stocks.

Alejandro Bohorquez, professor of International Relations at Universidad Externado de Colombia, highlighted the symbolic dimension of the move: “In Israel's case, this aligns closely with the current campaign discrediting Israel over its recent actions against the Palestinian population. Clearly, for Israel, the concern—beyond losing a decades-long business—doesn’t go much further. It’s more of a commercial issue. Colombia wasn’t even a main partner in the arms trade with these states. So, it’s more like a symbolic protest over Israel and Palestine’s recent actions.”

Indumil’s Engineering and Development Director, Alfonso Palacios Chavarriaga, explained that the next step involves completing the second design phase and producing ten prototypes, which will be tested to ensure they meet technical standards. The final phase will see mass production, with the rifles intended to fully replace the Galil in service with Colombia’s Armed Forces.

The initiative also reflects Colombia’s broader push for defence autonomy. President Gustavo Petro’s government has recently halted arms purchases from both Israel and the United States , underscoring a commitment to building a self-reliant military and reinforcing national sovereignty in defence procurement.

“Any military force in the world knows the power of the IGLA-S,” Maduro said. “Venezuela has no more and no less than 5,000 IGLA-S in key anti-aircraft defence positions to guarantee peace, stability, and the tranquillity of our people.”

Maduro’s remarks came shortly after U.S. President Donald Trump announced plans to launch operations against drug traffickers operating on land, a move that has heightened tensions between Washington and Caracas.

The IGLA-S, similar to the U.S.-made Stinger missile, is a short-range, man-portable air defence system designed to target drones, helicopters, and low-flying aircraft. According to Russia ’s state arms exporter Rosoboronexport, the weapon has a range of up to six kilometres and can reach altitudes of 3.5 kilometres.

Venezuela first acquired the IGLA-S systems between 2005 and 2008 as part of a major arms deal with Russia under former President Hugo Chávez, aimed at modernising the country’s military. The stockpile remains one of the largest collections of such weapons in Latin America.