Great powers rarely fail because they are unaware of their problems. More often, they fall apart because they misidentify or only partially identify the root of those problems. The ability to accurately diagnose weaknesses, to distinguish between temporary constraints and structural limits, and to generate the political will to fix deep-seated problems separates states that adapt and thrive from those that stagnate or crumble.

China today faces an imposing list of challenges that it needs to assess and address. Economic growth is slowing, the population is aging, the financial system is under stress, and other countries have been tightening trade controls and scaling up their own industrial policies to compete. For many years, China’s economic expansion could mask the country’s underlying vulnerabilities. That era is now over. And in party documents and major speeches alike, leaders in Beijing admit these pressures and acknowledge the country’s weaknesses.

But recognition is not diagnosis, nor does it automatically translate into meaningful action. Beijing describes China’s challenges as technical, developmental, or externally imposed rather than products of systemic problems. This distinction is strategic. It downplays political and institutional vulnerabilities that are causing the issues or making them worse, including the concentration of authority in the hands of Chinese leader Xi Jinping, tensions between central directives and local implementation, misaligned incentives between leaders and rank-and-file cadres, and a demand for ideological rigidity that leaves limited room for feedback or policy correction.

How China views its own weaknesses is as consequential as the weaknesses themselves. When Beijing casts structural problems as technical hurdles or pressures from abroad, it limits the reforms it is willing to pursue while offloading responsibility by blaming factors outside the Chinese political-economic system itself. For policymakers in the United States and Europe, understanding how China interprets its own problems is essential to managing long-term competition, calibrating deterrence, and identifying areas, however few, where real engagement remains possible.

Rhetorically, Chinese leaders have not shied away from identifying the challenges that the country faces. In 2017, Xi signaled that he was aware of growing problems of decades of economic growth by declaring that the country’s principal contradiction—the tension that defines each era and drives development, according to Mao Zedong’s framework—had changed. China’s biggest contradiction was no longer between growth and scarcity, which had been the driving force of the reform era, but rather between “unbalanced and inadequate development and the people’s ever-growing needs for a better life.” In other words, while endorsing more and better development overall, Xi was acknowledging that rapid economic growth had created quality-of-life concerns such as income inequality, environmental degradation, and demand for more than just the fulfillment of basic subsistence needs.

Xi has been equally blunt about China’s technological vulnerabilities. Since 2016, when China’s 13th Five-Year Plan and other policy documents signaled the leadership’s renewed emphasis on the long-standing objective of promoting domestic innovation, Xi has repeatedly warned that China’s “key and core technologies are controlled by others.” He has identified advanced semiconductors, industrial software, and precision manufacturing equipment (such as lithography machines) as strategic chokepoints. External........

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