Ever since the United States ascended to global leadership at the end of World War II, American leaders have regularly been stricken by bouts of anxiety that the country is in decline and losing ground to a rival. The Soviet Union’s 1957 launch of the Sputnik satellite prompted such fears, as did Soviet expansionism in the 1960s. In the 1980s, Washington was seized by the worry that American industry was incapable of competing with Japan’s economic juggernaut. Even in 1992, just after the Soviet Union collapsed, an article in the Harvard Business Review asked, “Is America in Decline?”

Today, this perception of decline is wedded to fears about new vulnerabilities in the U.S. democratic system and the burgeoning strength of China. Both of these concerns have merit. Although U.S. voters disagree on the sources of the threats to American democracy, they broadly express an anxiety that their country’s democratic institutions can no longer deliver on the American dream’s promises. An October Gallup poll found that three-quarters of Americans were dissatisfied with their country’s trajectory.

Meanwhile, the story goes, China is powering ahead, pairing ambitious economic and diplomatic agendas with a massive military expansion while the United States staggers under the weight of inequality, stagnating wages, legislative gridlock, political polarization, and populism. Over the past three decades, China has indeed established itself as the factory of the world, dominating global manufacturing and taking the lead in some advanced technology sectors. In 2023, China produced close to 60 percent of the world’s electric vehicles, 80 percent of its batteries, and over 95 percent of the wafers used in solar energy technology. That same year, it added 300 gigawatts of wind and solar power to its energy grid—seven times more than the United States. The country also exerts control over much of the mining and refining of critical minerals essential to the global economy and boasts some of the world’s most advanced infrastructure, including the largest high-speed rail network and cutting-edge 5G systems.

As the U.S. defense industry struggles to meet demand, China is producing weapons at an unprecedented pace. In the past three years, it has built over 400 modern fighter jets, developed a new stealth bomber, demonstrated hypersonic missile capabilities, and doubled its missile stockpile. The military analyst Seth Jones has estimated that China is now amassing weapons five to six times faster than the United States.

To some observers, such advances suggest the Chinese system of government is better suited than the American one to the twenty-first century’s demands. Chinese leaders often proclaim that “the East is rising and the West is declining”; some U.S. leaders now also seem to accept this forecast as inevitable. Arriving at such a broad conclusion, however, would be a grave mistake. China’s progress and power are substantial. But it has liabilities on its balance sheet, too, and without looking at these alongside its assets, it is impossible to evaluate the United States’ real position. Even the most formidable geopolitical rivals have hidden vulnerabilities, making it crucial for leaders to more keenly perceive not only the strengths but also the weaknesses of their adversaries.

And although China will continue to be a powerful and influential global player, it is confronting a growing set of complex challenges that will significantly complicate its development. Following a decade of slowing growth, China’s economy now contends with mounting pressures from a turbulent real estate market, surging debt, constrained local government finances, waning productivity, and a rapidly aging population, all of which will require Beijing to grapple with difficult tradeoffs. Abroad, China faces regional military tensions and increasing scrutiny and pushback by advanced economies. Indeed, some of the foundational conditions that drove China’s remarkable growth over the past two decades are unraveling. But just as these new difficulties are emerging, demanding nimble policymaking, Chinese leader Xi Jinping’s consolidation of power has stifled political debate and sidelined technocrats, yielding a policymaking process that is brittle, reactive, and prone to missteps. Chinese young people now lament the narrowing space they have to achieve their goals, a trend that won’t change unless their country’s leadership does. But that event appears distant.

Even with its many shortcomings and vulnerabilities, the United States continues to command a strategic depth that China fundamentally lacks: a unique combination of economic vitality, global military superiority, remarkable human capital, and a political system designed to promote the correction of errors. The resilient and adaptable U.S. economy has the world’s deepest and most liquid capital markets and unparalleled influence over the global financial system. The United States continues to attract top global talent, including many Chinese nationals now fleeing their country’s autocratic political environment.

Put plainly, the United States still has a vital edge over China in terms of economic dynamism, global influence, and technological innovation. To highlight this fact is neither triumphalism nor complacency. It is the root of good strategy, because Washington can easily squander its asymmetric advantages if excessive pessimism or panic depletes its will, muddies its focus, or leads it to overindulge nativist and protectionist impulses and close America’s doors to the rest of the world. For despite its problems, China is still making headway in specific domains that challenge U.S. national security and prosperity, such as quantum computing, renewable energy, and electric vehicle production. A political-economic system such as China’s can remain a fierce rival in key areas even as it groans under the weight of its pathologies.

China most often gains primacy in areas in which the United States is dramatically underinvested. China’s greatest assets in its competition with the United States are not its underlying fundamentals but its hyperfocus and willingness to expend enormous resources, and tolerate enormous waste, in the pursuit of key objectives. That means that Washington cannot afford to retreat from sectors vital for competing in the twenty-first century’s economy, as it did in the case of 5G technology in the previous decade.

U.S. President-elect Donald Trump’s campaign rhetoric relied particularly heavily on the specter of American decline. The United States does face its own daunting array of problems abroad and at home, but these pale in comparison to those China faces. And Washington’s tendency to stress its rivals’ power and underestimate its own strengths has often backfired, becoming a trap that leads to serious policy errors. Even Trump’s most pessimistic advisers should understand this history—and recognize that U.S. leaders risk making costly missteps by adopting a reactive posture toward China instead of capitalizing on the United States’ comparative advantages to push forward its interests at a moment when Beijing is struggling.

Throughout the last century, the United States has consistently overestimated the strength of its rivals and underestimated its own. This habit became particularly evident during the

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