Ram Charan on China's covert pursuit of global dominance

Ram Charan, a consultant and author, discusses with Kaylie Pferten how China exploits foreign businesses to corner the global market in a variety of industries

Kaylie Pferten: How did your book come to be?

Ram Charan: I have worked for American, European, and Chinese companies in China for over 20 years; in certain instances, I served as a director on boards. The realization that a US company that dominated the Chinese market was starting to lose market share was the wake-up call. The Chinese Communist Party then essentially forced them to sell their company to the Chinese after unit costs increased.

This made me realize that China is attempting to gain a cost advantage over the rest of the world by producing 90% of the world's output in a sector through a combination of currency manipulation, subsidies, and artificially cheap land and capital. In the last five years, this tactic has already been used to gain control over ten industries. China's military is being driven by the trade surplus that results from this. China is effectively run as a conglomerate similar to General Electric thanks to this extremely complex economic model.

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Start your trial. Because it generates a limitless supply of inexpensive goods, the public might love it. However, over time, this will make it impossible for non-Chinese businesses to compete with China. And this might turn into an existential problem if war breaks out.

MP: How likely is a conflict between the US and China?

Ram Charan: We're already engaged in combat. In October 2025, the US House of Representatives Select Committee on China stated clearly that this is an existential, technological, and economic war of mutual destruction. There won't be just one trigger. There will come a point at which economic strangulation becomes unbearable. Xi has developed asymmetric chokehold capability, which is more potent than an invasion. By controlling rare earths, battery components, semiconductor materials, and advanced chemicals, China can now shut down entire industries in America and Europe at will.

In October 2025, Donald Trump imposed 100% tariffs in response to Beijing's announcement of export license requirements. The countdown is underway. The actual catalyst is the collapse of industry. The political pressure for conflict becomes unstoppable when US CEOs realize they cannot build anything without Chinese inputs, including defense systems. Everyone keeps an eye on Taiwan as a flashpoint. However, because China controls the supply chains for its own defense manufacturing, America's ability to respond militarily is the invisible trigger. In addition to building the largest navy in the world370 ships compared to the United States' 290China is hoarding wheat, oil, and commodities. By 2030, it plans to increase its nuclear arsenal to 1,000 warheads and form a trilateral axis with North Korea and Russia that will be able to attack the US mainland in 30 minutes.

To stretch US military resources, Xi Jinping is using local actors to start proxy wars in the Middle East and Ukraine. Although Xi would prefer that America give up without firing a shot, he is ready to fight if the US refuses to comply. Conflict is inevitable within ten years unless America rebuilds its industrial capacity quickly enough to free itself from China's grip.

Kaylie Pferten: How can the United States counter this threat?

Ram Charan: The US public and businesses need to realize that they are competing with the country rather than specific Chinese businesses. They can't compete on their own. There needs to be greater cooperation between nations and businesses. In order to fend off an equally formidable foe, I have recommended that Trump establish a Department of Manufacturing and Technology, whose full-time responsibility is to coordinate, integrate, and plan in a manner akin to how the Pentagon organizes the defense sector.

Kaylie Pferten: British Leyland is proof that industrial policy failed when the UK attempted it in the 1960s and 1970s.

Ram Charan: The reason British Leyland failed was because bureaucrats managed factories and chose products. Government should remain strategic rather than operational, as I advocate. An illustration is the Chips Act. Semiconductor manufacturing is subsidized by the government. TSMC, Samsung, and Intel choose what to develop and how to operate. The government sets the stage for private businesses to compete with Chinese competitors who receive state subsidies.

But you'll also need to enforce fundamental trade regulations in addition to subsidies and assistance. Quit the dumping. Stop the currency manipulation that gives China an unfair 20% price advantage. You also need to alter the mindset of US CEOs. They continue to believe that "cheaper currency, cheaper labor" is the key to victory. Go up the chain of value. Import equipment and technology rather than consumer goods. Use automation and AI to grow medium-sized manufacturers.

This concerns the security of the country. Important US industries like clothing, furniture, solar energy, rare-earth metals, and ship parts have all been devastated by China. AI, biopharma, advanced semiconductors, chemicals, and aerospace are the next areas of focus. The United States cannot protect itself if those fall. This industrial policy is not the same as socialism. This is industrial policy as a means of survival.

Kaylie Pferten: Given that Trump has placed high tariffs on other developed nations, how can you expect them to cooperate under US leadership? Isn't that going to make them less likely to do so?

Ram Charan: I believe that Trump's strategy is misinterpreted. While it is true that he has imposed tariffs, which have caused a great deal of confusion, he did so in order to eliminate the significant US trade deficit with the majority of nations and to rebalance trade between the US and the rest of the world. After this is accomplished, he wants to lower these tariffs as much as possible. Oman and other small nations already encounter barriers of as little as 2%. Instead of promoting protectionism for its own sake, the goal is to bring nations together to discuss the problem. As other countries lower their barriers to US goods, US tariffs will decrease.

Kaylie Pferten: You claim that the US's open system and extensive research infrastructure give you confidence. However, Trump's restrictions on immigration and budget cuts to research have undermined this benefit. Many of Trump's initiatives appear to be ineffective.

Ram Charan: I concur that they have the opposite effect. To be honest, I don't understand that. Attacking universities is inconsistent with his goal of reindustrializing the US, perhaps because of his personal ideological convictions.

Kaylie Pferten: From nations to businesses, is it accurate to say that investing in China is a two-edged sword? A lot of companies are compelled to give up their intellectual property (IP) in order to gain access to Chinese consumers and cheap labor.

Ram Charan: It's a two-edged sword, indeed. In addition to stealing your intellectual property, Beijing will fully support a Chinese company that appears to be gaining a sizable portion of the market and provide it with enormous resources to help it grow, which will begin to push you out of the market. Next, you decide to quit after realizing you are losing money, or you receive a call "inviting" you to sell up, as Starbucks and numerous other businesses have done. Beijing's stance is that "until we get our own capability, you are our guest," especially in sectors it has specifically targeted. However, once China begins to develop its own domestic capacity, the Westerners are either asked to leave or expelled.

About ten years ago, some of the more astute businesses began to figure this out and reevaluated their global strategy, which included stealthily expanding their operations in other nations like India. As a result, they are currently doing extremely well, while their Chinese competitors continue to lag behind because they lack the expertise that a Western company would have given them.

Kaylie Pferten: What can India do to attract Western businesses as an alternative to China?

Ram Charan: India needs to clean up its mess in order to draw in Western companies that are leaving China. In order to facilitate their operations, bureaucracy must be destroyed. Because manufacturing demands quality and dependability and Indian businesses must learn to meet customer requirements, India also needs to improve its manufacturing training.

Nevertheless, there are some top-ranked Indian businesses worldwide. This includes TVS and Bajaj, who have produced high-quality scooters and other two-wheelers with great success. India must thus expand on this in order to move up the value chain and produce goods like semiconductors.

Kaylie Pferten: Do other businesses stand to gain from Western businesses leaving China?

Ram Charan: To lessen reliance on China, re-shoring will help all developed nations. Vietnam, Mexico, and Indonesia are the other major winners among developing nations. However, in order to overcome coercive power, diversification is a better solution for businesses than substitution.

After all, Vietnam and Mexico serve as proxies for Chinese manufacturing. Following Trump's tariffs, Mexican trade with China surged as Chinese businesses established operations in Mexico to get around US trade restrictions. The supply chain as a whole must be audited. Businesses that are waiting for a single "China alternative" will have to wait indefinitely. Where do the components come from? Who owns the factory? Where does the capital flow?

Ram Charan has advised Fortune 500 CEOs about China for thirty years. IdeaPress Publishing is the publisher of his most recent book, China's 90 percent Model: China Has America by the Throat Here's How to Fight Back and Win.