# Old Tapes > Source: > Published: 2026-07-22 09:11:28+00:00 # Old Tapes ### The US AI industry is about to suffer the China treatment. *“Pursue one great decisive aim with force and determination.”* – Carl von Clausewitz For those unfamiliar with how China fuses industrial policy with its geopolitical objectives to astonishing effect, the following two news articles might seem unrelated. First up are reports that the country will soon be exporting cars at a pace greater than America’s entire capacity to make them. We turn to *The Guardian* for the stunning [details](https://www.theguardian.com/business/2026/jul/14/china-car-exports-june-trade-us-eu-trump-tariffs): “ China’s monthly car exports topped 1m for the first time in June as overall overseas shipments from the world’s second biggest economy rose 27%. Official Chinese customs data showed that a stronger-than-expected trade performance kept China on track to match or beat last year’s record trade surplus of $1tn (£748bn), achieved despite Donald Trump’s curtailed tariff war. Sales of Chinese brands ranging from BYD to Jaecoo are booming, eating into the market shares of long-established brands, particularly in Europe.” For the second part of our narrative, we click over to the *South China Morning Post*, where we are [introduced](https://www.scmp.com/economy/china-economy/article/3361211/payback-why-chinas-world-beating-car-industry-faces-plunging-sales-home?utm_source=cm&utm_medium=email&utm_campaign=GME-O-enlz-uv&UUID=29b1fc34-91f3-4b86-8145-8ba3fdb6bd76&utm_content=20260721_China_Economy_FW_RU&CMCampaignID=e591e34e50a7734d253b6e067a0fedfb) to Wang Wenfei, a 30-year-old chef from central China’s Henan province. Like most Chinese consumers, Wang is in the market for an affordable, well-built car he can count on for his modest daily needs. Before he could finalize his acquisition, he learned that Beijing had pulled the rug out from under the subsidies he had been counting on to make the purchase, causing him to put off the decision. The *Post* sees a trend developing: “ Wang is far from alone. China is now the world’s largest car exporter, but sales at home have hit the skids in recent months, as the government scales back its subsidy programme and consumers remain reluctant to spend amid a shaky job market and prolonged property downturn. The trend is creating a headache for Chinese carmakers like BYD and Chery Automobile – pushing them to lean more heavily on overseas markets at a time of rising trade tensions – as well as complicating Beijing’s efforts to rebalance China’s economy towards domestic consumption.” For most of the developed world, ensuring a healthy domestic market for strategic industries is usually the top priority, with import/export balances used as a valve to dampen the impact of economic cycles on local champions. As we have tirelessly [pointed out](https://newsletter.doomberg.com/p/chip-shot) over the years, this is simply not so for China, which regularly flips the script. When the goal is global domination, the domestic market is used as the toggle. This play follows a familiar script. In the early stages, local champions are heavily subsidized on the home front until they have either developed or pilfered the necessary technology to compete on a global scale. Then the world is flooded with excellent products offered at impossible-to-compete-with prices, with the goal of quite literally putting the competition out of business. If this means the likes of Mr. Wang have to wait to get their shiny new vehicles, so be it. There’s a greater national interest at stake, and Chinese leaders will pursue it with ruthless efficiency. Were this just a story condemning the likes of General Motors, Ford, Toyota, Honda, and Volkswagen to ruin, it would be bad enough, but this exact sequence is playing out in the all-important artificial intelligence (AI) industry, only at an even faster pace. From cutting-edge semiconductor chips to frontier models, Beijing is tracing a familiar pattern, and we see no evidence that Western leaders properly understand what is happening, let alone are capable of doing much about it. As far as pieces on the board go, this particular arrangement is critical for all investors to understand and prepare for. Let’s take inventory of where things stand now, where they will inevitably soon be, and what it all portends. ## Keep reading with a 7-day free trial Subscribe to Doomberg to keep reading this post and get 7 days of free access to the full post archives.