Written by: Meng Yan
On April 2, 2025, Trump initiated the so-called "Liberation Day" tariff war, triggering countermeasures from multiple countries. This move is widely regarded as a significant event that could alter the global economic landscape, with implications that rival the "Nixon Shock" of August 1971 when the dollar was decoupled from gold. In both domestic and international Chinese discourse, whether from the perspective of Chinese interests or American interests, there is a strong critical stance towards Trump's policy. Personally, I focus on digital assets and Web3 technology, and I am more concerned about the position and development trends of the cryptocurrency and blockchain industry under this policy. However, due to my unfamiliarity with economic and trade issues, as well as my lack of understanding of the United States, I still need to consult experts. Therefore, I once again invited Dr. Shao Qing for a discussion on this topic.
1. The Essence of the Trade War is Competition for Knowledge Sovereignty
Meng Yan: Professor Shao, our previous discussion on Trump's cryptocurrency policy attracted some attention, with some readers commenting that it was the most logical interpretation of the Trump administration's crypto policy they had encountered. However, the situation has changed so rapidly that it has even caught us off guard. Trump has just announced a "Unified Tariff" policy, causing significant global shock, and several countries have already expressed their intention to retaliate. The economic circles both inside and outside the country almost unanimously believe that he is reversing course, engaging in a form of populist manufacturing protectionism, reflecting the incompetence of Trump's economic team and chaotic policies. Some readers believe that Trump's provocation of a global trade war will inevitably lead to great chaos, rendering his cryptocurrency policy irrelevant. I know you have recently conducted a long-distance, extensive investigation of the technology industry in both China and the United States, and I would like to hear your latest views on the trade war and the development trends of the cryptocurrency industry.
First, I would like to hear your analysis of Trump's motives for this tariff war. Why is he pursuing this reciprocal tariff policy? On the surface, the large-scale trade deficit that the United States experiences each year does seem to indicate that it is "losing out." However, many economists have pointed out that as the issuer of the global reserve currency, the United States does not actually suffer losses in the current international trade. Despite the massive deficit in the current account, it can finance itself globally at very low interest rates, and with just a few clicks on Wall Street, it can earn more than a large factory in Asia would make in a year. When considering the overall picture, the United States is actually benefiting. If this is the case, why is Trump pursuing a new tariff strategy? Is it really due to economic incompetence?
Shao Qing: To discuss this topic, we must first set aside our emotions and focus on facts and logic. Let me be straightforward: Trump's new tariff policy is fundamentally different from the motives behind the trade war he initiated during his previous term. It is not simply about reducing the trade deficit or bringing all manufacturing back; rather, it is about bringing back knowledge and technology. This goal is structural and cannot be discerned by merely looking at financial statements, which is why it does not receive a rational explanation in mainstream economics and is dismissed as nonsense.
Mainstream economics discusses GDP and trade by only counting monetary value. So, whether you sew shirts, manufacture high-tech precision equipment, or provide financial services and earn commissions from speculative trading, it all appears the same when generating 100 yuan of GDP from a monetary value perspective.
However, anyone who has worked in the industry knows that even if the profits are the same, the methods of earning differ significantly. Where is the difference? It lies in the density of knowledge and technology. If profits are generated through engineering infrastructure, data analysis, algorithm development, and equipment manufacturing, what accumulates behind it are technological capital, knowledge capital, engineering capabilities, and systemic understanding. In contrast, if profits are generated through speculative arbitrage, stock and real estate trading, and platform marketing, the growth may seem lively, but what accumulates behind it are non-replicable path dependencies, excessive demands for traffic and emotions, and structural overextension of real capabilities.
The capabilities accumulated through the former are sustainable, structured, and can be solidified as core assets of a nation's comprehensive competitiveness, serving as the "compound interest engine" of national capability. The latter, however, is opportunity-driven and non-reusable, making it difficult to solidify into systemic capabilities, and instead easily hollowing out the real economy, distorting incentives, and creating structural bubbles. More seriously, when the entire society regards speculative arbitrage as a symbol of "smartness" and asset trading as a shortcut to "success," those who truly have the ability to engage in research and development, manufacturing, and infrastructure are marginalized. Over time, the entire country's knowledge structure, talent structure, and industrial structure will be subjected to reverse selection, ultimately falling into the trap of "superficial prosperity with a hollow foundation."
With the advancement of globalization over the past few decades, the hollowing out of the American economy has become increasingly severe, not only reflected in the large-scale relocation of manufacturing but also in the systematic loss of engineering culture and foundational knowledge in industries. Against this backdrop, some important figures in American intellectual and industrial circles have begun to reflect on the mainstream economic doctrine that "free trade is sacred and inviolable." Navarro, Peter Thiel, and Elon Musk are three of the most representative voices in this regard.
Navarro is an economics professor at the University of California, Irvine, and served as an economic advisor to the Trump administration. He was sentenced to prison for contempt of Congress during Biden's administration. Even while incarcerated, he wrote important chapters on international trade and tariff policy for the American Enterprise Institute's Project 2025, clearly advocating for "reciprocal tariffs" to replace "free trade," emphasizing that "fair trade" is the true institutional foundation that serves national interests. Navarro's core logic is that the efficiency gains from free trade come at the cost of geographical imbalances in knowledge and engineering capabilities. While the United States appears to save on manufacturing costs, it has effectively lost control over critical industrial processes, complete manufacturing systems, and practical knowledge.
At the same time, Peter Thiel has been continuously warning from the perspective of capital and technology philosophy. He repeatedly emphasizes that the American technology sector has long deviated from the path of "hard technology," becoming obsessed with internet traffic and financial arbitrage, while neglecting the foundational research, manufacturing capabilities, and engineering systems that can truly build a national moat. Thiel is extremely alert to the degradation of the United States in strategic fields such as manufacturing, energy, and semiconductors, and has invested heavily through organizations like Founders Fund in "high technology density, high friction, but with significant long-term returns," aiming to rebuild the underlying structure of technological competition.
Elon Musk, on the other hand, is the most representative figure in terms of action. He has an intuitive and precise understanding of the loss of systemic industrial capabilities in the United States and is promoting a comprehensive "re-industrialization" from rockets, energy, chips, robotics, low-orbit communication to large-scale manufacturing through SpaceX, Tesla, Starlink, and other platforms. His core belief is very clear—if the United States cannot master the closed-loop manufacturing capabilities based on first principles, it will not be able to maintain its global dominance.
These three figures represent three seemingly different but actually converging paths of policy, capital, and industry. They have made highly consistent judgments about the systemic imbalance of "knowledge density, engineering capabilities, and manufacturing systems" in the United States, each choosing different approaches to respond. The comprehensive adjustment of the Trump administration's policy is, in fact, an attempt at institutional correction driven by these thoughts and practices.
Thus, while Trump's political slogan for implementing "unified tariffs" is to "fight for workers' jobs," the fundamental motive is to "fight for national knowledge." Behind this is a strategic judgment about future technological sovereignty: if the United States cannot regain control over core manufacturing and engineering systems, it will ultimately lose its leading position in AI, chip technology, energy systems, and the next generation of industries, leading to a complete decline in a short period.
The problem is that mainstream economics is still obsessed with "measurable monetary logic." They create tables to track the inflow and outflow of current and capital accounts, calculating year after year and modeling day after day, but have they ever thought about creating a table for the inflow and outflow of knowledge and technology? Has anyone seriously counted how many complete engineering capabilities, how many first-line processes, and how many practical talents are withering away in the United States each year? Who has calculated that behind the relocation of an entire industrial chain, what accompanies it is not just equipment and orders, but a complete generation's "knowledge deconstruction"? Economists who can only count money and models that only focus on short-term indicators cannot see these structural and intergenerational losses. The problem facing the United States today is, after all, a result of being misled by an economics that only sees currency, ignores structure, emphasizes price over capability.
Therefore, we cannot use "old-fashioned economics" to view this trade policy, nor can we understand it as purely a populist impulse. It is actually creating space for re-anchoring knowledge and concentrating technology; it is a competition initiated by the United States to re-establish its knowledge sovereignty—though the means are crude and the path is perilous, the strategic direction is clear.
Meng Yan: However, the United States' technological innovation capability still leads the world, and it still has strong manufacturing and engineering capabilities. Is the Trump administration perhaps overreacting? Or is it deliberately exaggerating to manipulate public sentiment?
Shao Qing: The U.S. real economy is still strong, and its technological innovation capability remains number one in the world, but the trend of industrial hollowing out is very evident. You may still see Apple, Nvidia, SpaceX, as well as top universities and leading research institutions, but the real problem is that this strength is "spotty," not "widespread"; it is "top-end," not "systemic."
In other words, the United States still leads at the tip of the technological pyramid, but the base has begun to loosen, and the body of the pyramid is experiencing fractures. A large number of mid-level manufacturing, applied engineering, and high-skilled talents are either flowing overseas or shifting to non-industrial sectors. If you take a look at the traditional manufacturing strongholds in the U.S., you will see that an entire generation of young people has become disconnected from the engineering system. They may know how to write Python and understand AI, but they no longer know how to operate a lathe, understand assembly line logic, or want to work in factories.
This is not an exaggeration of the problem, but a real crisis judged from the perspective of national knowledge structure and systemic capability. Trump may not be able to articulate all these theoretical details, but he and his think tank see the symptoms. If these problems are not addressed for a long time, they will lead to social disorder and the collapse of national capability. From the perspective of more fundamental heavy industry and capacity building, the problems in the U.S. are even more apparent. In areas like metallurgy, power generation, chemicals, and machine tool manufacturing, the U.S. has long been surpassed by China. For example, in shipbuilding, the U.S. is projected to produce only one two-hundredth of China's shipbuilding tonnage in 2024, and if this continues, it will completely lose its systemic capabilities in large ship manufacturing and marine engineering. These were once the industrial pillars that the U.S. took pride in during the Cold War. More seriously, the U.S. has not successfully developed any world-class large infrastructure projects for many years. Whether it is high-speed rail, super grids, large water conservancy projects, or smart industrial parks, the U.S. is basically in a state of "stagnation or even regression." Initially, it was a financial issue, but if it drags on, it will become a problem of organizational capability and systemic engineering capability.
So, while the current situation may seem manageable, looking at the trend, it can no longer be delayed. Today, you can still say you don't want to do it, but in ten years, you may find you can't do it anymore.
This is why Trump wants to use the most radical means to bring back manufacturing, rebuild the engineering chain, and limit the outflow of key technologies—essentially, to re-anchor the structural foundation of national capability and reclaim the nation's knowledge sovereignty.
Meng Yan: In that case, I understand why Trump is so eager to initiate this trade war, as the issue of capability hollowing out may be dramatically amplified in the context of the AI technology revolution.
Shao Qing: Yes, during the cycles of technological revolutions, the contributions of knowledge and technology factors to economic growth and national strength often exhibit a step-like amplification effect. In the current AI and robotics industry, while the forefront is still led by the U.S., if the hollowing out of the U.S. real economy continues to worsen, with industrial territories collapsing, engineering culture fracturing, and knowledge density diminishing, then even if AI technology remains leading in Silicon Valley, the U.S. may experience a "top-heavy" structural imbalance, ultimately lacking the momentum to compete in the long term and being surpassed.
For the United States, this round of the AI technology revolution is not a game where bets can be placed repeatedly; it is a historic window of opportunity that can only succeed and cannot fail.
If successful, the United States could not only reintegrate the three pillars of technology, industry, and finance but also establish a new technological power structure of "AI Sovereignty + Crypto Dollar" globally, completing the transition from being the dominant player in the old globalization system to a designer of a new order. This would not only mean the continuation of its geopolitical dominance but also signify a return to the top of the food chain in a new round of global knowledge redistribution.
However, if it fails, the loss would not be limited to the AI industry chain but would represent a structural fracture of American national capability itself—financial systems would lose growth anchors, industrial systems would be unable to revive independently, social classes would further fracture, and the foundation of trust would collapse. The most dangerous aspect is that once America's "compound interest engine" stalls, the technological and industrial iterations of other countries will no longer unfold around the U.S., marking the first time that America slides from being a "platform nation" to a "technological follower."
The United States is essentially trying to save itself.
Historically, there has been a successful instance of self-rescue. Previous global empires before Britain—whether the Mongols, Spanish, Portuguese, or Dutch—had their global dominance last nearly a century, or about three generations. In the words of ancient Chinese self-centeredness, "Since ancient times, the Hu people have not had a hundred years of fortune." Britain also once faced a similar fate: at the beginning of the 19th century, just as Britain established global hegemony for a century, Napoleon rose, and Europe was engulfed in war. Domestic debt in Britain soared, with government debt as a percentage of GDP even higher than that of today's United States, making it seem like a country destined for decline.
However, what happened next completely rewrote the trajectory of this "century law": Britain's Industrial Revolution transitioned from an accumulation phase to an explosion of results. From steam engines to railway systems, from textile machinery to metal smelting, technological innovations were applied on a large scale, leading to a leap in industrial production efficiency and a significant advancement in the engineering capabilities, organizational management, and capital formation structures of society as a whole. This was not merely economic growth but a step-like amplification of "knowledge and technology factors"—it allowed Britain to regain structural advantages and successfully extend its global hegemony for another century.
This example illustrates that when a country can be the first to complete the chain of "transforming knowledge into productivity" during a technological explosion cycle, it has the potential to break the original cyclical law, achieve longevity, and even redefine the global order. The technological dividends brought by today's AI revolution, in terms of potential and historical significance, may far exceed those of the Industrial Revolution. This is precisely why there are increasingly more voices within the U.S. advocating for the need to bring back the geographical concentration of knowledge and technology domestically; otherwise, the so-called "free trade" will turn into a chronic hemorrhage of knowledge resources.
Meng Yan: In fact, this set of concepts is what our generation of Chinese people is most familiar with, can understand, and can accept. When Deng Xiaoping said, "Science and technology are the primary productive forces," he was essentially conveying this meaning. Since there is a "primary productive force," it indicates that this productivity is different from other forms of productivity.
Shao Qing: Yes, if we look back, China's open strategy adopted after 1978 was actually centered around "introducing knowledge" and "absorbing technology." Whether it was "bringing in" or "going out," it ultimately aimed to create a positive channel for knowledge inflow. This strategy has been extremely successful. At the industrial level, China has transformed from a "technology-importing country" to a "partial technology-exporting country" in fields such as communications, manufacturing, energy, the internet, and engineering technology. The foundation of all this is that China has achieved the largest scale of "technology knowledge surplus" in the world.
During my travels in the U.S. and China, I discovered an interesting phenomenon: the people who best understand Trump are actually many "veterans" from China's economic and industrial sectors. Many of them are victims and opponents of Trump's trade policies, yet quite a few express understanding of his choices. I believe this is because they are practitioners of China's economic growth over the past forty years.
Meng Yan: Yes, one point I particularly resonate with is that our generation has personally experienced the phenomenon of "knowledge compounding." When I first graduated from school and started working in mobile device development, I viewed those technological giants in the U.S. as almost god-like figures, completely out of reach. That gap was not just at the tool level but represented a cognitive dimension gap; it felt like they possessed an entire system while we could only fix parts.
However, over the past twenty years, China's development has been so rapid that practice has led to true knowledge. Many of my peers started as "engineering laborers," doing OEM work and supporting roles, gradually moving from imitation to improvement, and then from improvement to localized innovation, even developing complete systems for global output. Fields like photovoltaics, new energy vehicles, communication equipment, and basic manufacturing equipment… an entire generation of Chinese engineers has transformed China into the largest and most comprehensive industrial nation in human history within a generation. Isn't this a manifestation of "knowledge and technology compounding"?
It is not linear growth; as long as you can retain, utilize, and pass down knowledge, it will grow and self-replicate. However, if you sever a generation from hands-on work, from doing things, and from understanding system structures, the density of knowledge will collapse. Even if there is money later, it cannot be made up.
Therefore, I can particularly understand why Trump suddenly "got tough" and wanted to bring manufacturing back to the U.S. You cannot just look at employment data; you need to see whether this country still has first-line engineers and how many people know how to design a machine, run a production line, or build a building. Without these people, an entire generation of young people running off to become internet celebrities, no matter how high their income, is just a house of cards that will eventually collapse.
Shao Qing: The opposite of China is the United States. Over the past thirty years, under the guidance of mainstream economic theory, the U.S. has been racing down the path of financialization, where the relocation of manufacturing is not just a simple move of factories but the outflow of entire engineering systems, systemic capabilities, and foundational process knowledge. This outflow has, in fact, been tacitly permitted or even encouraged by the blind spots of economic theory.
The problem facing the U.S. today is not a lack of money or job opportunities but a structural loss of knowledge. Over the course of thirty years, the U.S. has allocated an entire generation of its best talents to Wall Street for stock trading, placed them in internet companies to develop advanced algorithms for precise advertising targeting, and optimized content for entertainment stars and traffic platforms, yet it has not allowed enough talent to enter manufacturing, engineering, energy, infrastructure, and industrial systems.
The result of this structural mismatch is a serious downward trend in the overall ability of American society to "create something"—especially in "how to create complex systems." On the surface, the economy appears prosperous, asset prices are rising, and innovation is active, but in reality, this country has severely shrunk in the two most fundamental knowledge accumulation ecosystems: the "engineering community" and the "practical community." If this trend is not corrected, transitioning from elastic deformation to plastic deformation will inevitably lead to a rupture.
Some people believe that American higher education is still world-leading, so these concerns are "alarmist." In fact, this is a misconception. Many of the knowledge and technologies that have a decisive impact on the nation and economy are not generated in university classrooms or ivory tower laboratories but are accumulated in the practice of large-scale industrial manufacturing and system engineering development. "Practice leads to true knowledge" is not just a slogan but a realistic path of knowledge generation. If a country lacks enough practical engineers, dense industrial chain collaboration, and complex project implementation and engineering execution, then the "textbook knowledge" will be difficult to transform into usable, transferable, and monetizable capabilities.
You see that many American universities are still ranked among the best globally, with numerous papers and advanced theories, but the problem is that the U.S. has retreated from many industries. In engineering infrastructure, shipbuilding, chemicals, and equipment manufacturing, who is still doing large projects? Who is still leading thousands of people in system integration? Who is still in the workshop adjusting parameters and managing production lines? If these links are severed, that knowledge system will become "dead knowledge" floating in the air. Once knowledge loses its practical soil and transmission pathways, it will quickly become unusable, even incomprehensible. Engineering knowledge relies on scenarios, population density, and time accumulation. Once lost, rebuilding it cannot be achieved merely by funding or establishing a laboratory; it requires reconstructing an entire "knowledge production mechanism in practice."
Thus, the problem for the U.S. is not whether it has good universities but whether it still has sufficiently large engineering scenarios, enough practical talents, and a complete industrial foundation to support this knowledge. Knowledge is not stored in books but lives in the collaborative chains between people and systems. If that chain is broken, even if you have the best textbooks in the world, you can only understand them but cannot implement them.
Many of the key capabilities accumulated by China over the past two to three decades—such as scheduling algorithms for communication equipment, on-site deployment of intelligent manufacturing, and debugging of electric vehicle control systems—are not "invented by a certain university" but are honed through projects, factories, and hundreds of trial-and-error and on-the-spot judgments. These things cannot be taught without hands-on practice and exploration, nor can they be "made up by reading literature." Therefore, when Chinese people see Trump trying to "turn the tables" through tariffs, technology repatriation, and restrictions on technology outflow, it is particularly easy to understand—what he wants to do is essentially what generations of Chinese leaders have been doing for decades. Essentially, the U.S. has also realized that it has been experiencing a reverse process of "knowledge outflow" over the past few decades, where not only factories are continuously lost but also the organizational capabilities for complex industrial systems, the understanding of foundational processes, and the control over technological evolution paths. If this continues, the U.S. will lose the composite mechanism that transforms knowledge into institutions, technology into production, and engineering into capabilities.
Meng Yan: This reminds me of a particularly harsh statement by U.S. Vice President Vance: "A country that does not engage in manufacturing will ultimately lose its ability to design." It seems this is not just a slogan; it represents a reflection by Americans on a painful historical lesson.
However, many people believe it is too late for the U.S. to reverse this process, and Trump's efforts to revive manufacturing are destined to fail. What do you think?
2. The Risks of Taking Action
Shao Qing: This is indeed a key issue. The motivation can be understood, but the methods may not be correct, and the path is extremely risky. From my recent interactions with various industry and policy figures in the U.S., there is a very clear sentiment: everyone acknowledges the seriousness of the problem, but at the same time, there is a lot of skepticism and even fear about the solutions. This creates a very paradoxical situation—reform is imperative, but the destructiveness of the reform itself is also significant.
Meng Yan: It’s somewhat like the expression we are familiar with, "Reform is seeking death, not reform is waiting for death."
Shao Qing: Yes, this situation is the hardest to handle. Su Shi once said in "Chao Cuo Lun," "The greatest trouble in the world is to be named as governing peacefully while actually having unforeseen worries." Why is it unmanageable? If one sits back and watches the changes without taking action, "it may lead to a point of no return"; yet if one takes action and does not do well, "the calamities of the world will surely gather upon me." Trump is currently making this choice.
From a political operational perspective, he could completely choose not to do this. Given his current public support, the level of integration within his party, and the state of infighting within the Democratic Party, as long as no major incidents occur, it is highly likely that he could "smoothly get through" these four years. But he also knows very well that if he continues to go through the motions and maintain the status quo, in a few years, the remaining generation of engineering and technological talent in the U.S. will be nearly extinct, industrial capabilities and systemic knowledge will be completely severed, and the trend of structural decline will become irreversible.
I believe that the vast majority of people in the world, if placed in Trump's position, would "sit back and watch the changes without taking action." But he has chosen to "take action." Making such a choice is not easy; it truly requires extraordinary individuals to undertake extraordinary actions.
However, once this path is chosen, the wisest strategy is to strike first with the strongest means at the earliest possible moment. That is why he chose the most radical approach—taking advantage of just having taken office, with Congress still under control, power concentrated, and public sentiment high, to throw out the "nuclear bomb." Even if it is a gamble, it is a gamble on the opening move of a "strategic cycle window."
Why? Because only in this way can key institutional barriers be broken with lightning speed while the opposition has not yet completed its reorganization and the establishment is still observing, establishing an irreversible policy inertia. At the same time, it allows ample time for subsequent positive releases, adjustments, and narrative reconstruction. If they really wait until the resistance to reform has gathered, and the internal and external parties have coordinated a counterattack, and the capital market has successfully mobilized for short selling, then this structural reconstruction will be impossible to push forward. Therefore, this wave of operations, while seemingly reckless, is actually shrewd—first completing the most difficult parts all at once, then using time to heal, policies to stabilize, and narratives to turn the tide.
Treasury Secretary Mnuchin spoke frankly at a closed-door briefing: the Trump team has a clear expectation of the costs of this round of policies; they know it will bring short-term shocks, even severe market pains—but they are more concerned about "whether they can bring the narrative back." In other words, they are not unaware of the pain; rather, they want to "package and release" the pain, and then create a "Trump rebound" through a series of subsequent policies—such as tax cuts, deregulation, large-scale infrastructure, and industrial incentives.
This "rebound" is not just a market rebound; it is also a narrative rebound, aimed at allowing society to see hope from the pain and feel resilience from anxiety. On one hand, it can quickly alleviate initial pains through tax cuts and regulatory relaxations, winning the trust of small and medium-sized enterprises and manufacturing voters; on the other hand, it can extend the timeline, leaving enough time for a Trump rebound and laying the groundwork for the 2026 midterm elections and the 2028 presidential election.
Meng Yan: Besides domestic resistance, external risks are also likely to be enormous. You just mentioned that this strategic reversal is actually a challenge to the path dependence of the global order after the Cold War, and even after World War II. Does that mean Trump is directly taking action against the entire "post-war order"?
Shao Qing: Yes, it can be said that he is performing a surgical cut on the globalization order established after the Bretton Woods system. Especially the shift from "free trade" to "fair trade" is not a technical adjustment but a fundamental change in paradigm. You must understand that free trade is not only a prerequisite for economic models but also the political foundation for U.S. dominance in the world after World War II. If during the Cold War, the U.S. relied on military power and ideological export to establish an ally system, then after the Cold War, it maintained its world leadership through the global trade system, the dollar clearing network, and the free flow of capital. The reason there has been nearly 80 years of overall peace in the world after the Cold War is partly due to nuclear deterrence and partly due to the U.S. exporting purchasing power and prosperity. Major powers are deterred from war, and they do not want to fight. They are deterred by the fear of nuclear war, and they do not want to fight because the international order established by the U.S. is quite good, providing most countries with a pathway for upward mobility.
What Trump is doing now is essentially peeling back a corner of this order, attempting to reconstruct a new global trading logic that favors U.S. knowledge and technology. This may block the upward mobility of many countries and will inevitably provoke a strong backlash. The biggest concern behind this is that if the fierce trade war continues to escalate, it could lead to the complete end of globalization, and the world could revert to a state of "beggar-thy-neighbor." In the past 80 years, even with localized conflicts and institutional friction, there has at least been a global order based on mutually beneficial trade maintained between major powers, forming a certain underlying logic of "mutual dependence equals peace." What Trump is now tearing down is precisely this logic. If countries believe that there are no longer any rules in the global market, and that fair trade is merely a rhetoric beautified by power, then what follows will not be industrial transfer but systemic decoupling, an escalation of military competition, and even a complete loosening of regional security frameworks.
Once globalization begins to collapse and countries revert to closed self-protection, the situation becomes extremely dangerous, as it may break the baseline of "no hot wars" between major powers since World War II. If military conflicts erupt between major powers during this process, then all of Trump's policy calculations today will be rendered meaningless. Whether it is his "knowledge sovereignty strategy" or "industrial re-anchoring," once the world falls into geopolitical chaos and security panic, all economic policy space will be taken over by the logic of war. He himself will no longer be seen as a "reformer" but will be labeled by history as the initiator of misjudging global trends and igniting a global crisis.
We hope that the leaders of major world powers can possess enough wisdom to avert such a tragic fate for humanity. If the option of war can be ruled out, then the immediate risk that follows is the dollar.
One direct impact of the trade war is the weakening of the dollar's international status. In the past, dollar hegemony relied not only on military power and national credit but also on its binding of global commodity and capital circulation paths. As long as the world remains on the track of "free trade + dollar settlement," the demand for dollars naturally exists. However, if Trump makes trade itself unpredictable, even punitive, then other countries have ample reason to promote de-dollarization—not out of ideology, but as a risk hedge.
And this is the most dangerous and uncontrollable aspect of Trump's strategy. Domestically, he can mobilize public opinion with votes; externally, he cannot prevent others from preparing for the worst and starting anew.
In this context, we may have a clearer understanding of Trump's stablecoin and cryptocurrency policies.
3. Cryptocurrency Assets in the Competition for Knowledge Sovereignty
Meng Yan: Do you think Trump's stablecoin and cryptocurrency policies are truly aligned with his overall trade war strategy? Are his policies really that coherent?
Shao Qing: I know that many people, including observers both inside and outside the U.S., are skeptical about this issue. They feel that Trump is just a political amateur, speaking exaggeratedly and implementing crude policies, so how could he possibly devise a coherent, synergistic national strategy? But this is precisely what we need to reassess.
I do not believe that Trump himself is a technocratic policy designer, but that does not mean his policies lack systemic coherence. On the contrary, many of his key decisions are backed by deep policy think tank support, long-term ideological groundwork, and very clear strategic demands. Look at Project 2025, the Heritage Foundation, and the reshaping of "economic nationalism" within the Republican Party over the past five years; all these materials have long connected "manufacturing return + technological sovereignty + financial reconstruction."
And cryptocurrency, especially stablecoins, provides an excellent interface—it can break through (other countries') traditional financial regulatory restrictions, form a new global demand for dollars, and also stimulate a wave of grassroots entrepreneurial activity, bringing engineers, developers, and financiers back into the "Made in America" framework. This combination may not be a linear deployment like a planned economy at the tactical level, but at the strategic structure level, its coupling is very clear.
In other words, whether there is a detailed blueprint in Trump's mind for every step is uncertain, but in action, he is indeed promoting a path of national reconstruction that is mutually reinforcing and logically coherent. However, this path is not achieved through rational negotiation or international dialogue but is blasted out with "policy nuclear bombs." This approach is crude, but the dedication to the goal is rare; it can even be said to be strategically clear and tactically brutal.
Meng Yan: You just mentioned that Trump's trade policies weaken the dollar, but if you think about it, even if the dollar is weakened, it still remains unrivaled against global fiat currencies. Who can replace the dollar? None of the people present can compete. However, if in the past few years, some other countries have joined forces to elevate Bitcoin's status and create a blockchain payment system similar to Libra that anchors a basket of fiat currencies, then the dollar could face significant trouble today. Fortunately for the dollar, these countries lack such foresight and unity, and now, in their weakened state, they can seize the opportunity to dominate the crypto-digital economy through regulatory breakthroughs. In this sense, it can better explain why Trump wants to establish a Bitcoin strategic reserve.
Shao Qing: Many people in the crypto space have expressed dissatisfaction with Trump's "Bitcoin strategic reserve," believing it to be merely a performative slogan, lacking a clear purchasing plan and financial budget support, appearing to be a speculative move to please the geek community during the election period. But they overlook a more profound strategic consideration—the so-called "reserve" is not about how much is bought, but about establishing the trading dominance between dollar stablecoins and mainstream crypto assets like Bitcoin.
In other words, the essence of this strategy is to ensure that globally, the main trading pair for Bitcoin must be dollar stablecoins, rather than yuan stablecoins, euro stablecoins, or synthetic currencies anchored to multiple fiat currencies. This is a core issue of the currency pricing system.
Once this position is established, no matter how decentralized Bitcoin becomes or how it is viewed as "digital gold," it must return to the dollar coordinate system for pricing, settlement, and exchange. From a monetary strategy perspective, this is equivalent to transforming Bitcoin from a potential "opponent" into a "strategic ally"—it is no longer a competing currency challenging the dollar but becomes an extension of the dollar into the future digital economy.
This actually continues a classic logic: the U.S. has never feared new platforms as long as it can set the price. This has been true historically and remains true today. What the Trump team is now trying to do is to re-anchor the dollar's dominant position in the crypto space, making stablecoins the "dollar fleet" of the digital economy, with Bitcoin as one of the "flagship assets" under that fleet. The reserve is merely a facade; extending the dollar's pricing power is the core.
Meng Yan: Whether the logic you mentioned holds true will likely have to wait until U.S. stablecoin legislation is enacted to confirm.
Shao Qing: Of course, the central path of this entire integration process is stablecoins. Recently, there have been very active movements regarding stablecoin legislation. Last weekend, the full text of the STABLE Act draft was released, which is essentially paving the way for this—giving stablecoins a compliant, regulated identity, allowing them to legally assume the role of "on-chain dollars." This week, Senator Tim Scott announced support for the "Debanking Act," one of the most important agendas of which is to prohibit federal banking regulators from using "reputational risk" as a basis for assessing bank-client relationships, thereby reducing the situation where crypto companies are denied service by banks due to subjective judgments from regulators. In other words, once this act is passed, U.S. banks will be able to provide smooth financial services to crypto companies, and the channel between fiat dollars and the crypto world will "transform from a chasm to a thoroughfare."
Once this is established, in the future, any financial application on any blockchain, smart contract, or even AI agent that requires a unit of account and payment channel will first connect to dollar stablecoins. This means that the dollar will rebuild its financial dominance in AI and the digital economy through a crypto framework.
Recently, I conducted some research in Seattle and found an interesting phenomenon: a group of tech giants from Web2, AI, and cloud computing backgrounds are now emerging to start stablecoin projects. This indicates that policy expectations are quite strong. This shows one thing: the market's narrative for "on-chain dollars" is no longer just exploratory but is beginning to place bets. Moreover, the direction of these bets is very clear—not to create a "decentralized utopia," but to build a complete financial digital reconstruction project of "Federal Reserve replica," "dollar API," and "on-chain compliant asset layer."
These entrepreneurs are not "crypto veterans" but talents familiar with distributed systems, cloud-native architecture, enterprise-level security, and payment processes. They come with an understanding of real-world scenarios, policy windows, and compliance chains, bringing technical capabilities to connect to the "new dollar track," rather than to challenge it.
As you said, even if the dollar is challenged, it still "remains unrivaled against fiat currencies," but the real threat could once have been from "de-dollarized digital systems" like Bitcoin and Libra. Now, the Trump administration clearly recognizes this point—rather than suppressing Bitcoin, it is better to master its pricing system; rather than blocking the on-chain world, it is better to dominate its financial infrastructure.
Stablecoins are the core of that financial infrastructure. As long as the on-chain clearing and settlement channels, pricing systems, and trading foundations are firmly bound to dollar stablecoins, the crypto world becomes an extension of the dollar world, rather than a competitor.
Meng Yan: Technically speaking, if stablecoins succeed, they cannot be isolated. The rise of stablecoins will immediately trigger a series of ripple effects. For example, RWA (Real World Assets) on-chain: U.S. Treasury bonds, corporate bonds, real estate securities, and technology company equities can all be transformed into digital assets on the chain, settled and traded within the stablecoin system—this is what we mentioned last time as the new generation of "Subscribe to America" mechanism.
Shao Qing: Yes, although RWA is still a buzzword in the industry, it is backed by very profound geopolitical financial calculations. It will directly drive global capital to enter the U.S. asset market through on-chain methods, using dollars to buy U.S. stocks, dollar bonds, and U.S. industry-related tokens. Moreover, the combination of "dollar stablecoins + U.S. RWA" can play a role on both external and internal fronts. Externally, its task is to expand the dominant position of the dollar in the global digital economy, countering the loss of trust brought about by trade wars and geopolitical confrontations; internally, it serves as a tool to break the traditional financial regulatory framework, unleash growth imagination, and alleviate public dissatisfaction.
Let's first discuss the external aspect. In the past, the dollar relied on technological innovation, military power, energy, trade surpluses, and global trust, but today these foundations are no longer solid. Trump's strong push for "unified tariffs" can certainly reshape manufacturing, but it also undermines the myth of free trade, shaking the trust in the dollar. Therefore, a new "dollar demand channel" must be established—and stablecoins are the infrastructure of that new channel.
Once stablecoins are legalized and compliant, they can carry the liquidity and trading of RWA assets. U.S. Treasury bonds, corporate bonds, real estate, technology equities… all these assets, once digitized and fragmented on-chain, can be subscribed to globally like "modules." Global capital can use stablecoins to buy RWA, allowing U.S. assets to be "bought anytime, exited anytime," bypassing SWIFT, skipping the banking system, and avoiding geopolitical friction. This is the true "on-chain dollar attraction."
But the more critical aspect is the internal function. Trump's radical policies have already begun to provoke unease and dissatisfaction domestically, urgently needing to release economic benefits and calm public sentiment. Recently, Treasury Secretary Mnuchin revealed that domestic tax cuts and deregulation policies are about to be unveiled, with favorable policies for the cryptocurrency industry being an important part.
Meng Yan: So the Trump administration has actually combined a set of tools that are originally "anti-globalization," such as tariffs, with a set of means for "re-globalization," such as crypto assets, in a very unique way?
Shao Qing: Yes. On the surface, there is no direct causal relationship between them, but through supply chain adjustments, capital path reconstruction, and financial tool substitution, they form an indirect coupling. You say tariffs are a blockade, and crypto is an opening—true. But it is precisely this tension that constitutes a complete strategy. Tariffs are just policy parameters that most people can understand and see, but the real upheaval is the structural transformation of some invisible "hidden variables." Among these, AI and crypto are likely the most important wheels. It can also be said that the U.S. is now ensuring global digital economic sovereignty through AI and the crypto economy, striving to regain technological sovereignty.
Four, The Purpose of the Infinite Game is Not to Determine Win or Lose
Meng Yan: No matter how we explain Trump's motives and reasons for provoking the tariff war, we must acknowledge that other countries expressing anger and retaliating is also reasonable. Several countries have already announced countermeasures against Trump's tariffs, with China being one of them, and the entire global trade system is in a precarious state.
Shao Qing: This intense confrontation is essentially a product of a way of thinking. Many countries, including the U.S., today view the competition for knowledge sovereignty as a finite game that must determine a winner and a loser. The direct result of this mindset is to see each other as threats rather than variables; as opponents rather than co-actors. Thus, all negotiations turn into games, all policies become defensive, and all structural adjustments are understood as zero-sum.
During my recent trip back home, I felt that domestic public opinion regarding the trade war and U.S.-China competition generally exhibits two extreme tendencies.
The first is the "decisive battle theory," which believes that the U.S. and China have completely entered a life-and-death confrontation cycle, and that the goal of the U.S. in launching the trade war is to completely crush China, which is in imminent danger and must enter a special system for comprehensive confrontation.
The second is the "inevitable victory theory," which holds that the U.S. has entered irreversible decline, and that Trump's trade war is "self-destructive," only accelerating its own collapse, while China's national fortune is on the rise, making it possible to take its place, simply waiting for the outcome.
These two judgments seem to be opposing, but they both fall into the mindset of a finite game—viewing the U.S.-China competition as a zero-sum contest, where one must win and the other must lose, with no coexistence. This is seriously inconsistent with the facts. In reality, the failure of either of these two major powers would be an unbearable burden for the other.
Today's global structural reconstruction is no longer a linear competition of "industrial scale + resource consumption" as in the 20th century. It resembles a system evolution centered around knowledge production, technology transformation, organizational mechanisms, and incentive design. If you approach this issue with a finite game mindset, you will misjudge the direction, misallocate resources, and even be forced to exit the game.
Especially in the AI era, economic and technological competition has essentially shifted from "scale confrontation" to "system co-creation"—it is no longer about who builds bigger, but about who iterates faster, opens more cleverly, and connects more deeply. AI is not a product but a mechanism of continuous learning and evolution; therefore, it inherently requires participants to possess sufficient patience, flexibility, and cooperation ability.
This determines that the competition for knowledge and technology in the AI era is a typical "infinite game." It has no endpoint, no decisive win or loss, only a process of continuous continuation and evolution. The key is not to win once, but to ensure that you always have the qualification and ability to participate in the next round of upgrades.
The purpose of the infinite game is not to determine win or lose, but to keep the game going. Keeping the game going means you must maintain an open ecosystem, updated rules, fair entry, and effective incentive mechanisms. You cannot block opponents to the point of losing motivation, nor can you overcompete yourself to the point of collapse. The real opponent is not the other country, but system stagnation, innovation exhaustion, and trust breakdown.
Therefore, we must be particularly vigilant against narratives that describe U.S.-China competition as a "new Cold War" or "ultimate showdown"—that is the logic of the previous industrial era, which does not hold in this round of technological revolution. We need to move away from the emotional narrative of "either win or perish" and truly enter a strategic mindset of "sustainable co-creation is true strength."
Meng Yan: I hope the world can be as rational as you say.
Shao Qing: It requires wisdom. A wise nation does not ask "how to win," but rather "how to continuously gain the ability to participate in this game of technological and regulatory co-evolution." This is the essence of what we call the "infinite game." It is not about giving up competition, but about changing the understanding of competition.
At the table of the AI and crypto revolution, the main players are left with only the U.S. and China. How the cards are played depends largely on the way of thinking.
Thus, we see that although the U.S. is engaged in a tariff war and decoupling, it is also undertaking an open reconstruction in stablecoins and RWA. Why? Because it knows that relying solely on blockades will not win technological sovereignty; true victory lies in who masters the rules of the next generation of platforms and who attracts more high-quality participants.
China is the same. We must move from "winning the competition" to "designing the competition," creating the soil for continuous innovation to occur in terms of rules, systems, and ecosystems, allowing and even accommodating opponents to be present, and ensuring that the game continues.
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