Dialogue on Trump's Trade War: Knowledge Sovereignty Competition Can Be an Infinite Game

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 the Chinese-speaking world, both domestically and internationally, there is a strong critical stance towards Trump's policy, whether viewed from the perspective of Chinese interests or American interests. 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. Some readers commented that it was the most logical interpretation of Trump's administration's cryptocurrency 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 great shock worldwide, and several countries have already expressed their intention to retaliate. Economists both inside and outside the country almost unanimously believe 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 since Trump has provoked a global trade war, it will inevitably lead to great chaos, making his cryptocurrency policy irrelevant. I know you recently conducted a long-distance, large-scale 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 motivation for this tariff war. Why is he pursuing these reciprocal tariffs? On the surface, the large-scale trade deficit that the United States experiences each year does seem like a "loss." However, many economists have pointed out that as the issuer of the world's 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. With just a few clicks on Wall Street, it can earn more than a large factory in Asia would make in a year of hard work. Considering all factors, the United States is actually benefiting. If that is the case, why is Trump pursuing a new tariff strategy? Is it really due to incompetence in economics?

Shao Qing: To discuss this topic, we must temporarily set aside emotions and focus on facts and logic. I want to be straightforward: Trump's new tariff policy is fundamentally different from the motivations behind the trade war he initiated during his previous term. It is not simply about reducing the trade deficit or bringing back all manufacturing; rather, it is about bringing back knowledge and technology. This goal is structural and cannot be seen just by 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 only in terms of monetary value. So whether you sew shirts, manufacture high-tech precision equipment, or provide financial services and earn commissions from speculative trading, the generation of 100 yuan in GDP looks the same from a monetary value perspective.

However, anyone who has worked in the industry knows that while making money may be the same, the methods of earning it can differ greatly. Where is the difference? It lies in the density of knowledge and technology. If wealth is generated through engineering infrastructure, data analysis, algorithm development, and equipment manufacturing, then what is accumulated behind it is technological capital, knowledge capital, engineering capability, and systemic understanding. On the other hand, if wealth is generated through speculative arbitrage, stock and real estate trading, and platform marketing, then while growth may appear lively, what is accumulated behind it is non-replicable path dependence, excessive demands on traffic and emotions, and structural over-exploitation 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. In contrast, the latter is opportunity-driven and non-reusable, making it difficult to solidify into systemic capabilities, and it is more likely to hollow out the real economy, distort incentives, and create structural bubbles. More seriously, when an 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 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, an economics professor at the University of California, Irvine, and a former economic advisor to the Trump administration, was sentenced to prison for contempt of Congress during Biden's presidency. 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 actually 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 tech 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 he invests heavily in "high-tech density, high friction, but with great long-term returns" industries through organizations like Founders Fund, aiming to rebuild the underlying structure of technological competition.

Elon Musk is the most representative figure in terms of action. He has an intuitive and precise understanding of the loss of industrial systemic capabilities in the United States and promotes a comprehensive "re-industrialization" from rockets, energy, chips, and robotics to large-scale manufacturing through SpaceX, Tesla, and Starlink. 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 seemingly different but actually converging paths of policy, capital, and industry. They have made a highly consistent judgment about the systematic imbalance of "knowledge density, engineering capability, and manufacturing systems" in the United States, each choosing different ways to respond. The comprehensive adjustment of the Trump administration's policies is actually an institutional corrective attempt driven by these thoughts and practices.

Thus, Trump's political slogan of "fighting for workers' jobs" with the "Unified Tariff" is fundamentally motivated by "fighting 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, chips, 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 process flows, 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 "knowledge deconstruction" of an entire generation? Economists who can only count money and focus on short-term indicators cannot see these structural and intergenerational losses. The problem with the United States today is fundamentally that it has been misled by this kind of economics that only sees currency, ignores structure, emphasizes price over capability.

Therefore, we cannot use "old-era 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, 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 companies like Apple, Nvidia, and SpaceX, as well as top universities and leading research institutions, but the real issue is that this strength is "spotty," not "systemic"; it is "at the top," not "structural."

In other words, while the United States still leads at the tip of the technological pyramid, the base has begun to loosen, and the body is experiencing fractures. A large number of mid-level manufacturing, applied engineering, and skilled talents are either flowing overseas or shifting to non-industrial sectors. If you take a look at traditional manufacturing strongholds in the U.S., you will see that an entire generation of young people has become disconnected from engineering systems. 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 construction capabilities, the problems in the U.S. are even more pronounced. In areas such as metallurgy, power generation, chemicals, and machine tool manufacturing, the U.S. has long been surpassed by China. For example, in shipbuilding, the U.S. will only produce one two-hundredth of China's shipbuilding tonnage in 2024. If this continues, the U.S. will completely lose its systemic capabilities in large ship manufacturing and marine engineering, which were once proud industrial pillars during the Cold War. More seriously, the U.S. has not successfully developed any world-class large-scale infrastructure projects for many years. Whether it is high-speed rail, super grids, large-scale water conservancy projects, or smart industrial parks, the U.S. is basically in a state of "stagnation or even regression." Initially, it was a fiscal 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 trends, 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 that 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 critical technologies—essentially, to re-anchor the structural foundation of national capability and reclaim national 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, every time there is a technological revolution, the contribution of knowledge and technology factors to economic growth and national strength tends to exhibit a step-like amplification effect. In the current AI and robotics industries, 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 territory collapsing, engineering culture fracturing, and knowledge density dissipating, then even if AI technology remains ahead in Silicon Valley, the U.S. may experience a "top-heavy" structural imbalance, ultimately lacking momentum in long-term competition and being overtaken.

For the U.S., this round of the AI technology revolution is not a game where bets can be placed repeatedly, but a historic window of opportunity that must succeed and cannot fail.

If successful, the U.S. can not only re-integrate 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 leader of the old globalization system to being the designer of a new order. This not only means maintaining its geopolitical dominance but also signifies standing at the top of the food chain once again in the new round of global knowledge redistribution.

However, if it fails, the loss will not only be in the AI industrial chain but also in the structural fracture of the U.S. national capability itself—the financial system will find no growth anchor, the industrial system will be unable to revive autonomously, social classes will further fracture, and the foundation of trust will collapse. The most dangerous scenario is that once the U.S. "compound interest engine" stalls, the technological and industrial iterations of other countries will no longer unfold centered around the U.S., and the U.S. will slide for the first time from being a "platform nation" to a "technological follower."

The U.S. is essentially trying to save itself.

Historically, there has been a successful instance of self-rescue. In the world before Britain became a global empire—whether it was the Mongols, Spain, Portugal, or the Netherlands—their global dominance lasted almost a century, or about three generations. According to ancient Chinese self-centered ideology, "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, Britain had just established global hegemony for a century, coinciding with Napoleon's rise, and Europe was engulfed in war. Domestic debt soared, and the ratio of government debt to GDP was even twice as high as that of today's United States, making it seem almost destined to decline.

However, what happened next completely rewrote the trajectory of this "century law": the Industrial Revolution in Britain transitioned from an accumulation phase to an explosive phase. From steam engines to railway systems, from textile machinery to metal smelting, technological innovations were applied on a large scale, industrial production efficiency leaped, and the overall engineering capability, organizational management ability, and capital formation structure of society experienced a leap. This was not just simple 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 complete the chain of "transforming knowledge into productivity" ahead of others during a technological explosion, 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 may far exceed those of the Industrial Revolution. This is precisely why there are increasing voices within the U.S. advocating that knowledge and technology must be re-centered domestically; otherwise, the so-called "free trade" will become a chronic hemorrhage of knowledge resources.

Meng Yan: In fact, this set of concepts is the most familiar, understandable, and acceptable to our generation of Chinese people. Deng Xiaoping's statement that "science and technology are the primary productive forces" essentially means this. 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 essentially 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. In terms of industry, 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" globally.

During my travels in the U.S. and China, I noticed an interesting phenomenon: many "veterans" in China's economic and industrial circles are the ones who best understand Trump. Many of them are victims and opponents of Trump's trade policies, yet quite a few express understanding of Trump's choices. I believe this is precisely 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, I was involved in mobile device development, and I viewed those technical giants in the U.S. as almost god-like figures, completely out of reach. That gap was not just at the tool level, but 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, and then gradually moved from imitation to improvement, and from improvement to localized innovation, even developing complete systems and exporting them globally. 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. But if you cut off a generation from hands-on work, from doing things, and from understanding system structures, the knowledge density will collapse, and even if you have money later, it cannot be recovered.

Therefore, I can particularly understand why Trump suddenly "got tough" about repatriating manufacturing. You cannot just look at employment data; you must consider whether this country still has first-line engineers, how many people know how to design a machine, how to run a production line, and how to build a building. Without these people, if an entire generation of young people runs off to become internet celebrities, even if their income is high, it is just a castle in the air, destined to collapse sooner or later.

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 hollowing out the real economy. The relocation of manufacturing is not just a simple moving of factories; it is the outflow of the entire engineering system, systemic capabilities, and foundational process knowledge. This outflow has been tacitly permitted and even encouraged by the blind spots of economic theory.

The problem with the U.S. today is not a lack of money or job opportunities, but a structural loss of knowledge. For a full thirty years, the U.S. has allocated an entire generation of its best talents to Wall Street for stock trading, to internet companies for developing advanced algorithms to deliver targeted ads, and to optimize content for entertainment stars and traffic platforms, without allowing enough talent to enter manufacturing, engineering, energy, infrastructure, and industrial systems.

The result of this structural mismatch is that the overall ability of American society to "create something"—especially "how to create a complete complex system"—has begun to show a serious downward trend. 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, turning from elastic deformation to plastic deformation, it will inevitably lead to a break.

Some people believe that American universities are still world-leading, so these concerns are "alarmist." In fact, this is a misconception. Many knowledge and technologies that are decisive for 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; it is the real path of knowledge generation. If a country does not have enough practical engineers, dense industrial chain collaboration, and complex project implementation and engineering landing, then "textbook knowledge" is unlikely to grow into usable, transferable, and monetizable capabilities.

You see, many American universities are still ranked among the top globally, with numerous papers and advanced theories, but the problem is that the U.S. has withdrawn 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 broken, then those knowledge systems become "dead knowledge" floating in the air. Once knowledge loses its practical soil and transmission pathways, it quickly becomes unusable, even incomprehensible. Engineering knowledge relies on scenarios, population density, and time accumulation. Once lost, rebuilding it is not as simple as allocating funds or building a laboratory; it requires re-establishing a complete "knowledge production mechanism in practice."

Therefore, the problem with the U.S. is not whether it has good universities, but whether it has a sufficiently large engineering landscape, enough practical talents, and a complete industrial foundation to support this knowledge. Knowledge is not stored in books; it lives in the collaborative chains between people and systems. Once that chain is broken, even if you have the best textbooks in the world, you can only understand them but cannot produce anything.

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 some university," but are honed in projects, factories, and through hundreds of trial-and-error and on-the-spot judgments. These things cannot be taught without hands-on practice or exploration, and cannot be "made up by reading literature." Therefore, when Chinese people see Trump trying to "turn the tables" through tariffs, technology repatriation, and limiting technology outflow, it is particularly easy to understand—what he wants to do is essentially what several generations of Chinese leaders have been doing for decades. Fundamentally, the U.S. has also realized that it has been experiencing a reverse process of "knowledge surplus" over the past few decades, with not just factories flowing out, 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 its composite mechanism for transforming 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 design capabilities." It seems this is not just a slogan; it represents a painful historical lesson for Americans.

However, many 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 Strong 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 exchanges with various industry and policy figures in the U.S., one very obvious sentiment is that everyone recognizes the seriousness of the problem, but at the same time, they are filled with doubts and even fears 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 sounds a bit 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 danger in the world is to be called peaceful and uneventful while actually harboring unforeseen troubles." Why is it unmanageable? If one sits back and watches the changes without taking action, "it may lead to irreparable consequences"; while if one takes strong action and does not do well, then "the calamity of the world will surely gather upon me." Trump is currently making this choice.

From a political operational perspective, he could have completely avoided this issue. 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 probable 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, a few years down the line, the remaining generation of engineering and technical talent in the U.S. will be nearly extinct, and the industrial capabilities and systemic knowledge will be completely severed, making the structural decline 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 strong action." Making such a choice is not easy; it is indeed a desire to undertake extraordinary tasks, requiring extraordinary individuals.

However, once this path is chosen, the wisest strategy is to take the initiative as early as possible and use the strongest means to strike first. That is why he chose the most radical approach—taking advantage of just having taken office, with Congress still under control, concentrated power, and heightened public sentiment, to throw out the "nuclear bomb." Even if it is a gamble, it is a gamble on the initiation of a "strategic cycle window."

Why? Because only in this way can he break through key institutional barriers with lightning speed before the opposition has completed its reorganization and the establishment is still observing. At the same time, it allows ample time for subsequent releases of positive news, adjustments, and narrative rebuilding. If he waits until the resistance to reform has fully coalesced, and the internal and external forces have coordinated to counterattack, and the capital markets have successfully mobilized to short-sell before taking action, then this structural reconstruction will be impossible to push forward. Thus, while his actions may seem reckless, they are actually shrewd—first completing the most difficult parts, then using time to heal, policies to stabilize, and narratives to turn the tide.

Treasury Secretary Mnuchin candidly stated at a closed-door briefing that the Trump team is clearly aware of the costs of this round of policies; they know it will bring short-term shocks, even severe market pain—but they are more concerned about "whether they can bring the narrative back." In other words, they are not unaware of the pain; they want to "package and release" the pain, and then through a series of subsequent policies—such as tax cuts, deregulation, large-scale infrastructure, and industrial incentives—create a "Trump rebound."

This "rebound" is not just a market rebound; it is 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 pain through tax cuts and regulatory loosening, gaining the trust of small and medium-sized enterprises and manufacturing voters; on the other hand, it can extend the timeline, allowing time for Trump's rebound and laying the groundwork for the 2026 midterm elections and the 2028 presidential election.

Meng Yan: Besides domestic resistance, external risks are likely equally significant. You mentioned earlier that this strategic reversal is essentially a challenge to the global path dependency established after the Cold War and even after World War II. Does this also mean that 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 global 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 premise of economic models but also the political foundation for the U.S. to dominate the world after World War II. If during the Cold War, the U.S. built its ally system through military power and ideological export, then after the Cold War, it relied on the global trade system, the dollar clearing network, and the free flow of capital to maintain its world leadership. 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 because the U.S. exported purchasing power and prosperity. Major powers did not dare to go to war, nor did they want to. They were afraid of nuclear war and did not want to fight because the international order established by the U.S. was quite good, providing a rising path for most countries.

What Trump is doing now is essentially tearing off a corner of this order, attempting to reconstruct a new global trading logic that favors American knowledge and technology. This could block the rising paths 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 among major powers, forming a certain underlying logic of "interdependence equals peace." What Trump is 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 transfers but systemic decoupling, intensified military competition, and even a complete loosening of regional security frameworks.

Once globalization begins to collapse and countries revert to closed self-preservation, the situation becomes extremely dangerous, as it may break the long-standing bottom line of "no hot wars" between major powers since World War II. If military conflicts break out between major powers during this process, then all of Trump's policy calculations today will be in vain. His "knowledge sovereignty strategy" and "industrial re-anchoring" will be rendered meaningless once the world falls into geopolitical chaos and security panic, and 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 subsequent risk is the dollar.

One direct impact of the trade war is the weakening of the dollar's international status. The past dominance of the dollar relied not only on military power and national credit but also on its binding to the global flow paths of goods and capital. 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 and even punitive, then other countries will 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 sentiment with votes; externally, he cannot stop 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 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? Is his policy really that coherent?

Shao Qing: I know many people, including observers from within and outside the U.S., are skeptical about this question. They feel that Trump is just a political amateur, making exaggerated statements and implementing crude policies, so how could he possibly devise a coherent, coordinated 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 systemicity. On the contrary, many of his key decisions are supported by deep policy think tanks, 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 repatriation + technological sovereignty + financial reconstruction."

And cryptocurrency, especially stablecoins, provides an excellent interface—it can both break through (other countries') traditional financial regulatory restrictions and create a new global demand for dollars, while also sparking a wave of grassroots entrepreneurial activity, bringing engineers, developers, and financiers back into the framework of "Made in America." This combination may not be a linear deployment like planned economies at the tactical level, but its coupling is very clear at the strategic structure level.

In other words, whether or not there is a detailed blueprint in Trump's mind down to 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 method is crude, but the dedication to the goal is rare, and it can even be said to be strategically clear and tactically wild.

Meng Yan: You mentioned earlier that Trump's trade policy weakens the dollar, but upon closer reflection, even if the dollar is weakened, it remains in an unbeatable position against global fiat currencies. Who can replace the dollar? None of the players here can compete. However, if in recent years, some other countries have united to elevate the status of Bitcoin and create a blockchain payment system similar to the Libra of yesteryear 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 is easier to understand why Trump wants to establish a Bitcoin strategic reserve.

Shao Qing: Many people in the crypto circle have expressed dissatisfaction with Trump's "Bitcoin strategic reserve," believing it to be merely a performative gesture without a clear purchasing plan or financial budget, appearing to be a speculative act to please the geek community during the election period. However, they overlook a deeper strategic consideration—the so-called "reserve" is not about how much is bought, but about establishing the trading dominance between dollar stablecoins and mainstream cryptocurrencies 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 monetary pricing system.

Once this status is established, no matter how decentralized Bitcoin becomes or how it is regarded 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 pricing. This has been true historically and remains true today. What the Trump team is now trying to do is re-anchor the dollar's dominant position in the crypto field, making stablecoins the "dollar fleet" of the digital economy, with Bitcoin as one of the "flagship assets" of that fleet. The reserve is merely a façade; extending the dollar's pricing power is the core.

Meng Yan: Whether this logic holds true will probably have to wait until U.S. stablecoin legislation is enacted to confirm.

Shao Qing: Of course, the entire path of this integration centers around stablecoins. Recently, there have been very active movements in stablecoin legislation. Last weekend, the full text of the STABLE Act was released, which is essentially paving the way for this—granting stablecoins a compliant, regulated identity, allowing them to legally take on the role of "on-chain dollars." This week, Senator Tim Scott announced support for the "Debanking Act," which has a crucial agenda item: prohibiting federal banking regulators from using "reputational risk" as a basis for assessing bank-client relationships, thereby reducing the likelihood of crypto companies being denied service by banks due to subjective judgments from regulators. In other words, if this bill 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, any financial application, smart contract, or even AI agent on any blockchain will first connect with dollar stablecoins when it comes to pricing units and payment channels. This means that the dollar will rebuild its financial dominance in AI and the digital economy through the 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 coming out to start stablecoin projects. This indicates that policy expectations are quite strong. This shows one thing: the market's narrative around "on-chain dollars" is no longer just exploratory but has begun 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 like the "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 architectures, enterprise-level security, and payment processes. They bring with them an understanding of real-world scenarios, policy windows, and compliance chains, aiming to connect with the "new dollar track," rather than challenge it.

As you said, even if the dollar is weakened, it still "dominates all fiat currencies," but the real threat could once have been "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 hub of that financial infrastructure. As long as the on-chain clearing and settlement channels, pricing systems, and underlying transactions are firmly bound to dollar stablecoins, the crypto world becomes an extension of the dollar world, not an adversary.

Meng Yan: Technically speaking, if stablecoins succeed, they cannot exist in isolation. The rise of stablecoins will immediately trigger a series of interconnected effects. For example, RWA (Real World Assets) on-chain: U.S. Treasury bonds, corporate bonds, real estate securities, and equity in tech companies can all become digital assets on-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, while 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 tokens related to American industries. Moreover, this combination of "dollar stablecoins + American RWA" can play a role on both internal and external fronts. Externally, its task is to expand the dollar's dominant position in the global digital economy, countering the loss of trust brought about by the trade war and geopolitical confrontation; 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, it is essential to establish a new "dollar demand channel"—and stablecoins are the infrastructure of that new channel.

Once stablecoins are legalized and regulated, they can carry the flow and trading of RWA assets. U.S. Treasury bonds, corporate bonds, real estate, tech equity… all these assets, once digitized and fragmented on-chain, can be subscribed to globally like "modules." Global capital can buy RWA with stablecoins, allowing U.S. assets to achieve "buy in anytime, exit 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 effect. Trump's radical policies have already begun to trigger unease and dissatisfaction domestically, urgently needing to release economic benefits and calm public sentiment. Recently, Treasury Secretary Mnuchin revealed that 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," like tariffs, with a set of means for "re-globalization," like cryptocurrencies, in a very unique way?

Shao Qing: Yes. On the surface, there seems to be 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 form of blockade, and cryptocurrencies are a form of openness—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 that some invisible "hidden variables" are undergoing structural transformation. Among these, AI and cryptocurrency may be the most important. 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.

4. The Purpose of the Infinite Game is Not to Determine Winners and Losers

Meng Yan: Regardless of how we explain Trump's motivations and reasons for initiating the tariff war, we must acknowledge that the anger expressed by other countries and their retaliatory measures are also reasonable. Several countries have already announced countermeasures against Trump's tariffs, including China, 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 today, including the U.S., view the competition for knowledge sovereignty as a finite game that must determine winners and losers. The direct result of this mindset is that they 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 to China, I felt that there are generally two extreme tendencies in public opinion regarding the trade war and U.S.-China competition.

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 declined irreversibly, and that Trump's trade war is "self-destructive," only accelerating its own collapse, while China's national fortune is on the rise, and it can take over by 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 or lose, and there is no room for coexistence. This is seriously inconsistent with the facts. In reality, the failure of either of these two major powers would be a heavy 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 matter 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 fundamentally shifted from "scale confrontation" to "systemic 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 collaborative 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 winners or losers, only a continuous process of extension and evolution. The key is not to win once but to ensure that you always have the qualifications and capabilities to participate in the next round of upgrades.

The purpose of the infinite game is not to determine winners and losers but to keep the game going. Keeping the game going means you must maintain an open ecosystem, update rules, ensure fair entry, and establish effective incentive mechanisms. You cannot block your opponents to the point of losing motivation, nor can you spiral inward to the point of collapse. The real opponent is not the other country but the stalling of the system, the exhaustion of innovation, and the breakdown of trust.

Therefore, we must be particularly vigilant against voices 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 must move beyond the emotional narrative of "either win or perish" and truly enter a strategic mindset of "sustained co-creation is what makes one truly strong."

Meng Yan: I hope the world can be as rational as you say.

Shao Qing: Wisdom is needed. 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 cryptocurrency revolution, the only players left are the U.S. and China. How the cards are played depends largely on the mindset.

Thus, we see that while the U.S. is engaged in a tariff war and decoupling, it is also undergoing an open reconstruction in stablecoins and RWAs. Why? Because it knows that relying solely on blockades will not win the battle for technological sovereignty; true victory lies in who masters the rules of the next generation of platforms and who attracts more high-quality participants.