"Don't wear a hat too big for your head." It is a bit of gritty Cantonese wisdom, but let's be honest: It applies to everyone.
You get exactly that flavor when digging into the new "2025 National Security Strategy" just dropped by U.S. President Trump. The whole document screams a single message: The U.S. is pulling back. It is retreating its main battle lines to the Western Hemisphere and embracing a hard line of "semi-isolationism."
Trump is a businessman at heart. He handles state affairs like a merchant, prioritizing cold, hard realism. He happily trashes the utopian thinking of "white left" politicians like Biden, tossing global interventionism into the trash bin.
This isn't just Trump picking a new path for America. It is a necessity. He simply has no other card to play. But make no mistake, this shift triggers massive implications.
The Dollar Illusion: Fading American Muscle
First, look at the numbers. On paper, the U.S. remains the heavyweight champion of GDP in dollar terms. China’s total looks to be less than 70 percent of that. But that is just a currency conversion trick. Use a fairer metric: Purchasing Power Parity (PPP), and China blew past the U.S. way back in 2014. That isn't Beijing bragging; it’s the cold math used by the IMF and the CIA.
It isn't just about total output. China has leapfrogged the U.S. in critical innovation sectors. Look at the "new trio": electric vehicles, lithium batteries, and solar energy. China has locked down a near-monopoly global advantage. For the U.S., this kind of dominance used to be unimaginable.
Militarily, the U.S. holds the advantage in stock, but its capacity to replenish is alarming. "Stock advantage" means they have more toys right now. But "worrying incremental capacity" is the nice way of saying U.S. manufacturing has gutted out. In a war, if a ship sinks, replacing it takes forever compared to China. Sixth-generation fighters? Hypersonic missiles? China has them in service. The U.S.? They still only exist on PowerPoint slides.
Trump knows the score. That explains the strategic contraction. He is done playing global cop. You want protection? Open your wallet. That goes for Japan, South Korea, and the NATO club in Europe.
Trump's endgame is focusing energy on the American homeland. He wants to rebuild a brawny manufacturing sector and a robust economy. Why? Because that is the only way the U.S. survives a long-run brawl with China.
A New Warring States Chessboard
Second, view the global chessboard like China's Warring States period. Trump’s worldview splits the hemispheres: "Befriend the distant while attacking the near." He wants the Western Hemisphere under lock and key. As for the Asia-Pacific? He is effectively ceding it as China's sphere of influence to cut costs, while plotting to keep a foot in the door for later.
This strategy has morphed from the old Yalta talks into a G2 model—a pure two-power game. When trouble hits, Beijing and Washington meet to fix it. Europe gets kicked to the curb. Western Europe has slid from a vital anti-Soviet ally to a heavy American burden.
Third, seeing Trump retreat feels like a win. It means the end of the Democrats' "pivot to Asia." But don't get lulled into paralysis. The hostility hasn't vanished; the U.S. is just "not wearing a hat too big for its head." They are avoiding a direct fight now only to bulk up for the ultimate showdown later.
Plus, there is another election in three years. Can the Republicans hold on? If the Democrats storm back, they will tear up this semi-isolationist playbook. Whether this strategy sticks or not, the competitive intent remains. China has to work day and night to strengthen itself during this short window.
The Trap of Complacency: Don't Blink
China needs to dominate the economy—not just plugging holes in chip manufacturing, but becoming number one in every innovative industry. While the U.S. tries to decouple and fix its own broken supply chains, China must build the strongest new systems in the next five or ten industries.
Finally, look at the stakes for Hong Kong. On one hand, U.S. contraction eases the political pressure cooker. On the other, as the country builds a brand-new, autonomous international system, Hong Kong has a critical role to play. We have a three-year window. We better use it. Time waits for no one.
Lo Wing-hung
Bastille Commentary
** 博客文章文責自負,不代表本公司立場 **
The world is a mess, and everyone has to fend for themselves.
A lot happened last weekend. China-EU trade talks reached a preliminary agreement, finally bringing a measure of stability to turbulent international trade relations.
The crisis in France kept heating up. Student riots raged on, and the damage showed no sign of stopping.
On another front, the Saudi-led coalition had earlier backed the Yemeni government's counteroffensive and at one point claimed to have recaptured the coast along the Bab-el-Mandeb Strait. The move ended in disaster.
The Houthis struck back at Saudi Arabia, unleashing four consecutive attacks on Saudi airports and inflicting heavy casualties. Riyadh airport in the Saudi capital was completely shut down.
But none of it was as shocking as what came next. After US President Donald Trump and Russian President Vladimir Putin spoke by phone on October 9, the United States announced that Russia would immediately supply 300,000 tons of diesel to the United States and global markets.
The about-face was dizzying. Not long before, Trump had just signed a bill tightening sanctions on Russia. But the US midterm elections were looming, and diesel prices stayed stubbornly high because of the two wars in the Middle East and Ukraine.
Trump had no other choice. He struck a deal with Putin, and after hanging up the phone even said he wanted to thank him.
The US-Russia agreement left Ukrainian President Volodymyr Zelensky furious. He publicly slammed Trump's move as a weak decision and warned that lifting sanctions would give Russia the funds to attack Ukraine.
Trump did not back down. He first leaked to the media that the reason he had to reach an agreement with Russia was that Zelensky had repeatedly ignored US calls to stop attacking Russian oil refineries.
Then Trump stepped in personally. He told reporters at the White House on October 10 that Ukraine should get a new president. He blasted Zelensky for continuing to attack Russian oil refineries, accused him of trying to make trouble for the whole world, and warned that Zelensky had "better damn well stop".
A day later, Donald Trump turned to social media with a fresh claim: Russia and Ukraine had agreed to an energy ceasefire. Neither the Russian nor the Ukrainian side has confirmed it so far.
The energy price chaos gripping the United States is, basically, self-inflicted. The entire Russia-Ukraine war disaster erupted during the Biden era, with US backing. And the Iran war? That was orchestrated single-handedly by Trump.
Two wars have cooked up a giant global mess. Yet the United States can suddenly change face and strike a diesel supply agreement with Russia. That raises several questions.
First, where are the principles?
When the mood suits, the US sanctions Russian energy, convinced this can cut off Russia's war funding.
But when its own livelihood is squeezed and votes are on the line, the country can suddenly loosen those sanctions and freely buy Russian diesel. America's logic here is pretty messy!
In the "justice versus evil" narrative that the US has long championed, the US and the West embody the alliance of justice, while Russia, Iran, and North Korea are all evil regimes.
When others do not support US sanctions against these "evil regimes," the US will sanction those third parties. That is how the United States extends its long arm, imposing secondary sanctions on people around the world.
Back then, the US even asked Canada to arrest Huawei's CFO, Meng Wanzhou. The accompanying charge: that Meng had failed to comply with US orders on Iran sanctions.
These unilateral US sanctions never had United Nations authorization, and they have always lacked a legal basis. Now the United States can scrap them at any time, purely to suit its own needs. Sanctions pop in and out with zero logic, and the only explanation behind it all is these words: "American interests."
Anyone who still believes in America's democracy-lighthouse narrative is an absolute idiot.
Second, what happens next?
Ukraine has bombed Russia's own refining facilities hard, and the country's refining capacity is already down at least 20 percent. Even if Russia truly reaches a deal with Ukraine to pause mutual strikes on energy facilities, the diesel Russia can supply will remain quite limited.
A US-Russia deal can offer only a brief dose of psychological comfort. As long as the two wars have not truly stopped, the global energy crisis will keep worsening.
Rising energy prices push up inflation. Inflation pushes up bond yields. And yields stuck at high levels could at any moment bring the economies of heavily indebted countries such as France crashing down. That is where the real danger of the war trigger lies.
Third, stability is opportunity
There was a time when both Dubai in the UAE and Riyadh in Saudi Arabia counted as hubs of the Middle East and paradises for investment.
But after Trump ignited this Middle East war, it took barely half a year to send them plunging from heaven into hell. They lost their security, and they lost everything.
Their examples speak the truth: safety and stability bring opportunity. And Hong Kong is fortunate enough to be seizing exactly that kind of opportunity right now.
We can’t save the world or stop these two wars. All we can do is mind our own house, get our work done, and brace for whatever risks come next.
Lo Wing-hung
