Trump’s Big Retreat: America Shrinks to Survive, but China Must Strike Now

"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

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

World upheavals hit so fast these days, folks can't keep up or pivot.

Trump's National Security Strategy drops quietly in the early hours on December 5. This 33-page document kicks off with his public letter boasting: "No administration in history has achieved so dramatic a turnaround in so short a time." The braggart speaks truth here: it screams seismic shift. Stack it against Biden's 2022 version, and it's America yelling retreat to the Western Hemisphere.

Trump's strategy boils down to four razor-sharp priorities.

Priority one: Lock down U.S. national security, home safety, and border control. In short: zeroing in on immigration floods and drug wars.

Priority two: Western Hemisphere plus U.S. turf first, reviving Monroe Doctrine like a ghost from 1823. Monroe drew the line "America for Americans": kicking Europe out of the Americas, dodging their fights, and claiming U.S. backyard dominance.

Priority three: Hammer economic security. Re-industrializes America, forges self-reliant supply chains.

Priority four: Indo-Pacific slides to backseat. China drops from "existential threat" to plain economic rival. Defending Taiwan or the "first island chain"? Allies pay up themselves.

Trump's Four Pillars Shift

Strategy was due November but kept slipping. Word is Treasury Secretary Bessent twisted arms for softer China talk—fearing it tanks the fresh U.S.-China trade pact and torpedoes Trump's April China trip.

Still not clear on America’s latest National Security Strategy? Defense Secretary Hegseth goes on to spell it out in painstaking detail.

At California's Reagan National Defense Forum on December 6, Hegseth unpacks Trump's playbook. America won't “strangle China’s growth”, won't "dominate or humiliate" her, won't touch Taiwan Strait status quo. Call it the "new three no's" to China. Hegseth nails it: New strategy demands America-first realism, ditching utopian dreams.

Hegseth crows Trump axes idealism: "The War Department will not be distracted by democracy building, interventionism, undefined wars, regime change, climate change, woke moralizing, and feckless nation building... We will instead put our nation's practical, concrete interests first."

Hegseth doubles down: Trump embraces big-power spheres—China rules Pacific, America owns Western Hemisphere and Europe. Goal? Stable peace with China via fair trade, mutual respect.

Isolationism Roars Back

America reeks of isolationism now. But scan 248 years of its history, it's the default. For 150 years, the U.S. had locked down since its founders. Washington set it: "Expand trade, dodge political hooks abroad." Intervention? Mere blip, one-third anomaly.

This U.S. strategy U-turn packs massive significance.

Impact one: Globe splits East-West. America grabs Americas and Europe; nods to China's Asia-Pacific reign. Turf respected, no poaching. Forget "Indo-Pacific return" or Asia gang-ups against China.

Impact two: Trump bins Biden's white-left utopias—no global democracy pushes, meddling, wars, regime flips. No more China regime hunts or system tweaks.

Trump sweetens with "three no's." No curbing growth flips Biden's chip chokeholds—Trump greenlights NVIDIA H200 exports to China. No dominating or humiliating means hands off China's ways. No Taiwan Strait shifts? No Taiwan independence fuel—Lai Ching-te, zip it.

Stakes Rise for Hong Kong

Impact three: New strategy kills "democracy lectures" for China's Hong Kong Special Administrative Region. U.S. sanctions on Hong Kong and mainland officials over National Security Law? Outdated relics. Casual Jimmy Lai trial jabs? Pointless overreach.

Mutual respect rules? China ignores Trump's Proud Boys pardon—Enrique Tarrio's 22-year rap sheet vanishes. America skips Hong Kong national security trials. Fair swap.

Next level: Secretary of State Rubio eyes Trump's April China jaunt. America drops mainland and Hong Kong official sanctions? China likely lifts Rubio's.

U.S. Consulate General in Hong Kong and Macao, do read the strategy deep. Toe the president's line, tweak Hong Kong policy, and ditch the lip-service defiance.

Lo Wing-hung