During the 1990s to 2010s, Western scholars and policymakers, influenced by post-Cold War overconfidence and the assumption of uncontested U.S. dominance, largely failed to foresee the emergence of near-peer rivals such as China.
The “Unipolar Moment” and “End of History” (Post-Cold War Euphoria)
The collapse of the Soviet Union left the United States as the sole global superpower, giving rise to a pervasive sense of triumphalism and the belief in a “unipolar moment.” Many in the West came to see liberal democracy and free-market capitalism as the ultimate and permanent victors of history. Francis Fukuyama’s The End of History (1989) encapsulated this sentiment, arguing that liberal democracy represented the final form of human government. This notion fostered deep intellectual narcissism and hubris, as it implied that ideological competition had ended and that all nations would inevitably converge toward the Western model.
Guided by this worldview, U.S. policymakers assumed a linear path of convergence: that economic liberalization would naturally lead to political liberalization, and that China’s integration into the global economy would ultimately produce a liberal democratic state. This faith in the “Washington Consensus” ignored China’s distinct developmental logic—its gradual reform strategy, state dominance in strategic sectors, and selective engagement with global markets on its own terms. Consequently, China’s hybrid governance model—combining authoritarian control with market pragmatism—was dismissed as either transitional or unsustainable.
The result was a profound sense of strategic complacency. Believing themselves to be the unchallenged hegemon in a world trending inexorably toward liberalism, Western policymakers failed to anticipate the endurance and evolution of alternative systems of governance—or the emergence of a formidable, non-liberal peer competitor in the decades that followed.
Overconfidence in U.S. Structural Advantages
Following the collapse of the Soviet Union, the United States emerged as the undisputed global hegemon and came to believe in its unchallenged supremacy across multiple domains—technology and innovation, global finance and reserve currency status, higher education and research institutions, as well as military power and international alliances. This sense of triumphalism fostered a deep-seated conviction that the liberal democratic and capitalist model represented the ultimate and universally applicable path to modernization.
Western development theories, largely derived from the historical experiences of Europe and North America, reinforced this worldview by equating modernization with democratization and market liberalization. Non-Western models that diverged from this framework—such as China’s state-led capitalism, party-state governance, and experimental hybrid policymaking—were therefore dismissed as temporary deviations or historical anomalies rather than credible alternatives.
Underlying these assumptions was a persistent current of techno-Orientalism and cultural bias. Western discourse often portrayed China as a nation of imitators, constrained by bureaucratic rigidity and incapable of genuine creativity or innovation. Such stereotypes sustained the belief that China could not possibly become a leader in high-technology sectors like semiconductors, artificial intelligence, or green energy—until empirical reality began to disprove these notions.
This intellectual and strategic complacency had profound consequences. By clinging to the belief in its inherent superiority, the United States and much of the Western world neglected long-term investment in industrial policy, infrastructure, manufacturing capability, and technical education. Meanwhile, China quietly advanced in precisely these areas, leveraging state coordination and strategic vision to build the industrial and technological foundations that now underpin its resurgence as a near-peer competitor.
The “Liberal Bet” on China
Western policymakers during the post–Cold War era operated under a strong sense of economic determinism, assuming that integrating China into the global economy would inevitably bring about political liberalization. This belief underpinned key policy decisions such as granting Beijing Most Favored Nation status and supporting its accession to the World Trade Organization in 2001. The dominant theory held that as China’s economy expanded, a rising middle class, greater exposure to Western ideas, and the demands of managing a modern economy would compel the Chinese Communist Party to relax its authoritarian control and move toward democratic reform.
This assumption was reinforced by the “responsible stakeholder” narrative advanced by the George W. Bush administration, which posited that a more prosperous China would naturally seek to uphold and strengthen the U.S.-led international order rather than challenge it. Under this view, economic integration would not only moderate China’s behavior but also socialize it into the norms and institutions of the liberal global system. The popularization of ideas such as Thomas Friedman’s “Golden Arches Theory”—the notion that no two countries with McDonald’s franchises would ever go to war—reflected a broader faith in globalization as a force for peace and convergence.
Meanwhile, the immediate economic gains from engagement often eclipsed deeper strategic concerns. Western governments and corporations were captivated by the vast potential of the Chinese market, the lure of cheap consumer goods, and the cost advantages of offshoring production. The prospect of mutual prosperity created a powerful political and commercial constituency that prioritized short-term economic benefits over long-term geopolitical foresight. In doing so, Western policymakers underestimated the CCP’s ability to harness globalization for national strengthening without relinquishing political control, thereby misjudging the trajectory of China’s rise.
Underestimation of China’s Unique Model and Resilience
Western analysts frequently misapplied historical analogies when assessing China’s trajectory, projecting the Soviet Union’s collapse onto Beijing and assuming that a state-directed economy and authoritarian political system would prove equally unsustainable. This view ignored the distinctive hybrid nature of China’s “socialist market economy,” which effectively combined market dynamism with strong state control, long-term strategic planning, and a remarkable capacity for institutional adaptation. The prevailing assumption that all communist systems would inevitably disintegrate with economic liberalization reflected a deep underestimation of authoritarian resilience.
The Chinese Communist Party (CCP) demonstrated a level of flexibility and pragmatism that its Soviet counterpart never achieved. Learning from the collapse of the Soviet Union, the CCP took proactive measures to prevent ideological decay, economic stagnation, and leadership crises. It strengthened internal discipline, ensured elite cohesion, maintained performance-based legitimacy, and skillfully harnessed nationalism to reinforce its rule. Through these adaptive strategies, the Party not only sustained its authority but also successfully guided China through periods of rapid transformation.
This institutional adaptability was compounded by a persistent misreading of China’s innovation trajectory. For years, Western observers dismissed China as a mere “factory of the world,” capable of mass-producing low-cost goods but not of genuine technological creativity. Ambitious initiatives such as “Made in China 2025” were often derided as empty slogans or rebranded central planning exercises. In doing so, Western analysts failed to recognize the scale and intent of China’s long-term investments in research, development, and human capital. This misjudgment obscured the deliberate, state-supported process through which China moved from imitation to innovation, ultimately emerging as a formidable technological power that defied the deterministic assumptions of post–Cold War orthodoxy.
Domestic Priorities and Distractions in the West
In the aftermath of the Cold War, many Western nations, particularly the United States, sought to reap a so-called “peace dividend” by redirecting resources from defense to domestic priorities. This shift reflected a widespread belief that the era of great-power rivalry had ended, leading to a diminished emphasis on long-term strategic competition. However, this complacency coincided with profound structural changes within Western economies. Deindustrialization, the rise of the service and financial sectors, and the outsourcing of manufacturing were widely interpreted as natural outcomes of globalization rather than as indicators of growing strategic vulnerability.
The events of September 11, 2001, and the ensuing “War on Terror” further entrenched this strategic myopia. For nearly two decades, U.S. foreign policy, military planning, and intelligence priorities became overwhelmingly focused on counterterrorism and regional conflicts in the Middle East. This prolonged diversion of attention and resources came at the expense of recognizing and responding to the long-term geopolitical and technological implications of China’s ascent. By the time Washington began to reorient its strategic lens toward great-power competition, Beijing had already consolidated many of the economic and industrial foundations of its rise under the radar of a distracted and overextended United States.
Cognitive Biases and Lack of “Threat Perception”
Western policymakers and analysts often fell victim to confirmation bias, seeking evidence that reinforced their preexisting assumptions about U.S. primacy and China’s eventual convergence with liberal democratic norms. Viewing the world through a deeply Western-centric lens, they projected their own historical experiences and values onto China, assuming its modernization would follow a similar trajectory. This analytical myopia obscured an appreciation of China’s distinct strategic culture, its century-long pursuit of national rejuvenation, and the powerful historical grievances that continue to shape its worldview and policy ambitions.
This misunderstanding extended to China’s long-term planning mechanisms and industrial strategies. Many in the West dismissed initiatives such as the Five-Year Plans, “Made in China 2025”, and the Belt and Road Initiative as rhetorical exercises or inefficient central planning reminiscent of the Soviet model. In reality, these programs represented coherent, state-guided missions combining national strategy with localized experimentation, coordinated financing, and systematic talent mobilization. China’s approach fused centralized direction with pragmatic flexibility—precisely the opposite of the bureaucratic rigidity Western observers imagined.
At the same time, the United States and much of the West were increasingly driven by corporate short-termism and financialization. Industrial capacity was offshored in pursuit of immediate shareholder returns, while manufacturing and technological leadership eroded. In contrast, China prioritized industrial upgrading, sustained investment in STEM education, and the cultivation of innovation ecosystems through state-backed research, infrastructure, and industrial clusters. This divergence in strategic priorities fundamentally reshaped the global economic balance.
For much of this period, China’s military power appeared limited compared to that of the United States, reducing the sense of urgency that had once characterized Cold War rivalries. The absence of an immediate military threat fostered complacency and intellectual inertia, allowing Western elites to overlook the broader implications of China’s comprehensive rise. By the time Washington began to recalibrate its grand strategy—through initiatives such as the “pivot to Asia” and the renewed emphasis on great-power competition—Beijing had already closed significant gaps in industrial, technological, and geopolitical capability. The result was a belated awakening to a transformed international landscape that the West itself had long underestimated.
Conclusion
The combination of ideological hubris, intellectual narcissism, and flawed linear assumptions led the United States and much of the Western academic and policy establishment to misread China’s rise. Convinced of their own historical inevitability and the universal applicability of the Western development model, they dismissed alternative paths to modernization as unsustainable or illegitimate. This complacent worldview, reinforced by the belief in unchallenged U.S. primacy, blinded policymakers and scholars to the depth of China’s strategic intent, institutional adaptability, and long-term state capacity.
In essence, the post–Cold War era nurtured a dangerous fusion of triumphalism and self-satisfaction. Western elites, buoyed by the supposed “end of history,” assumed that globalization, liberalization, and integration into Western-led institutions would naturally transform China into a system resembling their own. Instead, China leveraged that very integration to strengthen its domestic foundations and advance its national rejuvenation project on its own terms. By failing to grasp the hybrid, state-capitalist nature of China’s political economy and the Communist Party’s capacity for strategic innovation, the West underestimated both the speed and the scale of China’s ascent.
Ultimately, this misjudgment produced a delayed and reactive recalibration of Western strategy—one that only began after China had already emerged as a near-peer competitor across multiple domains. What might have been managed as a gradual strategic adjustment instead became a belated recognition of a geopolitical transformation that had been decades in the making.