Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 619

Welcome to the grey war

There is lots of speculation about the risks of China and the United States going to a hot war. But a close examination suggests that China has already been in a ‘grey war’, a cyberwar, with the United States for several years now.

What is the grey war? It is obviously between black and white. We should not think of war and peace in binary terms, but along a spectrum where there are degrees of war and peace.

Propaganda and disinformation, the key instruments of the grey war, have always been features of international relations. But China and other authoritarian regimes also buckled down on efforts to destabilize the United States and other democracies by propaganda disseminated through social and other media.

China’s narrative of dominance

China’s grey war narrative is that it is on an unstoppable path to overtaking the United States. It is trying to demoralize the United States and the West. The Chinese want the United States to believe it is in irreversible decline, and the United States should not even try to contain China. It should just accommodate China.

China is highly motivated because it sees the very ideas of democracy and freedom as a regime threat. China is keen to create a world that is safe for the Chinese Communist Party.

It is of course deeply ironic that China and other authoritarian governments are often using U.S. technology to defend and export autocracy around the world.

The grey war is fundamentally different from the Cold War in that there are deep economic, technological and person-to-person connections between the United States and China, which was not the case between the United States and the Soviet Union.

The Arab Spring as a turning point

An important trigger for the grey war was the Arab Spring. Indeed, it was a super-wakeup call for China and other authoritarian states. They saw Egyptian protesters in Tahrir Square who were organizing their protests and communicating to the world using social media.

So, China began working hard to use the Internet and other technologies as vehicles for social and political control at home, especially for China’s Uyghur population. It began centralizing political control over the Internet such as through China’s Great Firewall and its banning U.S. tech companies like Google and Facebook from the Chinese market.

There is both a ‘front end’ and the ‘back end’ of the grey war. The front end refers to information operations through applications, news information and social media platforms. China now leads the way as state-sponsored news outlets push very aggressively narratives to discredit democracy and the US government.

Hardware as a weapon

The back end refers to the physical infrastructure of the Internet, namely cellular phones, satellites, fiber-optic cables, 5G networks, wires and antennas.

And in this space, there are only two countries — the United States and China — which have the hardware companies and expertise to be major players. Through the technology company, Huawei, China’s authoritarian government has access to everything that runs across its network.

In a way, the United States is at a disadvantage to China’s state capitalism in the grey war. China’s civil/military doctrine basically fuses its private companies with the government. Thus backend infrastructure produced by Huawei or ZTE can be used as instruments of the Chinese state for accessing and censoring information.

Censorship, surveillance and exporting control

For example, the Chinese government requires Chinese Internet companies to do things like censoring Winnie the Pooh (who resembles Chinese leader Xi Jinping!) or maps showing Taiwan as an independent territory or content that paints democracy in a flattering light.

China has over between two and three million employees, known as the 50 Cent Party, whose job is to monitor and censor the Chinese online information environment.

Moreover, China is creating a “techno-block” with countries (especially in Africa) to which it is supplying back-end information infrastructure. It is also exporting closed-circuit television (CCTV) surveillance technology for monitoring and controlling their societies.

China’s authoritarian Internet model is part of its strategy to promote autocracy around the world with the ultimate objective of making the world safer for the Chinese Communist Party.

The U.S.’s structural disadvantage

In sharp contrast to China, the US Internet environment is mostly decentralized with no control. People can basically say whatever they want online, unless it is illegal. But the US government does not have the nation’s tech industry at its beck and call like China does — although it does have the advantage of an open, more innovative system.

Looking ahead, the United States faces many challenges in the grey war zone. Donald Trump’s anti-migration narrative will undermine Silicon Valley, whose innovation has depended greatly on US-educated migrants.

Another important issue is deindustrialization and outsourcing of tech production to China have left the United States strategically vulnerable. In this new gray war, a deindustrialized United States can be a disarmed United States. COVID-19 highlighted the risk of being vulnerable to coercion.

Bridging the Silicon Valley-Washington divide

But reshoring all of outsourced manufacturing is not feasible, as the United States has very limited manufacturing capacities — despite Trump’s exhortations to bring manufacturing back to the United States.

One option is some reshoring of products which are critical to national security, along with 'friend-shoring' of some production to close and trusted allies.

Unfortunately, the United States has suffered in recent years from a rift between Capitol Hill and Silicon Valley. But today, the United States’ tech and policy-making communities need to work much more collaboratively to address the important challenges of technological competition with China. After all, Silicon Valley was born from contracts and close cooperation with the US government.

Part of the problem is the immense size of US tech companies which enables them to do their thing. Other factors are generational and cultural. The average age of an employee at Google and Apple is in the early 30s, whereas the average age of Senators is 63.

These people came of age at very different times, have had very different life experiences and view technology very differently.

The stakes: A divided world order

This tech-fuelled political warfare will shape the world’s balance of power for the coming century as autocracies exploit 21st-century methods to redivide the world into 20th-century-style spheres of influence.

The United States has all the ingredients to confront this. Perhaps the greatest challenge that the United States faces in this grey war is domestic politics, especially Donald Trump and the MAGA movement.

The United States needs well-managed immigration, strong investments in education and technology, an open trade system and positive relations with allies.

Above all, it needs to resist cronyism. However, at the present moment, all of these are risks.

 

John West is Executive Director of the Asian Century Institute and author of the book, “Asian Century … on a Knife-edge”. He has had a long career in international economics and relations, with major stints at the Australian Treasury, OECD, Asian Development Bank Institute, and Tokyo’s Sophia University. This article was originally published as a new Strategic Assessment Memo (SAM) by the Global Ideas Center in Berlin on The Globalist.

 

  •   9 July 2025
  • 6
  •      
  •   

RELATED ARTICLES

Engineers vs lawyers: the US-China divide that will shape this century

Concerns about China's rise to power seem overblown

The pivotal fight between China and the US

banner

Most viewed in recent weeks

The growing debt burden of retiring Australians

More Australians are retiring with larger mortgages and less super. This paper explores how unlocking housing wealth can help ease the nation’s growing retirement cashflow crunch.

Warren Buffett's final lesson

I’ve long seen Buffett as a flawed genius: a great investor though a man with shortcomings. With his final letter to Berkshire shareholders, I reflect on how my views of Buffett have changed and the legacy he leaves.

LICs vs ETFs – which perform best?

With investor sentiment shifting and ETFs surging ahead, we pit Australia’s biggest LICs against their ETF rivals to see which delivers better returns over the short and long term. The results are revealing.

13 ways to save money on your tax - legally

Thoughtful tax planning is a cornerstone of successful investing. This highlights 13 legal ways that you can reduce tax, preserve capital, and enhance long-term wealth across super, property, and shares.

Why it’s time to ditch the retirement journey

Retirement isn’t a clean financial arc. Income shocks, health costs and family pressures hit at random, exposing the limits of age-based planning and the myth of a predictable “retirement journey".

The housing market is heading into choppy waters

With rates on hold and housing demand strong, lenders are pushing boundaries. As risky products return, borrowers should be cautious and not let clever marketing cloud their judgment.

Latest Updates

Interviews

AFIC on the speculative ASX boom, opportunities, and LIC discounts

In an interview with Firstlinks, CEO Mark Freeman discusses how speculative ASX stocks have crushed blue chips this year, companies he likes now, and why he’s confident AFIC’s NTA discount will close.

Investment strategies

Solving the Australian equities conundrum

The ASX's performance this year has again highlighted a persistent riddle facing investors – how to approach an index reliant on a few sectors and handful of stocks. Here are some ideas on how to build a durable portfolio.

Retirement

Regulators warn super funds to lift retirement focus

Despite three years under the retirement income covenant, regulators warn a growing gap between leading and lagging super funds, driven by poor member insights and patchy outcomes measurement.

Shares

Australian equities: a tale of two markets

The ASX seems a market split in two: between the haves and have nots; or those with growth and momentum and those without. In this environment, opportunity favours those willing to look beyond the obvious.

Investment strategies

Dotcom on steroids Part II

OpenAI’s business model isn't sustainable in the long run. If markets catch on, the company could face higher borrowing costs, or worse, and that would have major spillover effects.

Investment strategies

AI’s debt binge draws European telco parallels

‘Hyperscalers’ including Google, Meta and Microsoft are fuelling an unprecedented surge in equity and debt issuance to bankroll massive AI-driven capital expenditure. History shows this isn't without risk.

Investment strategies

Leveraged single stock ETFs don't work as advertised

Leveraged ETFs seek to deliver some multiple of an underlying index or reference asset’s return over a day. Yet, they aren’t even delivering the target return on an average day as they’re meant to do.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.