Larry Elliott argues that Western predictions of Chinese economic collapse have repeatedly failed to materialise, and that China has instead progressed through three distinct phases of development, most recently establishing itself as a genuine rival to the United States in artificial intelligence. He notes that while China's growth model still relies heavily on investment and exports, leaving it exposed to criticism over excess capacity and weak domestic demand, its emergence as an AI power represents a significant shift with implications for global markets and the balance of power between East and West.

The article traces China's evolution from a low-cost manufacturing base ("China 1.0") to a producer of higher-end goods such as solar panels, batteries and electric vehicles ("China 2.0"), and now to a contender in cutting-edge technology ("China 3.0"). It highlights the July launch of Moonshot's Kimi K3 AI model, which proved so popular that new subscriptions were suspended within two days, offering a free alternative that reportedly matches Western models like ChatGPT. Citing analyst Edoardo Campanella, the piece describes Beijing's strategy of staying near the technological frontier and spreading its models globally, warning this could disrupt both markets and geopolitical power, particularly given the US's simultaneous alienation of allies through tariffs.