The Industrial Frontline of Great-Power Competition

Modern warfare is increasingly defined not by technological superiority alone, but by the ability to industrialise and sustain military production at scale. As conflicts from Ukraine to the Indo-Pacific demonstrate, attritional endurance and innovation-to-production speed now matter as much as precision or capability. Strategic advantage is shifting toward states that can convert innovation into mass deployable force faster than their adversaries.

The Weapon Is Only Half the Story

The next advantage in great-power competition may not belong to the state with the most sophisticated weapon, but to the state capable of producing and deploying enough of them at the necessary speed to maintain strategic advantage. For decades, military superiority was pursued by states through optimised networked warfare, increased precision, hypersonic weapons and autonomous systems. The idea at the heart of these decisions was that better technology translates into greater military advantage. This logic is not wrong, but an analysis of today’s conflicts shows it to be incomplete.

US operations against Iran have exposed the industrial and economic limits of technological superiority. In some engagements, American and allied forces have relied on multimillion-dollar interceptors to destroy Iranian-designed Shahed drones costing tens of thousands of dollars. A Patriot interceptor can cost $4 million, while a drone is estimated to cost $20 000-$50 000 (ELIAMEP, 2026). The interception may be tactically successful, but the operation raises a broader strategic question: how long can a military sustain a model in which it spends millions to defeat threats that its adversary can manufacture for mere thousands? The concern recent warfare reveals is not simply whether a weapon works, but whether the industrial system behind it can afford to keep producing it at the speed and scale demanded by the conflict (ELIAMEP, 2026).

From Technological Superiority to Industrial Endurance

It is clear the economics of interception are becoming inseparable from the economics of production. After 1991, Western militaries inclined towards the following model: quality → efficiency → precision → smaller inventories (Congressional Research Service, 2024). This model is good for scenarios predicated on short wars, technological superiority, air superiority and limited expeditionary operations. But when dealing with a prolonged high-intensity conflict, this model can become vulnerable (Loidolt, 2025).

Quantity is not more important than quality, but quality without sufficient scale is strategically fragile. A superior weapon system which cannot be replaced has limited value during a longer-term armed conflict. The war in Ukraine has shown the difference between peacetime production and wartime consumption: protracted attrition turns industrial capacity into an operational constraint (Danylyuk, 2025).

The Ukrainian battlefield has also demonstrated that production is no longer a separate function operating behind the frontlines. It has become increasingly integrated into the way military capabilities evolve. The rapid expansion of drone warfare is the clearest example of this process. Systems are constantly modified in response to battlefield experiences, while production is simultaneously expanded to meet new operational requirements. The result is a feedback loop in which the battlefield informs production, production enables deployment, and deployment generates new battlefield data (IISS, 2025).

Sources: Australian Army Research Centre; Ukrainian Ministry of Defence; OSW; RUSI.

This dynamic points towards a broader transformation in defence industrial power. The advantage increasingly belongs to states that can move rapidly through the entire cycle of innovation, from identifying a battlefield requirement to developing a solution, producing the solution at scale, deploying it, and adapting it again. Industrial capacity is not simply about having large factories or maintaining large stockpiles. It is about the ability to translate technological innovation into usable military power, and to do so repeatedly (Terhorst, 2026).

China vs. the United States: Who Can Industrialise Innovation?

If industrial capacity determines how long technological advantages can be sustained, the question becomes particularly important in the competition between China and the United States.

Beijing’s advantage in this great-power competition is increasingly visible not only in the technologies it develops, but in the industrial ecosystem that allows those technologies to be produced at scale. At present, China possesses a shipbuilding capacity estimated at 230 times that of the United States’. Just one of China’s major shipyards can match or exceed the capacity of the entire US shipbuilding base (Palmer, 2024).

This fact is relevant because industrial capacity allows for options. A state actor capable of producing a large number of ships, missiles, drones and other military systems can manage losses more efficiently. Losing one system is less damaging because it can be readily replaced (Palmer, 2024). China’s model also benefits from the interaction between its civilian and military industrial bases. Commercial shipyards provide infrastructure, investment and technological spillovers that can support naval production, illustrating how Beijing’s industrial power extends beyond the traditional defence sector (Funaiole, 2025).

Despite its lesser industrial capacity, the United States still holds significant technological advantages and a highly innovative private sector. Washington’s problem is how quickly an innovation can move from prototype to procurement, and from procurement to mass production? (Vergun, 2025). Recent US reforms have begun to address this gap, as the Pentagon seeks to broaden its pool of suppliers, expand multiyear munitions contracts and reduce bureaucratic delays in moving new capabilities into service (Vergun, 2025).

This distinction is crucial. Innovation without production is an advantage on paper and production without innovation is difficult to sustain. The strategic competition between Washington and Beijing is therefore becoming a contest of their innovation-to-production cycles. China’s challenge is its ability to industrialise technologies through enormous manufacturing ecosystems, while America’s challenge is to ensure that its technological and entrepreneurial advantages can be converted into military capacity before a crisis begins.

The emerging lessons is not that the United States needs to replicate China’s industrial model. It is that technological superiority becomes strategically significant only when an industrial system exists to scale it. In a prolonged conflict, the decisive advantage may not be which side has the most advanced prototype, but which side can turn the next breakthrough into thousands of usable systems.

Policy Recommendation

The policy implication is straightforward: governments need to stop regarding defence procurement as simply buying weapons systems, and instead start thinking about whether they can keep producing once those weapons are used. That means giving defence companies longer-term contracts to expand production; reducing unnecessary delays in procurements; strengthening access to key materials and components; and making it easier for new technologies to move from the private sector into military use. For European countries in particular, defence readiness should not be measured only by how much is spent or how advanced a weapon is, but by how quickly it can be produced, replaced and improved. The goal should be to build a defence industry that can meet the demands of a long war, and not simply prepare for the first few weeks.

Bibliography

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