The China Factor

Why Industrial AI Aligns with Intelligentized Warfare

The emerging divide between industrial and service economies is becoming a military divide. At the AI Summit in Seoul this week, the most important pattern was this, Industrial economies (Korea, China, Saudi Arabia, and India) experience AI as amplification, while service economies (Canada, the U.S., and Europe) experience AI as disruption.

Industrial AI is intelligence embedded in physical systems such as factories, logistics networks, robotics, vehicles, sensors and infrastructure. It increases throughput, precision and real-world capacity. This is the orientation of the East.

Service AI is intelligence applied to cognitive and linguistic tasks such as writing, analysis and office workflows. It disrupts labour because it automates the same knowledge tasks that service economies depend on. This is the orientation of the West.

This divide is no longer only economic.
It is becoming a military divide.

Industrial AI aligns naturally with the requirements of intelligentized warfare, where perception, autonomy and machine coordination determine advantage.

This analysis looks at why China sits at the center of this shift and how industrial AI is reshaping warfare.

Industrial AI as a Strategic Advantage

Industrial economies view AI as a force multiplier because it strengthens the systems their economies already depend on:

• manufacturing

• logistics

• robotics

• power grids

• ports and transport

• precision industrial processes

In these environments, AI improves:

• throughput

• safety

• yield

• efficiency

• predictive control

This is physical-world AI, intelligence embedded in systems that move, power, produce, and coordinate.

Service economies, by contrast, experience AI in the domains of:

• language

• analysis

• planning

• administration

• decision-support

These are the exact areas LLMs now automate or reshape.

The result: industrial nations see AI as leverage; service nations see it as disruption.

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Industrial AI = Intelligentized Warfare

Intelligentized warfare, China’s next-generation military doctrine relies on capabilities that industrial AI excels at:

• autonomous ISR

• adaptive logistics

• self-optimizing supply chains

• real-time targeting and battle management

• resilient sensing networks

• multi-domain machine-speed coordination

These systems require:

• domestic manufacturing

• robotics capacity

• chip supply

• integrated industrial policy

• large-scale physical infrastructure

Industrial AI maps directly onto these requirements.

It produces systemic competence, the ability for military systems to sense, reason, and adapt continuously.

The military that can embed intelligence into its physical systems will gain:

• faster OODA loops

• more resilient battlefield logistics

• higher autonomy under electronic attack

• continuous learning in real operations

• greater precision with lower manpower

This is the core of intelligentized warfare.

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Why China Is Structurally Aligned With Industrial AI

China’s economic structure provides the ideal foundation for this transition:

• high industrial share of GDP

• vertically integrated supply chains

• robotics and UAV mass production

• domestic chip and compute ecosystem

• unified civilian–military integration strategy

• national AI programs tied to physical infrastructure

China doesn’t just build models.
It embeds AI where its economy already produces value:

• ports

• rail

• logistics hubs

• energy networks

• manufacturing lines

• coastal and inland transport

When AI amplifies these systems, China gains a compound advantage:
economic scale + military acceleration.

This structural alignment is why intelligentized warfare is credible, not conceptual.

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The Western Constraint: AI Without Industry Cannot Deliver Strategic Power

Canada, and much of Europe face a structural limitation:

• service-heavy economies

• diminished industrial capacity

• fragmented supply chains

• slow procurement

• AI that is optimized for cognitive work, not physical autonomy

Western militaries deploy AI mainly in:

• analytics

• headquarters functions

• decision support

• documents and workflows

But intelligentized warfare demands AI that operates:

• on the move

• under fire

• in contested environments

• across physical infrastructure

• inside autonomous systems

This requires the industrial foundation that many Western economies have let erode.

The gap is not about “adopting AI faster.”
It is about rebuilding the production base AI needs to matter in warfare.

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Why Industry Determines Military AI Trajectory

Industrial AI naturally aligns with future combat because:

• warfare is physical

• logistics decide outcomes

• sensors and autonomy determine tempo

• manufacturing capacity determines resilience

• machine-speed adaptation determines survivability

Service economies excel at building:

• models

• platforms

• software ecosystems

Industrial economies excel at building:

• machines

• robotics

• munitions

• vehicles

• drones

• energy and transport systems

In intelligentized warfare, the winners are those who can integrate intelligence into the machines they produce.

China is designing their AI ecosystems for that purpose.

Western nations must decide whether they will do the same.

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In Canadian Defence, these insights point toward industrial AI as something that must live inside fleets, depots, ports, radar sites, satellites, ammunition lines, and Arctic infrastructure. The gap is not another HQ dashboard. It is AI that can schedule maintenance across a mixed fleet, reroute fuel and spares under stress, fuse sensors for continental defence in real time, simulate contested logistics for the Arctic, and help design, test, and adapt munitions and counter-drone systems at scale. AI that touches steel, fuel, and inventory as much as slides and reports. The opportunity for Canada is to pick a few of these industrial seams where it already has responsibility and geography on its side, and become very, very good at embedding intelligence there.

My Plaud AI transcriber did an excellent job switching between English and Korean during the conference.