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.
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.
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.
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.
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.
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.