Classic Form: A general lights fake campfires to create the illusion of a larger army, deceiving the enemy into inaction or retreat. The core principle is to present a falsehood so convincingly that it is accepted as reality.
Modern Version: The fabrication of economic strength, social consensus, or political movements using bots, media plants, and manipulated data. The goal is to engineer a reality that serves CCP objectives, from propping up financial markets to justifying geopolitical aggression.
AI-Powered Execution: This stratagem has evolved beyond simple rumor-mongering into the automated engineering of reality. Generative AI is used to create an endless supply of "false blossoms"—hyper-realistic but entirely synthetic images, videos (deepfakes), and text that make an illusion of success or consensus too dense and pervasive to easily disprove. To perfect these deceptions, the CCP employs
self-game training frameworks, where two AI models compete against each other—one generating a lie and the other attempting to detect it. This adversarial process rapidly refines the falsehood, making it more believable and resistant to debunking by human analysts or conventional detection tools. This capability extends to targeting senior leaders and foreign ministers with AI-generated deepfakes that mimic their voice and writing style, creating the potential for diplomatic incidents or distorted decision-making during crises.
CCP Application
Financial Illusion (VIEs): The use of Variable Interest Entities (VIEs) is a primary application of creating value from nothing. VIEs are complex legal structures that use contractual agreements to create an "illusion of ownership" for foreign investors in restricted Chinese tech sectors like telecommunications and media. Foreign investors pour trillions of dollars into these Cayman Islands-based shell companies, believing they own a piece of firms like Alibaba or Tencent, when in fact they hold no legal equity in the actual Chinese operating companies. This financial sleight-of-hand allows the CCP to siphon vast amounts of Western capital to fund its strategic industries and military modernization, literally creating wealth for its war machine from a fabricated legal premise. The entire structure is a self-reinforcing illusion: AI-generated propaganda about China's technological prowess and economic stability makes the VIEs seem like a credible investment, and the capital flowing from those VIEs is then used to fund the very AI that generates the propaganda.
Narrative Fabrication: During the COVID-19 pandemic, the CCP launched a global disinformation campaign, using bots and state media to spread fabricated narratives that the virus originated in a U.S. military lab or that its concentration camps in Xinjiang are benign "vocational schools". AI is now being used to generate and amplify this content at scale, creating a firehose of falsehood that overwhelms fact-checkers and creates a synthetic consensus.
Collaborators: Western financial institutions, law firms, and stock exchanges that facilitate and profit from the VIE structure, prioritizing transaction fees over due diligence and national security. Media outlets and social media platforms that uncritically amplify CCP narratives without verifying their sources. Think tanks and academic institutions that accept CCP-linked funding and subsequently lend their credibility to pro-Beijing talking points.
Counter: Mandate the use of content authentication and provenance protocols to watermark and identify AI-generated content. Legally challenge the viability of the VIE structure and prohibit U.S. investment exchanges from listing such entities, thereby cutting off the flow of capital that funds these operations. Create and defend platforms built on verified identity and fact-based reporting, and aggressively expose and de-platform state-backed bot networks.