In 1949, Mao Zedong's People's Liberation Army defeated Chiang Kai-shek's United States-backed Kuomintang (KMT) Nationalist Government in China. The KMT moved to Taiwan. The Kremlin promptly created an alliance with the newly formed People's Republic of China. According to Norwegian historian Odd Arne Westad, the communists won the Chinese Civil War because they made fewer military mistakes than Chiang Kai-Shek made, and because in his search for a powerful centralized government, Chiang antagonized too many interest groups in China. Moreover, his party was weakened during the war against Japan. Meanwhile, the communists told different groups, such as the peasants, exactly what they wanted to hear, and they cloaked themselves under the cover of Chinese nationalism.

Confronted with the communist revolution in China and the end of the American atomic monopoly in 1949, the Truman administration quickly moved to escalate and expand its containment doctrine. In NSC 68, a secret 1950 document, the National Security Council proposed reinforcing pro-Western alliance systems and quadrupling spending on defense. Truman, under the influence of advisor Paul Nitze, saw containment as implying complete rollback of Soviet influence in all its forms.

United States officials moved to expand this version of containment into Asia, Africa, and Latin America, in order to counter revolutionary nationalist movements, often led by communist parties financed by the USSR, fighting against the restoration of Europe's colonial empires in South-East Asia and elsewhere. In this way, this US would exercise "preponderant power," oppose neutrality, and establish global hegemony. In the early 1950s (a period sometimes known as the "Pactomania"), the US formalized a series of alliances with Japan, South Korea, Taiwan, Australia, New Zealand, Thailand and the Philippines (notably ANZUS in 1951 and SEATO in 1954), thereby guaranteeing the United States a number of long-term military bases.