Pressing forward

China has latent advantages in its technological competition with the US

The international landscape has become increasingly complex and volatile in recent years. A resurgence of protectionism and rising geopolitical tensions have injected greater uncertainty into the global trading system. Since 2018, tariff frictions initiated by the United States have expanded beyond trade into investment screening and restrictions on the movement of people. Containing China’s development has become a central pillar of US strategy, with policy tools shifting from indirect economic measures to more direct and structural technology controls. A clear-eyed assessment of the current state of China-US competition is therefore essential to understand how Beijing will shape the next phase of its policy response.

A new configuration of technological competition is taking shape. Global rivalry in “critical and core technologies” is intensifying, with China and the US holding differentiated advantages.

First, semiconductors form the hardware backbone of artificial intelligence and other strategic technologies, underpinning both industrial capability and national security. The global semiconductor market continues to expand, reaching $630.6 billion in 2024 and projected to approach $1 trillion by 2026.

Second, the bulk of global artificial intelligence patent grants come from China and the US. According to the Stanford Artificial Intelligence Index Report 2025, in 2023, China led in total AI patents and accounted for 69.7 percent of global AI patent authorizations, while the US share declined from a peak of 42.8 percent in 2015 to 14.2 percent. In terms of large model innovation, the US ranked first and China second in the number of leading global AI models released in 2024. The US has maintained a long-standing lead in this metric since 2003.

Third, quantum technology spans three core areas: quantum computing, quantum communication and quantum sensing. According to McKinsey’s 2025 industry report, the US and Japan led global quantum patent portfolios, accounting for 27 percent and 14 percent of total authorizations respectively. China ranks fourth overall in quantum patent grants, but stands second in the subfield of quantum communication.

Fourth, new materials encompass advanced basic materials, key strategic materials and frontier materials. Competition in this field is increasingly characterized by integration with artificial intelligence applications. In October 2024, the US Department of Commerce launched a $100 million competition to accelerate the domestic development of sustainable semiconductor materials using AI. In 2025, the US National Science Foundation announced funding support for new materials discovery across several critical sectors.

China’s Government Work Report in 2024 for the first time included the goal of “creating new ways of storing energy”. The US and the European Union are also stepping up deployment in this field. The US has provided investment tax credits for energy storage under the Inflation Reduction Act and subsequently added energy storage and battery technology to its Critical and Emerging Technologies List. The EU has issued policy frameworks such as its Advanced Materials for Industrial Leadership, prioritizing breakthroughs in battery technologies and next-generation energy storage materials. In recent years, China has achieved a series of major original breakthroughs in quantum science, life sciences, materials science and space science, and has ranked first globally for five consecutive years in both the number of papers published in leading international journals and international patent applications.

In response to China’s rapid advances in science and technology, the US and its Western allies have tightened restrictions across the entire industry chain, seeking to shape the rules governing future technological applications. Upstream, tech blockades against China have intensified. US controls primarily take the form of inbound investment restrictions and outbound export controls against China, supplemented by tighter scrutiny of scientific personnel exchanges, including entity lists and government procurement bans. Downstream supply chains are being restructured. In addition to tariffs imposed on Chinese goods that remain in place, the “One Big Beautiful Bill Act”, which took effect in July 2025, includes provisions restricting tax credit eligibility for companies linked to “prohibited foreign entities”, effectively pressuring US companies to avoid transactions with entities that have Chinese ties. At the level of standards-setting, the White House in May 2023 released the National Standards Strategy for Critical and Emerging Technologies, reaffirming the strategic importance of standards and calling for stronger US participation in standards-setting in order to bolster economic and national security.

Against this backdrop, China faces both structural challenges and latent advantages in technological competition.

In terms of challenges, although China’s total R&D spending and its share of GDP have risen steadily, they still lag behind those of the US and other advanced economies. While China ranks first globally in total patent filings, the proportion of original innovation remains insufficient, and its capacity to participate in international standards-setting across a broader range of industries requires further strengthening. Talent shortages persist in certain frontier technologies, and institutional mechanisms for translating basic research into commercial applications can be further optimized.

On the advantage side, China’s strengths in market size, industrial depth, infrastructure and State mobilization capacity are difficult to replicate. China possesses the world’s most comprehensive industrial system, covering all categories of the United Nations industrial classification — from upstream raw materials and midstream components to downstream equipment manufacturing. The new system for mobilizing resources nationwide has demonstrated distinctive effectiveness in the context of China-US competition. In addition, China possesses a deep pool of scientific and technological talent, with younger researchers increasingly emerging in frontier sectors. Going forward, it will be important to establish durable mechanisms that better support talent cultivation, development and deployment.

As China’s technological and economic strength grows, intensified competition with established powers is inevitable. Restrictive competitive measures are ultimately aimed at preserving absolute international dominance, and their foundation lies in technological capability. In the next phase, US efforts to constrain China’s technological development are likely to become deeper and more multifaceted. The coming five years will be a critical juncture and a key window for China to consolidate its strategic initiative. An effective response will require sustained focus on priority sectors, intensified efforts to overcome bottleneck issues, greater emphasis on original research and the reinforcement of China’s hard power within the global innovation ecosystem.

First, China should advance greater self-reliance and strength in science and technology while making effective use of global innovation resources. To leverage the advantages it has in its ability to mobilize resources nationwide, it should continue to raise research investment and concentrate on frontier and cross-disciplinary fields. Deeper integration of industry, academia and research — alongside coordinated development of education, science and talent — is essential. Domestically, building a unified national market would facilitate factor mobility; externally, optimizing international science and technology cooperation networks on the basis of mutual benefit would help mitigate external constraints.

Second, China should strengthen its basic research and enhance its capacity for original innovation. This includes providing stable, long-term support for foundational disciplines such as mathematics and physics, stepping up efforts to tackle critical technological challenges through competitive project mechanisms, and encouraging researchers — through expanded positions and improved institutional support — to pursue original exploration aligned with the country’s long-term strategic needs.

Third, China should refine its domestic standards system and expand its voice in international standards-setting. This will require stronger top-level design and cross-agency coordination to build a more coherent standards framework. It also calls for deepening mutually beneficial international standardization partnerships, improving network coordination capacity, and cultivating talent to serve in international organizations — thereby contributing Chinese expertise and enhancing China’s influence in global rule-making. (Source: China daily)