A 20-month investigation into China’s innovation capabilities across 10 advanced technology sectors has revealed that the country is at the forefront of global innovation in two industries and is close behind global leaders in four others. While China has not yet overtaken the global leaders, the study shows that its firms are rapidly advancing in innovation, potentially matching or surpassing the U.S. and other Western countries within the next decade. This conclusion comes from a new report by the Information Technology and Innovation Foundation (ITIF), which conducted the study.
The ITIF examined China’s progress in key industries: robotics, chemicals, nuclear power, semiconductors, display technologies, electric vehicles and batteries, artificial intelligence, quantum computing, biopharmaceuticals, and machine tools. The findings were presented at a Capitol Hill briefing on September 18.
“The common perception of China’s economy has long been that it is a manufacturing powerhouse but lacks the scientific and technological capability to drive groundbreaking innovations,” said Robert D. Atkinson, ITIF President and lead researcher. “However, if China continues to develop cutting-edge innovations at the same level or ahead of the U.S. and its Western allies, it could gain a decisive global advantage.”
Among the industries assessed, China is leading in nuclear power, on par with the global leaders in electric vehicles and batteries, and close to the front in robotics, displays, artificial intelligence, and quantum computing. It is lagging behind in chemicals, machine tools, semiconductors, and biotechnology. While export controls have hindered China’s progress in semiconductors, and quantum computing remains a challenge, China’s overall pace of innovation is impressive.
The report outlines that if China succeeds in becoming the world’s innovation leader, the global balance of techno-economic power would shift significantly. Such dominance would make China less vulnerable to Western sanctions, increase its military capabilities, and strengthen its influence over developing nations. Meanwhile, the U.S. technology sector could weaken, leading to a depreciated dollar or a growing trade deficit.
“China’s policies in economics, trade, and technology are all geared toward winning the battle for global techno-economic supremacy, with innovation in advanced industries as the primary goal of the Chinese Communist Party,” said Atkinson. “Many in the U.S. either fail to recognize this competition or believe the U.S. will inevitably win. But China’s science and technology system has notable strengths that the U.S. should take seriously.”
The ITIF report emphasizes that China has developed a unique innovation system that builds its own strengths while weakening its competitors, creating a cycle of dominance. To counter this, the ITIF recommends that the U.S. adopt certain aspects of China’s model, embracing a form of “national power capitalism” that acknowledges the reality of states competing for techno-economic power and invests sufficiently to win the ongoing innovation race.
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