Is the U.S. Already Losing the Tech War to China?

China has made significant strategic gains across biotechnology, aerospace, and robotics/AI, often surpassing the U.S. in research output, production capabilities, and government-led industrial support. While China still faces technological bottlenecks in jet engines, high-end AI chips, and advanced biomanufacturing, it is rapidly closing these gaps through state-funded R&D, forced technology transfers, and aggressive industry scaling.

In biotechnology, China overtook the U.S. in synthetic biology research output in 2017 and has since built a world-class biomanufacturing ecosystem capable of producing high-value pharmaceuticals, biomaterials, and industrial enzymes. Unlike the U.S., which misallocates biotech funding toward short-term applications, China prioritizes foundational research and industrial-scale bio-production. As a result, China is now exporting pharmaceutical innovations to major Western biotech markets, while the U.S. remains reliant on Chinese contract research organizations (CROs) for drug development and manufacturing.

In aerospace, China’s COMAC C919 has positioned itself as a long-term competitor to Boeing and Airbus, but it remains dependent on Western suppliers for engines, avionics, and composite materials. China aims to achieve full aviation self-sufficiency by 2035 through forced joint ventures, state-subsidized procurement, and domestic R&D investment. Meanwhile, in military aviation, China has made significant progress in jet engine development, particularly with the WS-10 and WS-20, which are now close to Russian military standards. The WS-15, developed for the J-20 stealth fighter, is China’s most advanced attempt to rival U.S. and European jet propulsion technology, but it still suffers from reliability and durability issues. If China succeeds in achieving jet engine independence, it will eliminate one of its last major technological dependencies and significantly enhance its military aviation capabilities.

In robotics and AI, China dominates the global industrial robotics market, accounting for 52% of all new installations in 2022. Through aggressive state subsidies, local AI innovation, and supply chain localization, China is rapidly replacing foreign suppliers with domestic alternatives. It has also become a global leader in AI-powered military drones, such as the Wing Loong and Rainbow series UAVs, which have been exported to conflict zones in the Middle East and Africa, directly challenging U.S. military and intelligence operations. China is further integrating AI-driven autonomous warfare, including drone swarms, robotic infantry, and naval drones (UUVs) into its military strategy. While still reliant on foreign high-end AI chips and actuators, China is aggressively working to eliminate these dependencies through domestic chip production and strategic supplier alliances.

The Next Decade of U.S.-China Tech Competition

China’s Made in China 2025 (MIC2025) strategy, a core component of its long-term industrial policy, is successfully positioning Beijing to dominate global supply chains and key technological sectors. The Chinese government integrates state-led industrial policies, military-civil fusion, and aggressive talent acquisition to achieve self-sufficiency in semiconductors, AI, telecommunications, and battery technologies. By controlling critical upstream resources such as graphite, lithium, and semiconductor packaging, China has created asymmetric dependencies that impact global markets.

Despite U.S. attempts to counter China’s advances through export controls, trade restrictions, and industrial policy initiatives like the CHIPS Act, these measures have failed to curb China’s progress. Beijing has adapted by stockpiling restricted technologies, investing in domestic semiconductor alternatives, and leveraging AI efficiencies to bypass restrictions on high-performance computing. Additionally, Chinese firms continue to infiltrate global markets, securing long-term dominance in 5G infrastructure, advanced manufacturing, and critical minerals processing.

A major factor in China’s rise is its systematic talent acquisition strategy, which recruits global experts through state-backed programs and private HR firms that obscure CCP involvement. Meanwhile, American universities and research institutions continue to collaborate with PRC military-linked entities, facilitating knowledge transfer that strengthens China’s technological ecosystem.

Effectiveness of Beijing’s Approach to Innovation

China has successfully leveraged its industrial policies to achieve manufacturing dominance across key high-tech sectors, with a particular focus on electric vehicles, batteries, robotics, artificial intelligence, and semiconductors. Over the past two decades, it has transitioned from low-end manufacturing to cutting-edge technological production, controlling 35% of global manufacturing output while the U.S. share has declined to 12%. The Made in China 2025 initiative has been rebranded but remains active, now operating under the broader goal of establishing China as a self-sufficient, industrial superpower with minimal reliance on foreign inputs.

The Chinese government has successfully exploited foreign firms for technology transfer, using policies that mandate joint ventures, forced localization of R&D, and supply chain dependencies. Tesla’s Gigafactory in Shanghai, Apple’s supply chain localization, and Siemens’ high-speed rail partnerships are clear examples of how foreign companies have unintentionally fueled China’s rise. These policies have enabled China to rapidly scale production in AI, 6G, robotics, and advanced chip packaging, even as it struggles with core semiconductor breakthroughs due to U.S. export controls. In response, China has massively expanded investment into domestic chip fabrication and AI-driven semiconductor workarounds, with firms like DeepSeek AI advancing despite restrictions on U.S. semiconductor exports.

China’s Brute Force Economics combines massive state subsidies, economic coercion, and control over strategic industries to outcompete foreign rivals. The government actively funnels resources into industrial AI, automation, and defense-related manufacturing, with more industrial robots deployed in China than in the rest of the world combined. This shift is enabling China to dominate the Fourth Industrial Revolution, where AI-integrated factories and automation reduce dependency on human labor—a critical advantage given China’s declining workforce and demographic crisis. While Chinese manufacturing remains dependent on certain foreign inputs, Beijing’s long-term strategy is to replace imports while maintaining foreign reliance on Chinese supply chains.

China’s control over next-generation industrial technologies places global economic and technological leadership at a pivotal moment. If current trends continue, China could surpass competitors in robotics, biotechnology, and AI-driven manufacturing within the next decade, mirroring its earlier dominance in solar panels, EVs, and telecom infrastructure (5G, Huawei).

Sources

• U.S.-China Economic and Security Review Commission (25.02.06)

Additional Assets

Images on this site are licensed under Creative Commons (CC) or public domain, unless stated otherwise. Some images were generated using AI tools. See individual image attributions for details.