According to a study by the "US-China Economic and Security Review Commission," China's massive industrial push over the past ten years has changed the global manufacturing and technology landscape.
It has been described as "interlocking innovation flywheels" that propel breakthroughs across multiple high tech sectors simultaneously.
China has rapidly expanded its industrial, science, and innovation policies since 2015, according to the report submitted to the US Congress.
To strengthen its capacity to design, produce, and commercialise cutting edge technologies, China has used significant state funding, strategic planning, and national coordination.
According to it, "The evidence shows that comprehensive strategic planning, massive state funding, and adaptive implementation have allowed China to overcome previous industrial policy failures."
According to the report, China has created a dense ecosystem of talent, supply chains, scientific infrastructure, and manufacturing capacity known as the "industrial commons," which enables Chinese businesses to compete fiercely in international markets and develop more quickly.
According to the report, "Innovation follows manufacturing," which emphasises how developments in one industry such as batteries, robots, or artificial intelligence are progressively spurring advancements in related areas.
One key example is the electric vehicle (EV) revolution in China. The EV industry has developed into a platform that is pushing innovation in Light Detection and Ranging (LiDAR) sensors, industrial automation, and autonomous driving technologies, building on past strengths in lithium batteries and large scale automotive manufacture.
With overlapping expertise in motors, batteries, sensors, thermal management, and artificial intelligence, domestic EV behemoths like BYD, XPeng, and Li Auto are now venturing into humanoid robotics.
These shared supply chains could enable automakers to create humanoid robots at significantly lower costs than conventional robotics companies, according to industry officials cited in the article.
China now boasts the third highest robot density in the world, having increased from just 19 units per 10,000 workers in 2015 to 470 in 2023.
This has hastened China's transition to "smart factories," many of which run with little human interaction, and led to sharp efficiency gains across manufacturing.
Beyond industries driven by technology, China is also rapidly advancing in synthetic biology, a new science with applications in advanced materials, agriculture, and health.
Currently, the nation has built significant research centers like Shanghai's Zhangjiang Hi Tech Park and controls over 70% of the world's fermentation capacity, which is essential for scaling biotech innovations.
With ramifications for pharmaceuticals, food security, and national security, the paper cautions that China's hegemony in biomanufacturing could give it a long lasting first mover advantage in the global bioeconomy.
It did, however, also recognize significant inefficiencies, redundant expenditures, and sporadic overcapacity, particularly in EVs, batteries, and solar panels.
According to the report, when weaker players are driven out by fierce domestic competition, China's policy approach eventually creates globally competitive businesses.
"The firms that survive this process are then typically highly competitive in global markets," it finds. The paper finds that Beijing will continue to prioritize industrial policy expenditures despite China's slowing GDP and growing local debt. Beijing views technical leadership as crucial to national security, economic resilience, and geopolitical power.
The report cautions that the United States and other nations risk losing ground in vital industries including robotics, sophisticated manufacturing, biotechnology, and quantum technologies in the absence of a concerted response.
