Is China really winning the technological race?

 Is China really winning the technological race?

In pure numbers, China is leading when it comes to patents filling and academic research in science and technology. But some of these numbers might be inflated.

In pure numbers, China is leading when it comes to patents filling and academic research in science and technology. But some of these numbers might be inflated.

During the democratic primary debate on Thursday, September 12th, three of the candidates, including the frontrunner Joe Biden, raised concerns about China’s theft of U.S. intellectual property as they discussed the ongoing trade war between the two countries, insisting on the need to make China accountable for these actions. The depiction of China as a technological thief isn’t anything new. Ever since the country started its economic catching up strategy in the 1980s, China has been seen (and quite rightfully so) as an expert in stealing and copying foreign technologies. But over the last few years, the tide has started to turn. According to many metrics, China is currently leading the world in terms of science and technological research.

The number of Chinese patents is skyrocketing

In order to switch from a “made in China” to a “design in China” market, the Chinese government has been massively investing in research and innovation, developing universities and flooding innovative companies with cash. This includes the much advertised Made in China 2025 initiative, launched by the government to make China dominant in high-tech. And this strategy is starting to bear fruits. In 2011, China became the first patent filer in the world, overcoming both the U.S. and Japan. 1.8 million domestic patents were approved in 2017 alone.

And the country is innovating where it matters, leading in strategic fields that will highly contribute to shaping the future of technology. According to figures released in January by UHY Hacker Young, a group of UK chartered accountants, China was responsible for 73% of AI and 32% of blockchain patent filings with the World Intellectual Property Organisation (WIPO) in 2017. Tencent, the Chinese behemoth who owns WeChat, now holds three times as many patents as Facebook and double that of Amazon. Peter Finnie, partner at international IP law firm Gill Jennings & Every, notes that between 2008 and 2017, the number of patent applications filed in China rose from 204,000 to 1.3m. A staggering increase of 600%. Over the same period, US patent filings increased by 20%, from 429,000 in 2008, to 525,000 in 2017.

"While China claims more patents than any country, “most are worthless”

The government has also been massively investing in higher education. The Double First Class University Plan has been conceived in 2015 to develop a group of world-class universities by 2050, and China currently spends 4% of its GDP in education, compared to only 2% in 1999. This has led to some impressive accomplishments, particularly in strategic fields such as STEM research. Since 2016, China publishes more peer-reviewed science and engineering articles than the U.S.

91% of five year-old design patents are discarded

But these impressive numbers are also starting to raise suspicion, some commentators arguing that they could have more to do with universities and businesses trying to comply with government quotas than with actual innovation capabilities being suddenly deployed. In a Bloomberg article, Lulu Yilun Chen, a China tech reporter, argues that while China claims more patents than any country, “most are worthless”, pointing out that a huge number of companies stop paying to defend their patents after only a few years, and that not all approved patents are linked to a significant technological discovery.

There are three types of patents in China: invention, design and utility patents. Invention patents, a category that accounts for about 23% of all patents delivered, are for new ideas that represent “notable progress” in advancing technology, and are quite difficult to obtain. But the two other categories apply to small design and utility improvements, are much easier to be granted and less valuable. As a consequence, some companies just stop paying to maintain them after a certain time. According to Bloomberg, no less than 91% of five year-old design patents are discarded!

“The high attrition rate is a symptom of the way China has pushed universities, companies and backyard inventors to transform the country into a self-sufficient powerhouse. Subsidies and other incentives are geared toward making patent filings, rather than making sure those claims are useful. So the volume doesn’t translate into quality, with the country still dependent on others for innovative ideas, such as modern smartphones,” writes Lulu Yilun Chen.

“Relying on patent grant numbers is not very useful to indicate innovation, especially due to a wealth of non-market incentives in applying for patents (tenure, promotion, subsidies, reduction of jail terms, obtaining a local residence permit, etc),” explains Mark Cohen, Senior Fellow and Director at Berkeley Center for Law and Technology.

Innovative companies receive a high-tech licence, which translates into important tax cuts, cash bonuses and subsidies, leading some businesses to fill patents in order to get those benefits. Some big companies, like Huawei, also offer patent-related bonuses to employees.

Most Chinese patents also aren’t filled overseas, another clue that some of them may be of poor quality. “Many scholars look to overseas filings as an indicator of quality – and China only files about 4 percent of its patents overseas, a relatively small cohort.”

Beijing is starting to act

The same logic applies to academic research. Last year, Han Xueying and Richard Appelbaum of the University of California surveyed 731 researchers at top-tier Chinese universities, to understand how government policies might impact their work.

“The US and Europe remain ahead in most fields but China has greatly improved, moved up"

“In China’s urgency to become a key player in the scientific community, the government has focused on research quantity over research quality. […] As many respondents indicated, more faculty members are spending their time trying to meet their university and department requirements for research and teaching than actually doing research and teaching. Many respondents echoed that this has resulted in a situation where very few still enjoy doing research. As stated before, the goal of research in China is no longer seen as about the pursuit of knowledge; rather, it has become a pursuit designed to meet quantitative indicators for one’s evaluation,” concludes the paper. One of the surveyed researchers even assured that people fabricate or plagiarise papers in order to pass their annual performance evaluations.

This doesn’t mean, of course, that Chinese research isn’t improving. “The US and Europe remain ahead in most fields – perhaps all fields (I haven’t studied all fields!) – but China has greatly improved, moved up, since I began doing research on it 15 years ago,” explains Richard Appelbaum. Neither that all patents filed in China are frauds. If some companies tend to artificially inflate the number of patents they filled, this has to be balanced with the fact that some other businesses who could fill substantial patents just don’t do so because they don’t see it as a priority. “Huawei has applied for a substantial number of patents and will dominate the standard essential patents for 5G as part of the standards process at 3GPP. On the AI side, Chinese companies have not applied for many patents, this is because they are likely considering their patent strategies and they are using innovations quickly as part of their business operations and have not prioritized the patenting process,” explains Paul Triolo, Head of global technology regulatory policy at Eurasia Group.

Chinese authorities are also starting to take action. At least 14 companies lost their high-tech licence last year, according to Bloomberg. In December 2018, the National Development and Reform Commission (NDRC) jointly announced, with 37 other government authorities of China, that it would impose a stricter discipline to punish dishonest behaviors in the patent field, making it harder to get financial support for those who don’t play by the rules.

And despite all the fake patents and poor research, China is still ahead of the U.S. in some key technological sectors, such as 5G. “For 5G mobile technology, Huawei is clearly the global leader, they are one or two years ahead of their closest competitors, Ericsson and Nokia. This is the future plumbing for infrastructures around the world, and China has been strategically investing in this field for a long time,” says Howard Yu, a professor of management and innovation at IMD business school in Switzerland. The number of domestic patents and research papers may be inflated, but China’s expertise in high tech is here to stay.

Over the past two millennia, Chinese ingenuity has spawned some of humanity's most consequential inventions. Without gunpowder, guns, bombs, and rockets; without paper, printing, and money printed on paper; and without the compass, which enabled ships to navigate the open ocean, modern civilization might never have been born.

Today, a specter is haunting the developed world: Chinese innovation dominance. And the results have been so spectacular that the United States feels its preeminence threatened.

Yet China lapsed into cultural and technological stagnation during the Qing dynasty, just as the Scientific Revolution was transforming Europe. Western colonial incursions and a series of failed rebellions further sapped the Celestial Empire's capacity for innovation. By the mid-20th century, when the Communist triumph led to a devastating famine and years of bloody political turmoil, practically the only intellectual property China could offer for export was Mao's Little Red Book.

After Deng Xiaoping took power in 1978, launching a transition from a rigidly planned economy to a semi-capitalist one, China's factories began pumping out goods for foreign consumption. Still, originality remained a low priority. The phrase "Made in China" came to be synonymous with "cheap knockoff."

Today, however, a specter is haunting the developed world: Chinese innovation dominance. It first wafted into view in 2006, when the government announced an "indigenous innovation" campaign, dedicated to establishing China as a technology powerhouse by 2020—and a global leader by 2050—as part of its Medium- and Long-Term National Plan for Science and Technology Development. Since then, an array of initiatives have sought to unleash what pundits often call the Chinese "tech dragon," whether in individual industries, such as semiconductors or artificial intelligence, or across the board (as with the Made in China 2025 project, inaugurated in 2015). These efforts draw on a well-stocked bureaucratic arsenal: state-directed financing; strategic mergers and acquisitions; competition policies designed to boost domestic companies and hobble foreign rivals; buy-Chinese procurement policies; cash incentives for companies to file patents; subsidies for academic researchers in favored fields.

The results have been spectacular—so much so that the United States feels its preeminence threatened. Voices across the political spectrum are calling for emergency measures, including a clampdown on technology transfers, capital investment, and Chinese students' ability to study abroad. But are the fears driving such proposals justified?

"We've flipped from thinking China is incapable of anything but imitation to thinking China is about to eat our lunch," says Kaiser Kuo, host of the Sinica podcast at SupChina | Reporting on China without fear or favor., who recently returned to the U.S after 20 years in Beijing—the last six as director of international communications for the tech giant Baidu. Like some other veteran China-watchers, Kuo believes neither extreme reflects reality. "We're in as much danger now of overestimating China's innovative capacity," he warns, "as we were a few years ago of underestimating it."

A Lab and Tech-Business Bonanza

By many measures, China's innovation renaissance is mind-boggling. Spending on research and development as a percentage of gross domestic product nearly quadrupled between 1996 and 2016, from .56 percent to 2.1 percent; during the same period, spending in the United States rose by just .3 percentage points, from 2.44 to 2.79 percent of GDP. China is now second only to the U.S. in total R&D spending, accounting for 21 percent of the global total of $2 trillion, according to a report released in January by the National Science Foundation. In 2016, the number of scientific publications from China exceeded those from the U.S. for the first time, by 426,000 to 409,000. Chinese researchers are blazing new trails on the frontiers of cloning, stem cell medicine, gene editing, and quantum computing. Chinese patent applications have soared from 170,000 to nearly 3 million since 2000; the country now files almost as many international patents as the U.S. and Japan, and more than Germany and South Korea. Between 2008 and 2017, two Chinese tech firms—Huawei and ZTE—traded places as the world's top patent filer in six out of nine years.

"China is still in its Star Trek phase, while we're in our Black Mirror phase." Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon.

Accompanying this lab-based ferment is a tech-business bonanza. China's three biggest internet companies, Baidu, Alibaba Group and Tencent Holdings (known collectively as BAT), have become global titans of search, e-commerce, mobile payments, gaming, and social media. Da-Jiang Innovations in Science and Technology (DJI) controls more than 70 percent of the world's commercial drone market. Of the planet's 262 "unicorns" (startups worth more than a billion dollars), about one-third are Chinese. The country attracted $77 billion in venture capital investment between 2014 and 2016, according to Fortune, and is now among the top three markets for VC in emerging technologies including AI, virtual reality, autonomous vehicles, and 3D printing.

These developments have fueled a buoyant techno-optimism in China that contrasts sharply with the darker view increasingly prevalent in the West—in part, perhaps, because China's historic limits on civil liberties have inured the populace to the intrusive implications of, say, facial recognition technology or social-credit software, which are already being used to tighten government control. "China is still in its Star Trek phase, while we're in our Black Mirror phase," Kuo observes. By contrast with Americans' ambivalent attitudes toward Facebook founder Mark Zuckerberg or Amazon's Jeff Bezos, he adds, most Chinese regard tech entrepreneurs like Baidu's Robin Li and Alibaba's Jack Ma as "flat-out heroes."

Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon. Many are catalogued in The Fat Tech Dragon, a 2017 monograph by Scott Kennedy, deputy director of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies. Among the obstacles, Kennedy writes, are "an education system that encourages deference to authority and does not prepare students to be creative and take risks, a financial system that disproportionately funnels funds to undeserving state-owned enterprises… and a market structure where profits can be made through a low-margin, high-volume strategy or through political connections."

China's R&D money, Kennedy points out, is mostly showered on the "D": of the $209 billion spent in 2015, only 5 percent went toward basic research, 10.8 percent toward applied research, and a massive 84.2 percent toward development. While fully half of venture capital in the States goes to early-stage startups, the figure for China is under 20 percent; true "angel" investors are scarce. Likewise, only 21 percent of Chinese patents are for original inventions, as opposed to tweaks of existing technologies. Most problematic, the domestic value of patents in China is strikingly low. In 2015, the country's patent licensing generated revenues of just $1.75 billion, compared to $115 billion for IP licensing in the U.S. in 2012 (the most recent year for which data is available). In short, Kennedy concludes, "China may now be a 'large' IP country, but it is still a 'weak' one."

"[The Chinese] are trying very hard to keep the economy from crashing, but it'll happen eventually. Then there will be a major, major contraction."

Anne Stevenson-Yang, co-founder and research director of J Capital Research, and a leading China analyst, sees another potential stumbling block: the government's obsession with neck-snapping GDP growth. "What China does is to determine, 'Our GDP growth will be X,' and then it generates enough investment to create X," Stevenson-Yang explains. To meet those quotas, officials pour money into gigantic construction projects, creating the empty "ghost cities" that litter the countryside, or subsidize industrial production far beyond realistic demand. "It's the ultimate Ponzi-scheme economy," she says, citing as examples the Chinese cellphone and solar industries, which ballooned on state funding, flooded global markets with dirt-cheap products, thrived just long enough to kill off most of their overseas competitors, and then largely collapsed. Such ventures, Stevenson-Yang notes, have driven China's debt load perilously high. "They're trying very hard to keep the economy from crashing, but it'll happen eventually," she predicts. "Then there will be a major, major contraction."

"An Intensifying Race Toward Techno-Nationalism"

The greatest vulnerability of the Chinese innovation boom may be that it still depends heavily on imported IP. "Over the last few years, China has placed its bets on a combination of global knowledge sourcing and indigenous technology development," says Dieter Ernst, a senior fellow at the Centre for International Governance Innovation in Waterloo, Canada, and the East-West Center in Honolulu, who has served as an Asia advisor for the U.N. and the World Bank. Aside from international journals (and, occasionally, industrial espionage), Chinese labs and corporations obtain non-indigenous knowledge in a number of ways: by paying licensing fees; recruiting Chinese scientists and engineers who've studied or worked abroad; hiring professionals from other countries; or acquiring foreign companies. And though enforcement of IP laws has improved markedly in recent years, foreign businesses are often pressured to provide technology transfers in exchange for access to markets.

Many of China's top tech entrepreneurs—including Ma, Li, and Alibaba's Joseph Tsai—are alumni of U.S. universities, and, as Kuo puts it, "big fans of all things American." Unfortunately, however, Americans are ever less likely to be fans of China, thanks largely to that country's sometimes predatory trade practices—and also to what Ernst calls "an intensifying race toward techno-nationalism." With varying degrees of bellicosity and consistency, leaders of both U.S. parties embrace elements of the trend, as do politicians (and voters) across much of Europe. "There's a growing consensus that China is poised to overtake us," says Ernst, "and that we need to design policies to obstruct its rise."

One of the foremost liberal analysts supporting this view is Lee Branstetter, a professor of economics and public policy at Carnegie Mellon University and former senior economist on President Barack Obama's Council of Economic Advisors. "Over the decades, in a systematic and premeditated fashion, the Chinese government and its state-owned enterprises have worked to extract valuable technology from foreign multinationals, with an explicit goal of eventually displacing those leading multinationals with successful Chinese firms in global markets," Branstetter wrote in a 2017 report to the United States Trade Representative. To combat such "forced transfers," he suggested, laws could be passed empowering foreign governments to investigate coercive requests and block any deemed inappropriate—not just those involving military-related or crucial infrastructure technology, which current statutes cover. Branstetter also called for "sharply" curtailing Chinese students' access to Western graduate programs, as a way to "get policymakers' attention in Beijing" and induce them to play fair.

Similar sentiments are taking hold in Congress, where the Foreign Investment Risk Review Modernization Act—aimed at strengthening the process by which the Committee on Foreign Investment in the United States reviews Chinese acquisition of American technologies—is expected to pass with bipartisan support, though its harsher provisions were softened due to objections from Silicon Valley. The Trump Administration announced in May that it would soon take executive action to curb Chinese investments in U.S. tech firms and otherwise limit access to intellectual property. The State Department, meanwhile, imposed a one-year limit on visas for Chinese grad students in high-tech fields.

Ernst argues that such measures are motivated largely by exaggerated notions of China's ability to reach its ambitious goals, and by the political advantages that fearmongering confers. "If you look at AI, chip design and fabrication, robotics, pharmaceuticals, the gap with the U.S. is huge," he says. "Reducing it will take at least 10 or 15 years."

Cracking down on U.S. tech transfers to Chinese companies, Ernst cautions, will deprive U.S. firms of vital investment capital and spur China to retaliate, cutting off access to the nation's gargantuan markets; it will also push China to forge IP deals with more compliant nations, or revert to outright piracy. And restricting student visas, besides harming U.S. universities that depend on Chinese scholars' billions in tuition, will have a "chilling effect on America's ability to attract to researchers and engineers from all countries."

"It's not a zero-sum game. I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."

America's own science and technology community, Ernst adds, considers it crucial to swap ideas with China's fast-growing pool of talent. The 2017 annual meeting of the Palo Alto-based Association for Advancement of Artificial Intelligence, he notes, featured a nearly equal number of papers by researchers in China and the U.S. Organizers postponed the meeting after discovering that the original date coincided with the Chinese New Year.

China's rising influence on the tech world carries upsides as well as downsides, Scott Kennedy observes. The country's successes in e-commerce, he says, "haven't damaged the global internet sector, but have actually been a spur to additional innovation and progress. By contrast, China's success in solar and wind has decimated the global sectors," due to state-mandated overcapacity. "When Chinese firms win through open competition, the outcome is constructive; when they win through industrial policy and protectionism, the outcome is destructive."

The solution, Kennedy and like-minded experts argue, is to discourage protectionism rather than engage in it, adjusting tech-transfer policy just enough to cope with evolving national-security concerns. Instead of trying to squelch China's innovation explosion, they say, the U.S. should seek ways to spread its potential benefits (as happened in previous eras with Japan and South Korea), and increase America's indigenous investments in tech-related research, education, and job training.

"It's not a zero-sum game," says Kaiser Kuo. "I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."

China is winning the power battle in AI race with US

There is a widespread belief that China is establishing itself as a new superpower, displacing the United States from the global power structure. China has undeniably become a worldwide economic powerhouse, and it is anticipated to overtake the U.S. as the world's largest economy by 2028. With increased spending on weapons research and the development of multiple covert weapons, China is on the verge of surpassing the U.S. in military capability.

Significantly, countries that lead in the research and application of artificial intelligence (AI) will determine the future of the technology and increase their economic competitiveness greatly, while those that fall behind risk losing competitiveness in critical industries. AI is set to revolutionize the world, empowering those countries that fully realize its promise. It will be a key driver of future economic growth and national security.

Moreover, AI is sometimes referred to as a general-purpose technology because of its wide range of applications in practically every industry – the GUID Partition Table (GPT). A GPT is a technology with widespread economic implications. Only a few examples exist such as steam engines, electricity and computers. These technologies have had a profound impact on our civilizations by modifying preexisting economic and social systems.

AI is the newest brilliant, dazzling object on the technological horizon. It has grown very popular in today's globe. It's the simulation of human intellect in computers that have been programmed to learn and mimic human behavior. AI will have a significant impact on our quality of life as it develops. It has the potential to significantly boost the economy of a developed country.

For its technological advancements, China has won the AI battle with the U.S. and is on its way to world supremacy. According to Western intelligence assessments, China, the world's second-largest economy, is expected to dominate many major emerging technologies, including AI, synthetic biology and genetics, within a decade or two.

Pentagon official’s words

The Pentagon's first chief software officer, Nicolas Chaillan stressed that “in 15 to 20 years, we have no competing fighting chance against China.” It's already decided; “Whether it requires a war or not is kind of anecdotal right now.”

He also claimed that several government departments in the U.S. had "kindergarten-level" cyber defenses. Moreover, Chaillan also criticized the reluctance of U.S. firms, such as Google, to collaborate with the government on AI, and extensive ethical disputes over technology for the U.S.’ delayed innovation. While China was destined to rule the world's future, everything from media narratives to geopolitics is under their control.

One of the reasons China has been able to move more rapidly than the U.S. is that it is not mired in enormous arguments about AI ethics. But partly because Chinese businesses are compelled to collaborate with the government, whereas many American businesses are wary of working with the Pentagon. Google, for instance, halted working with the Pentagon on AI in 2018 after a dozen employees departed after the business assisted the Department of Defense in developing software that could boost drone attack accuracy.

Chaillan, on the other hand, stated that Chinese corporations were obligated to comply with the Chinese government and were making "huge expenditures" in AI without concern for ethical considerations.

Notably, the U.S. has attempted to curb China's emergence as a digital power by prohibiting Huawei's 5G network from operating in the U.S. and establishing a virtual embargo on U.S. companies supplying software and components to Chinese tech firms. Whereas China’s President Xi Jinping is pushing China to establish technological self-sufficiency in fields such as microchip manufacturing to wean the country off its reliance on the U.S.

Significantly, there will always be economic ups and downs, but the underlying drive that's occurring in Chinese culture right now will continue to create new prospects and growth. China has announced a five-year plan worth $1.8 trillion to dominate AI, robotics, 6G and all other technologies by 2035, releasing a five-year plan worth $1.8 trillion.

In comparison to the European Union and the U.S., China's AI capabilities have advanced in several areas. China has surpassed the bloc as the world's largest AI publisher. Moreover, the quality of its AI research has consistently improved over time. Its software and computer services companies have increased their R&D expenditures. China's determination to master AI goes far beyond the recognition that this group of technologies will be the most crucial driver of economic advancement over the next quarter-century. China's data collection and national determination have helped it to close the gap with American leaders in this area over the last decade.

China now has nearly twice as many supercomputers ranked in the top 500 for performance as the U.S., even though the U.S. was once the leader in this category. Furthermore, China is likely to maintain its advantage in terms of data generation. Overall, though, China has not dramatically narrowed the AI gap with the U.S., but its steady growth could eventually erode U.S. dominance over the technology.

Consequently, countries that lead in the research and application use of AI will determine the future of the technology and increase their economic competitiveness greatly, while those that fall behind risk losing competitiveness in critical industries. As a result, China has taken the lead. The Chinese government, rules and regulations, public attitudes toward privacy and strong collaboration between corporations and the government are all contributing to the country's AI progress. At the same time, American AI confronts significant challenges, including a culture that prioritizes privacy over security, distrusts authority and the government; as such, firms are wary of collaborating with the U.S.

Nine charts that show who’s winning the U.S.-China tech race

Chinese and American companies are locked in a hard-fought battle for technological primacy. Here’s a look at where that competition is headed.

Most lawmakers, tech experts and businesspeople agree that the United States is facing mounting technology competition from China, but what does that competition look like?

Some of the rivalry is still at an early stage, involving emerging fields such as quantum computing and artificial intelligence. And the United States still holds an advantage in crucial sectors such as software and semiconductors.

But in industries including smartphones, drones and electric vehicles, Chinese companies are gaining ground — or already are far ahead.

China owes its rise to a variety of factors: a skilled and lower-cost workforce, huge government subsidies that have pushed Western rivals out of business, and, unlike many U.S. investors, a willingness to finance expensive manufacturing sectors that sometimes yield lower profits than software ventures do.

Alarmed by the mounting competition, the Biden administration and many members of Congress have called for more government support for domestic research and manufacturing. Even some Republicans have softened their free-market convictions to embrace more government intervention to bolster strategic sectors such as semiconductors, an approach known as industrial policy.

These nine charts illustrate the massive strides Chinese companies have made in many areas and the sectors where U.S. firms still dominate.

Smartphones

Apple, an American company, and Samsung, a South Korean one, are the smartphone brands most Westerners know, together accounting for a bit more than one-third of smartphones sold globally. But in many parts of the world, including Asia and Africa, Chinese brands dominate, helping them secure three of the top five sales rankings globally, according to IDC Quarterly Mobile Phone Tracker.

The U.S. effort to cut off semiconductor supplies to Huawei has hurt that Chinese tech giant’s ability to make smartphones and undermined its sales in recent years, but other Chinese brands have filled that void. In part by scooping up Huawei’s market share, Xiaomi this year overtook Apple to become the second-ranked smartphone globally, with Samsung ranking first.

A number of other Chinese brands that are even less well known in the West have made big inroads in Africa and Asia with low-cost, high-quality handsets, helping Chinese smartphones account for more than half of sales among the top 15 brands globally. The Chinese company Transsion is now the leading smartphone company in Africa, with its Infinix, Tecno and Itel brands, according to IDC Quarterly Mobile Phone Tracker.

Telecom network gear

Chinese technology first came to many Westerners’ notice through the telecommunications sector, where Huawei quickly grew into the world’s biggest manufacturer of the cellphone-tower equipment that transmits cellular signals.

Huawei became particularly dominant in equipment sales for the latest 4G and 5G networks, which are expected to underpin many technologies of the future, providing mobile data connections for driverless cars, automated factories and more.

Huawei’s heavy investment in equipment development and manufacturing helped it rise even as U.S. companies were retreating from the business, discouraged by the heavy capital investment required, and by the fragmented Western market that made it hard for them to gain scale.

As a result, barely any U.S. companies sell telecom network equipment today. Cisco sells switches and routers that reside in the innermost parts of a carrier’s network, but does not compete in the market for the cell-tower equipment that allows cell sites to connect with smartphones and other mobile devices.

As Huawei grew dominant, the United States essentially banned the equipment domestically and pressured allies not to use it, alleging that China could tap into the gear to spy or disrupt networks. That campaign has helped dent Huawei’s market share in recent months, and helped Sweden’s Ericsson and South Korea’s Samsung pick up share.

Commercial drones

The commercial drone sector is one of the starkest examples of China’s strength in the hardware business. One Chinese company, DJI, founded by tech entrepreneur Frank Wang, owns the U.S. market for the unmanned aircraft, which are used for agriculture, cinematography, public safety and aerial photography.

U.S. and other Western manufacturers barely register in the sector, with Skydio, an autonomous drone maker in California founded by three MIT graduates, holding just under 1 percent of the commercial drone market in the U.S., according to Drone Industry Insights.

Western manufacturers are expected to benefit from growing apprehension among U.S. federal agencies that Chinese-made drones could aid Chinese espionage.

A 2020 law banned the U.S. military from using Chinese-manufactured drones, while other federal agencies have restricted their use. The Pentagon has called DJI a national-security risk and has instead endorsed five “trusted” drone makers: the U.S.-headquartered companies Skydio, Altavian, Teal Drones and Vantage Robotics and the French company Parrot. In marketing materials last year, Parrot highlighted this tension, asking potential customers “Do you trust DJI drones?”

DJI has pushed back on what it calls the “incessant politically-driven allegations” and said it respects customers’ data security.

Electric vehicles

Western, Japanese and Korean automakers dominated the global market for gasoline-powered cars. But in the electric vehicle business, Chinese manufacturers are starting to pose more competition — particularly inside China, which is now the world’s largest automotive market.

California-based Tesla continues to have the largest market share globally among electric vehicles and plug-in hybrids, thanks to its strong sales in China, the United States and Europe, according to data from Canalys, which reflects the number of vehicles sold. Volkswagen Group ranks second.

SGMW, a joint venture between General Motors and two Chinese automakers, has rapidly gained market share thanks to its booming sales in China of a tiny electric car that can travel at top speeds of 62 miles an hour. The Hong Guang Mini EV hit the market last year at a starting price of $4,500 and quickly became a top seller with Chinese budget shoppers.

The Chinese brands BYD, Great Wall Motors and Nio are also popular EVs inside China, according to Credit Suisse data.

The Chinese government has spent at least $60 billion to support the fledgling electric-car industry, including research-and-development funding, tax exemptions and financing for battery-charging stations, according to the Center for Strategic and International Studies, a Washington think tank. Chinese brands so far have not made much progress outside China.

As of May this year, the Chevrolet Bolt ranked third among electric vehicles in the United States, behind the Tesla models Y and 3, according to Credit Suisse. The Ford Mustang Mach-E ranked fourth.

Social media

The success of TikTok shows China gaining ground in software, a sector the U.S. has long dominated.

TikTok’s U.S. user surge continued even after the Trump administration sought to ban the app, saying that it threatened national security by collecting “vast swaths” of user data that Trump said the Chinese Communist Party could tap for unspecified nefarious purposes.

The Biden administration reversed that ban order, in part because federal courts had temporarily blocked it from proceeding, saying that it appeared to exceed the bounds of the law. But TikTok and other Chinese apps might not be out of the woods, yet: the Biden administration said it remained concerned about the security of Chinese-owned apps and would review them.

Mobile games

China is not just a large market for mobile gaming. It is also a growing developer of the games, which are played on smartphones.

Consumer spending on the games is huge, reaching $22.3 billion in the U.S. alone last year, through in-app purchases, according to Sensor Tower.

The U.S. company Activision Blizzard held the top rank in the second quarter of this year, grabbing 10 percent of U.S. consumer spending on the top 25 mobile-game companies, with offerings including “Call of Duty: Mobile” and “Candy Crush Saga.” Zynga, the U.S. developer behind “Words With Friends,” also drew a large chunk of the spending.

Chinese developers include Lilith Games, which held 2 percent of the same market in the quarter through its “AFK Arena” and “Rise of Kingdoms” games, and MiHoYo, which held another 2 percent through games including “Genshin Impact.”

Chinese companies are also big investors in gaming companies based in the United States. Tencent, the tech giant headquartered in Shenzhen, China, owns 40 percent of Epic Games, the U.S. developer of the global hit “Fortnite.” It has also fully acquired Riot Games, a Los Angeles-based developer responsible for the game “League of Legends.”

Semiconductors

The United States still dominates global sales of semiconductors, the computer chips that power most modern electronics, from airplanes and smartphones to cars and vacuum cleaners. In 2020, U.S.-headquartered companies accounted for almost half of the nearly $500 billion in global chip sales, according to IC Insights.

Yet many U.S. companies that sell chips do not actually manufacture them. They design the semiconductors — much of the value is in the innovative design — and outsource the production to big manufacturers such as Taiwan’s TSMC.

About 13 percent of semiconductor manufacturing capacity is in the United States, versus 16 percent in China, 20 percent in Taiwan, 19 percent in South Korea and 17 percent in Japan, according to a study commissioned by the Semiconductor Industry Association.

When it comes to the highest-tech logic chips with the tiniest transistors of sizes below 10 nanometers, Taiwan manufactures 92 percent and South Korea the rest.

The United States is a big manufacturer of chips at the next level down of complexity, while China so far manufactures mostly older-tech chips, giving it a modest 4 percent share of global semiconductor sales.

Despite years of investment, China has had a hard time developing and producing the most modern semiconductors, which require intricate designs and production know-how. Still, China is investing billions in its chip companies to try to catch up.

Partly out of concern about China’s rising technological prowess, the Biden administration and a bipartisan group of lawmakers are pushing to re-shore some chip manufacturing to the United States. The Senate recently approved $52 billion in federal subsidies for domestic chip manufacturing and research. The measure still must clear the House.

Batteries

Lithium-ion batteries are central to the emerging green economy, powering electric vehicles and storing solar and wind energy for later use. China is way ahead in producing them, and that gap is expected to continue.

China has been bolstering its battery and electric-vehicle companies with tens of billions of dollars of state support, including research and development funding, subsidies for manufacturers and financing for battery-charging stations. It has also driven demand by subsidizing consumer purchases of electric vehicles, and by making buyers of gasoline-fueled cars wait much longer for a license plate.

Thanks to its federally funded universities and national labs, the United States has some of the best early-stage battery research in the world. It also has Tesla, an electric-car leader with big plans for domestic battery production. General Motors, too, is investing heavily in battery manufacturing.

The Obama administration offered some support for battery manufacturers and electric vehicles, and California has adopted many incentives and regulations to boost those sectors, but overall the United States has largely left it to the free market.

Solar panels

Global demand for solar panels is booming as countries scramble to harness more renewable energy sources. And China is by far the biggest supplier of the technology.

China’s dominance of the industry is even bigger when considering that much of the production happening in Malaysia and Vietnam is controlled by Chinese companies.

China’s regional and central governments heavily subsidized solar manufacturers with low-cost land, electricity and financing, helping sustain them even when they were losing money, according to the Information Technology & Innovation Foundation, a D.C. think tank. The surge in Chinese production drove down panel prices globally and forced many Western manufacturers out of business.

Human-rights researchers have delivered a blow to China’s solar industry lately by reporting that some factories are using forced laborers from the persecuted Uyghur minority. U.S. Customs and Border Protection this summer began blocking imports of some solar panels on these grounds, causing some panel buyers to scramble for U.S. suppliers, instead.

First Solar, headquartered in Tempe, Ariz., has benefited from this shift, selling out its production run through 2022. Congressional lawmakers are now considering tax breaks and other measures to support domestic manufacturers, and are discussing provisions to potentially block Chinese components from federally funded renewable energy projects.