China’s rise as a global force in technology and engineering continues to accelerate
China now stands at the forefront of nearly every technology shaping the modern era.
The Australian Strategic Policy Institute’s 2025 Critical Technology Tracker, released last week, shows China leading seven of eight AI fields, all 13 categories of advanced materials and manufacturing, every one of the seven defence, space, robotics, and transportation technologies, nine of ten energy and environmental technologies, and five of nine areas in biotechnology, genetics, and vaccines.
China’s technological ascendancy is, in effect, almost comprehensive. Yet the country has only half as many billionaires as the United States, and its billionaire count grew only half as fast this year. How, then, has it achieved such dominance?
This is all the more striking given that China identifies as a Marxist–Leninist society—and Karl Marx himself regarded technology with caution. In Wage, Labour and Capital (1847), he wrote: “The instrument of labour, when it takes the form of a machine, immediately becomes a competitor of the worker himself.”
Can the West catch up?
The Chinese Communist Party has no such reservations—despite presiding over a nation whose workforce is shrinking.
In China, it is the Party, not billionaire tycoons as in the United States, that steers the technological agenda. The handful of Chinese entrepreneurs who have accumulated great wealth do so only with the Party’s continued approval.
China’s emergence as a technological powerhouse was on vivid display last month at the 27th Hi-Tech Fair in Shenzhen.
Spread across 400,000 square metres—roughly the size of 20 cricket grounds—the event showcased an array of cutting-edge innovations. Reports and video footage showed hall after hall of humanoid robots, including two sparring in a boxing ring behind an interview set, as well as an entire exhibition zone devoted to flying cars, or “eVTOL” (electric vertical take-off and landing) vehicles.
As Industrial Transition Accelerator executive Faustine Delasalle put it: “There’s an acceleration in China that we’re not seeing anywhere else in the world.”
China once scrambled to catch up to the West, particularly the United States. It eventually did.
Now it is the West trying to catch up to China—and, increasingly, struggling to do so.
And the marvels extend far beyond those displayed in Shenzhen. A sampling of recent highlights includes:
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a mosquito-sized drone built for surveillance
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a mountainside in Guizhou blanketed with solar panels
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cancer-therapy research that camouflages tumours as pork to trigger an immune attack
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an open-source AI model surpassing the top human score in the Math Olympiad
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humanoid robots now shipping to industrial clients
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a robot engineered to clean hotel rooms and bathrooms
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48,000 kilometres of high-speed rail capable of 350 km/h, including the Shanghai Maglev, which exceeds 400 km/h
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the world’s highest bridge—the Huajiang Canyon Bridge
China 'ditches the standard innovation model'
Analyst Dan Wang explores the roots of China’s technological surge in his book Breakneck: China’s Quest to Engineer the Future.
Wang argues that China functions as an “engineering state”—a country almost compelled to build—while the United States has evolved into a lawyer-dominated society, “a government of the lawyers, by the lawyers, and for the lawyers,” one that instinctively obstructs progress wherever possible, though Donald Trump is currently pushing to roll back many regulations.
“As the United States lost its enthusiasm for engineers,” Wang writes, “China embraced engineering in all its dimensions.”
China’s government pours hundreds of billions of dollars into what it calls a “whole-of-nation” industrial policy—an approach that began with the Made in China 2025 strategy unveiled a decade ago and later evolved into the 14th Five-Year Plan. That plan, released in 2020, committed US$1.4 trillion (A$2.11 trillion) over five to six years for new infrastructure ranging from 5G networks and smart cities to large-scale industrial digitalisation.
Blogger Noah Smith explained the essence of this “whole-of-nation” model in a post last week. China, he writes, has abandoned the traditional innovation framework—where government, academia, companies, and financiers all chase their own objectives independently—in favour of one where the state orchestrates all of them toward a single, overarching goal from start to finish.
“Basically, the government now tries to take innovation ‘from bean to bar’, as the chocolate shops say,” Smith notes. “It identifies a technological target—becoming self-sufficient in robotics, for example—and then works backwards to determine what breakthroughs are required. It funds the necessary basic and applied research, transfers those breakthroughs to the appropriate companies, supports them in creating new products, and then helps them commercialise and scale those products.”
The government works backwards from the goal, directs the research, and bankrolls the companies from development through commercialisation.
That, truly, is an industry policy—and it’s little wonder China is pulling ahead.
Australia's 'National AI Plan' lacking
This strategy has also enabled China to secure a near-monopoly over the critical minerals and rare earths essential to modern technology—an advantage that now gives Beijing considerable geopolitical leverage, which it is increasingly willing to use.
The model does have a downside: chronic overcapacity. The government is now attempting to rein in what’s known as “involution”—the brutal, low-margin competition that arises when too many firms fight for the same market, leading to price wars, oversupply, and shrinking returns.
Needless to say, comparing China to Australia is even less flattering than comparing it to the United States. We’re not even cycling on the same velodrome.
Last week, the Labor government released its “National AI Plan,” which reads more like a glossy brochure than a substantive roadmap. Its main function seems to be quietly abandoning the “10 guardrails” for AI that former science and industry minister Ed Husic championed last year.
Instead, the plan allocates $30 million to establish an AI safety institute—a reasonable idea, though I’m currently reading If Anyone Builds It, Everyone Dies, the book by Eliezer Yudkowsky and Nate Soares that’s gone viral for its stark warnings about machine superintelligence. If their argument holds water, $30 million feels like a thin safeguard against existential risk.
Safety concerns aside, the funding for promoting AI in the National AI Plan turns out to be entirely repurposed money: $460 million in “existing funding already available or committed to AI and related initiatives.” And that figure spans multiple years—unspecified ones at that.
By comparison, the Chinese government is spending US$56 billion on AI development in 2025 alone.
China holds key to modern world
China is steadily supplanting American hegemony, which is why the Trump administration has begun referring to the US and China as the “G2.”
The term reflects a shift in US policy—from aggressive decoupling and containment toward a transactional co-management approach—effectively dividing the world into two spheres and leaving the Asia-Pacific largely under China’s influence.
The United States had little choice. China is not only too powerful to confront directly, it increasingly controls the levers of the modern world.
In many respects, autocratic China occupies the position that democratic America held in 1944, when the Bretton Woods conference cemented its global dominance.
China may soon absorb Taiwan, potentially without a shot being fired. The US and the rest of the world may object, but are likely to do little, signaling a shift toward a new global order.
While there are many challenges within China itself, the implication for Australia is unmistakable: in a G2 world, we must find a way to pivot strategically.
