Chinese leader Xi Jinping warned his party’s ruling elites this year that failure to understand emerging technologies could see China cede ground in the race to dominate the future of the global economy.
“Leading cadres at all levels must effectively strengthen their knowledge of frontier science and technology, improve their professional capabilities and make efforts to understand science and technology, understand the industries, and make good decisions,” Xi said in a January 30 speech published on Monday in Qiushi, the Communist Party’s official theoretical journal.
He renewed earlier calls to promote quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interface, embodied AI and 6G as “new economic growth points.”
Cultivating future industry giants “is of great significance for us,” including to seize a position of technological leadership, Xi told members of the party’s strategy-crafting Politburo.
Identifying key industries and choke points has helped China dominate green tech while controlling the supply of rare earth metals and other raw materials used to build them.
Upgrading the World’s Factory
Beijing spent two decades and trillions of dollars in state funding to build a worldwide reliance on Chinese manufacturing.
It carved out land and enabled heavily subsidized local companies to bypass fiscal and environmental norms in ways liberal democracies in the West could not.
Chinese industrial policy poured into strategic sectors helped raise powerful companies that now hold commanding positions in the global marketplace for everything from electric cars to information technology, often at the expense of competitors in the West but also in the Global South.
Electric vehicle maker BYD, for instances, benefits from below-market loans, tax concessions and vertically integrated supply chains that let it produce cheaply and at scale, undercutting prices in Europe and other markets worldwide.
BYD overtook Elon Musk’s Tesla as the world’s top EV seller in 2025. In Europe, BYD ranks third on the list of best-selling EV brands, behind Volkswagen and BMW, according to a March report by the European Commission.
The U.S. response has been to effectively ban Chinese-made electric cars in the domestic market, while the European Union is planning to move from tariffs to price controls.
Now, China is plotting a course through a cyber revolution increasingly defined by artificial intelligence, robotics and smart devices in every household.
It intends to emerge as the winner by leading the world in scientific breakthroughs and supplanting the United States as the top provider of the online services and connected hardware that will drive future economic growth, starting with AI.
It is already building out the necessary infrastructure—including vast new power grids—to supply decades of AI research ahead. But whether it can achieve parity with America in computing power is another matter.
The plan may help China overcome the long-term headwinds faced by its own economy, such as its rapidly aging and shrinking population and the considerable pushback against policies that effectively deindustrialized the rest of the world.
Unlevel Playing Field
A new OECD report released on Monday said that industrial subsidies in 15 key sectors were at their highest level since the global financial crisis of 2008, when governments including the U.S. bailed out banks and carmakers.
Firms in China received 52 percent of the $108 billion in subsidies provided worldwide in 2024, according to the Paris-based organization.
The analysis of more than 500 of the world’s largest firms found that around 22 percent of their collective growth from 2005-2023 could be attributed to subsidies including government grants, tax breaks and cheap loans.
“For Chinese firms, almost 60 percent of their global market share gains can be explained by the subsidies received,” the OECD said.
They also received at least three to eight times more subsidies than their OECD competitors.
“Just like doping in sports, there is therefore a risk that subsidies result in less productive players winning unfairly at the expense of more innovative and efficient ones,” the report said. “This could eventually impose long-term costs on the global economy in the form of less innovation, product quality, and competition, even as consumers benefit in the short-term from the lower prices.”
The Chinese government says its companies dominate strategic industries because of the competitiveness of their products.
