U.S.–China strategic competition is often framed through the language of national supremacy and great-power rivalry. This, however, is a constricting lens. Certainly, the relationship carries elements of one-upmanship and systems competition. Yet at its core, the contest is not merely about the relative balance of power between the two countries. It is about which form of socio-political organisation can deliver the most effective economic, technological, and governance outcomes.
It is about who gets to shape and control the engines of future economic growth and prosperity. And it is about who builds the technologies, standards, and systems upon which the world will depend and, in doing so, who determines the direction of modernity. Technology is the principal terrain on which this geopolitical struggle over modernity is being waged. Understanding the scope of this contest requires assessing each side across three domains, i.e., innovation capability, ability to coerce and blunt coercion, and global penetration in terms of the adoption of technologies, standards, and systems by others around the world.
Beijing’s Innovation Policy
Over the past decade, Beijing has assiduously focused on strengthening domestic innovation capabilities, a trajectory now crystallised in its innovation-driven development strategy. At the highest levels, Chinese policymakers have repeatedly argued that the modernisation of science and technology is central to Chinese-style modernisation. In effect, the leadership sees China’s future development as inseparable from sustained advances in science and technology.
Consequently, policy has focused on expanding R&D expenditure, investing in basic research and original innovation, breaking through core technologies, building a national science and technology innovation system, integrating technological and industrial innovation, refining technology governance, and expanding a high-skilled human resource base. In 2024, China spent RMB 3.63 trillion ($506.41 billion)—around 2.69% of GDP—on R&D. The top 1,000 private firms accounted for around 40% of that amount. Basic research expenditure reached an estimated RMB 250.09 billion, more than 70% higher than in 2020 and accounting for 6.9% of total R&D spending. The same year, 524 Chinese mainland firms featured in the top 2,000 global industrial R&D investors.
At the same time, Beijing has displayed greater ideological adaptability. For instance, President Xi Jinping convened a special meeting in February 2025 to court the country’s private-sector technology giants, enlisting them in furthering the Party-state’s techno-strategic agenda. This came after nearly four years of regulatory crackdowns targeting the tech sector that had resulted in falling profits and weakened confidence. Despite domestic criticism, the Chinese government also introduced the new K visa in October 2025 in order to attract high-skilled foreign talent. Reinforcing this momentum, the Global Innovation Index—which evaluates economies based on science and innovation investment, technological progress, technology adoption, and the socioeconomic impact of innovation—now ranks China as the world’s 10th most innovative economy.
The leadership appears convinced that this strategy is delivering dividends, a confidence reflected in the recommendations for the formulation of the 15th Five-Year Plan, which doubles down on the innovation-led development approach.
US Continuities and Departures
Meanwhile, an emphasis on expanding domestic innovation capabilities has also been a consistent theme across recent U.S. administrations. There was a clear continuity in focus on sectors such as defence, artificial intelligence, biotechnology, semiconductors, and quantum computing between the first Trump administration and the Biden administration. Both approached the technology piece in the U.S.-China relationship primarily through the lens of strategic competition. Yet, significant divergences existed in each administration’s perspective on the role of government, the importance of federal research funding, the governance of technology giants, and engagement with allies and partners. Trump 2.0 has not only accentuated these divergences but also created new cleavages while rethinking direct competition with China.
The current administration places sharper emphasis on investing in domestic capabilities, particularly in semiconductors, AI, cloud computing, and data centres. Its approach combines aggressive deregulation, incentives for the private sector—which accounts for nearly 78% of R&D spending—and efforts to extract investment commitments from allies and partners. These initiatives, however, coexist with drastic cuts to federal R&D funding and political scrutiny of U.S. universities, reflecting an ideological agenda favouring small government and efficiency. While federal funding accounts for merely 19% of US R&D spending, it is critical to fund basic research.
In addition, nativist sentiments, which resonate strongly with the MAGA base, are increasingly shaping policies on skilled immigration, even as the U.S. continues to rely on global technology talent for competitiveness. At the same time, the administration remains internally divided over how technology should be conceptualised within the broader framework of competition. Should it be viewed as a commercial product that can be monetised for private and governmental revenue generation while flooding markets of rivals, or should it be considered an ecosystem to be cultivated with trusted partners and a strategic asset to be denied?
The administration’s decision to approve the sale of advanced NVIDIA chips to entities in the UAE and Saudi Arabia, alongside the controversial clearance for the H200 chip to China and the criticism of that decision, illustrates this debate. Overall, the current U.S. technology policy can best be described as a blend of techno-nationalism, nativism, and mercantilism. The techno-nationalistic agenda, in this case, sits uncomfortably with the mercantilist approach.
Beijing’s hesitation in accepting the unilateral H200 concession by the Trump administration is indicative of how deeply the Chinese leadership has internalised, and is weary of, the notion of great power competition. In this sense, it is at odds with Chinese capitalists, whose stated and revealed preferences are for interconnection with the US technological ecosystem. Nevertheless, great power competition is a central theme that runs throughout Chinese political and policy discourse.
For instance, at a key meeting of leading Chinese scientists and engineers in May 2024, Xi Jinping was unambiguous in arguing that technological revolution today is intertwined with great power competition, with high-tech fields becoming the “main battleground of international competition.” Further, writing after the fourth plenum of the 20th Central Committee, which outlined the agenda for China’s 15th Five-Year Plan, Vice Premier He Lifeng was categorical that “in the final analysis, competition among major powers is a competition in productive forces, with the focus being on the development of new quality productive forces.” The experience of dealing with Trump 2.0 has further strengthened this perspective. Xi rather emphatically underscored this at the December 2025 Central Economic Work Conference, telling the gathering that “practice has proven that they cannot choke us by grabbing our ‘neck’.”
Likewise, despite the incoherence in the executive’s approach in Washington, the US Congress continues to view technology policy vis-à-vis China through a competitive lens. In November 2025, the U.S.-China Economic and Security Review Commission published an assessment of the outcomes of the Made in China 2025 initiative. The study found that China broadly met its goals in only about half of the 10 focus sectors. More importantly, it added that across the 10 sectors, the country had “rapidly built domestically and, in many cases, globally competitive capabilities.” The study concluded that Made in China 2025 has “helped turn China into a formidable peer competitor with the United States and other global manufacturing leaders in many areas of leading-edge technology.”
Key Domains and Countermeasures
Increasingly, both China and the US appear to be pursuing breakthroughs in and independent control over supply chains across a select set of key domains. This sets the stage for future competition. China’s 15th Five-Year Plan clearly outlines a set of sectors as emerging industries, future industries and key core technologies that require breakthroughs. Several of these—such as AI, quantum computing, biotechnology, advanced semiconductors, industrial technologies, fusion energy, aerospace, etc—overlap with the priorities outlined by the US Office of Science and Technology Policy.
China is also increasingly catching up with the US in terms of developing a suite of systems and policies—such as export controls and imitations of the US Foreign Direct Product Rule and the US de minimis rule—to counter what it perceives as American coercion. Throughout 2025, Beijing responded to US pressure through mirror measures. However, it would be erroneous to view its approach to controls as simply a defensive tool. As Beijing gains ascendancy in a particular technology or production capability, it is likely to protect that dominance and use it as leverage politically with other actors.
At the same time, it is also keen on building partnerships to expand access to resources, talents, technologies and markets. Such interconnectedness blunts coercion and potential containment, while expanding avenues for advancement. Likewise, despite Trump’s abrasive and extractive approach towards partners and allies, the US is pursuing technological collaboration with select states, as evident by the Technology Prosperity Deals inked with Japan and South Korea in October 2025. In addition, both the US and China are also increasingly competing on standard-setting. While China unveiled its Global AI Governance Action Plan in mid-2025, the US’s AI Action Plan clearly calls to pursue the adoption of American standards among allies and partners and counter Chinese influence in international governance bodies.
This contest over standards is not merely about leadership in specific technologies or sectors. It is about shaping the socio-political parameters that will govern how future technologies are adopted, applied, and regulated. In this sense, as argued earlier, Sino-US great power competition is fundamentally about contouring modernity itself: which system can deliver superior outcomes, build durable capabilities, exert global influence, and ultimately shape the future.
The article was first published in India’s World magazine’s February edition, on 6, 2, 2026.
