China's Advantage in Critical Technologies Beyond AI

The recent unveiling of a new Chinese artificial intelligence called DeepSeek has rocked the technology sector, particularly in Silicon Valley. This AI model is not only cheaper and faster but also open source, leading to significant market reactions; tech stocks lost approximately $1 trillion in value following the announcement. Some industry experts have described this as a "Sputnik moment" for the United States, drawing parallels to the Cold War era when the Soviet Union launched its first satellite. However, the lead that China has over the U.S. extends far beyond just AI language models.

A comprehensive study conducted by the Australian Strategic Policy Institute (ASPI), released in 2024, illustrates this shift in the technological landscape. The report reveals that China now outperforms the U.S. in 57 out of 64 critical technologies, a drastic increase from just three technologies in 2007.

In 2007, the U.S. led in 60 different sectors, but today, it maintains dominance in only seven. This decline highlights the changing dynamics in global technology leadership and raises questions about the future of U.S. innovation.

Areas of Chinese Excellence

According to the ASPI study, China excels in several advanced technology fields, which include:

• Advanced integrated circuit design and fabrication
• High-specification machining processes
• Advanced aircraft engines
• Drones, swarming and collaborative robots
• Advanced radiofrequency communication

Where the U.S. Still Leads

While China has made incredible strides, the U.S. continues to hold a leadership position in:

• Natural language processing

China's Strategy for Success

The ASPI attributes China's remarkable progress in key technologies to President Xi Jinping's ‘Made in China 2025’ initiative. This plan has resulted in enormous direct state investments in research and development, specifically targeting critical technology sectors.

Furthermore, Xi's strategy has included significant investments that complement research spending. These efforts focus on enhancing industrial policy, modernizing supply chains, and boosting the manufacturing sector, all aimed at achieving technological supremacy.

China, Technology, AI