The quantum funding boom is a political project with a thin technological base

AMERICAN LAWMAKERS from both parties are preparing to boost federal spending on quantum computing, arguing that China's state-backed push demands a matching American response. The House is expected to debate legislation this autumn that would increase annual military spending on quantum development and application by 68%, to $567 million. A similar effort is underway in the Senate. This sits alongside a $2.013 billion package of CHIPS Act incentives the Commerce Department announced in May, dispersing cash to nine quantum firms — including $1 billion to IBM and $100 million each to six pure-play startups — in exchange for minority equity stakes.

The arithmetic is striking. The entire global quantum-technology market — computing, sensing and communications combined — reached $1.9 billion in 2025, according to the Quantum Economic Development Consortium, an industry group. Public funding commitments across wealthy countries total roughly $57 billion. Governments are outspending the market by more than 30 times.

The rhetoric frames this as a race. The reality is closer to a subsidy ecosystem. Pure-play quantum companies in America — Infleqtion, D-Wave, PsiQuantum and Quantinuum — doubled their combined annual lobbying spend to $2.2 million this year, as the Congressional Budget and Defence bills were being shaped. That is a small sum by pharmaceutical or defence standards, but it is enormous for a sector whose companies generate barely $200 million in combined revenue. The incentive is clear: when the government is writing cheques, the most profitable activity may not be building computers but securing the next round of funding.

To be sure, the technology is genuinely important. Fault-tolerant quantum computers — machines capable of performing millions of quantum operations without error — could transform drug discovery, materials science and cryptography. IBM, the most systematic player, has outlined a path to delivering its first large-scale fault-tolerant system, called Starling, by 2029. It would operate 200 logical qubits and run 100 million quantum gates. That is ambitious but not implausible. The question is not whether quantum computing will eventually work. It is whether the American political response to it is coherent.

The China argument provides the cover for the spending. China has invested roughly $15 billion in quantum technology, the largest commitment of any single country, according to the Council on Foreign Relations, a think-tank. Its 15th Five-Year Plan, approved in March, designates quantum as the top "future industry", above biomanufacturing, hydrogen energy and 6G. A National Venture Guidance Fund has allocated $17.5 billion across three regional vehicles for quantum and related hard technology. China also leads in patents, filing more than half of the world's quantum technology applications between 2022 and 2024.

The trouble is that China's numbers are not as clean as they sound. Some analysts, including at the Center for Strategic and International Studies, apply a 60% effectiveness discount to Chinese announced figures, given a pattern of targets that are not fully realised or activities relabelled to meet political quotas. And the comparison is asymmetrical: China pours the money directly. America is now taking equity stakes in private companies and letting pure-play startups lobby for their share.

What makes the American approach disquieting is not the size of the commitment but its architecture. The Commerce Department's $2 billion CHIPS package takes minority, non-controlling stakes in each recipient. That gives Washington a say — and a potential conflict — in companies it is supposed to be helping compete. PsiQuantum, one of the $100 million recipients, is simultaneously raising capital from 1789 Capital, a fund where Donald Trump Jr is a partner. D-Wave's co-founder, Emil Michael, now sits in a top Pentagon role. These are not allegations of wrongdoing. They are the natural by-product of a system where government funding, equity stakes and political connections run through the same ecosystem.

The stock market has been generous despite the contradictions. The S&P Kensho Global Quantum Computing Technologies Index rose 69% in the first five months of 2026, compared to a 10.7% gain for the S&P 500. IonQ, the market leader, trades at a $26 billion valuation after reporting quarterly revenue of $64.7 million, up 755% from a year earlier but from a tiny base. The same quarter saw IonQ insiders unload $454 million of stock. D-Wave insiders sold $331 million. Rigetti insiders sold $72 million. The insiders who know these businesses best are using the rally to exit.

The deeper problem is structural. Quantum computing is not yet commercially useful at scale. Error correction remains the bottleneck: quantum bits are extraordinarily fragile, and scaling them into reliable logical qubits requires orders of magnitude more physical qubits than current machines possess. Industry consensus puts the earliest useful applications at the end of the decade or beyond. The gap between political urgency and technological readiness is widening.

That gap creates a familiar risk: the politics of permanent subsidy. When governments begin paying for research that private markets would not yet fund, the initial rationale is innovation. The eventual outcome is often a constituency of firms that depend on the subsidy to survive. The Luddites were wrong about machines in the long run but right about transition costs. Quantum funding risks a different error: confusing government patronage with commercial viability.

A wiser approach would separate the genuine strategic questions from the subsidy politics. The real threat from Chinese quantum advancement is not in commercial computing — where the timeline favours whomever solves error correction first, regardless of nationality — but in cryptography. A sufficiently powerful quantum computer can break the encryption that underpins most financial and defence communications. The "store now, decrypt later" problem means adversaries can harvest encrypted data today and crack it once the technology matures. That is a national-security imperative that warrants sustained, coordinated investment. But it is not an argument for handing equity-linked grants to a handful of privately held startups.

Congress should fund the hard infrastructure — the foundries, the cryogenics supply chain, the workforce pipeline — without taking equity stakes that blur the line between patronage and policy. The National Quantum Initiative, whose authorisation runs until 2029, needs a strategy update that includes performance measures, which the Government Accountability Office says it currently lacks. And the military component should focus on post-quantum cryptography and sensor technology, not on propelling unproven startups toward IPO valuations.

The quantum revolution may arrive. But it will not be saved by lobbying, insider-friendly valuations, or a political framework that confuses subsidies with strategy. Competition, not patronage, is what will decide which architecture wins. Policymakers would do well to remember the difference.