The Rise of China's Technology: Lessons for the US

China's rapid technological advancements can serve as a lesson for the US. Author and analyst Dan Wang discusses how China developed its tech sector, including its focus on research and development, and notes that the US can learn from its approach. The two countries are currently competing in areas such as cars and chips.

China's rapid technological advancements, particularly in areas such as artificial intelligence (AI) chips and semiconductor manufacturing, serve as a significant lesson for the United States. Analysts and authors, such as Dan Wang, have highlighted key strategies that China has employed to develop its tech sector, including a strong focus on research and development (R&D). These strategies have propelled China to become a major competitor in various technological domains, including cars and chips.

One of the primary factors driving China's technological prowess is its substantial investment in R&D. According to a report cited by Wang, China's domestic AI chip market is projected to grow from 17% in 2023 to 55% by 2027, despite U.S. export controls and performance gaps in advanced packaging and high-bandwidth memory (HBM) [1]. This growth is fueled by state-backed R&D initiatives and a push for self-reliance, which has enabled Chinese firms to navigate geopolitical tensions and regulatory shifts.

China's approach to R&D is not without challenges. The U.S.-China tech rivalry has created a high-stakes battleground, where geopolitical tensions, regulatory shifts, and supply chain fractures collide. The Trump administration's policy shift, allowing limited exports of AI chips while imposing a 15% revenue-sharing agreement, has created a precarious equilibrium, pressuring margins for U.S. firms but also incentivizing compliance [2]. Meanwhile, China's retaliatory measures, such as rare earth export controls and tariffs on U.S. semiconductor imports, have fractured the global supply chain, forcing companies like TSMC and SMIC to adopt "friend-shoring" strategies [3].

Despite these challenges, China's advancements in 7nm chip technology and rare earth dominance have strengthened its position in the global tech landscape. The U.S., in response, has allocated $8 billion to bolster domestic production through the CHIPS and Science Act of 2022 [1]. However, the U.S. must avoid overregulation that stifles its semiconductor industry, even as it safeguards national security [4].

For investors, the path forward lies in diversification. Allocating capital across Chinese innovators like Huawei and DeepSeek, while hedging with global leaders such as AMD and AWS, can mitigate exposure to any single geopolitical outcome [1]. The bifurcation of the semiconductor landscape, however, demands vigilance: a divided tech ecosystem risks reduced interoperability and fragmented standards [4].

In conclusion, China's rapid technological advancements offer valuable lessons for the U.S. By focusing on R&D, navigating geopolitical tensions, and adopting strategic risk management frameworks, the U.S. can learn from China's approach and maintain its competitive edge in the global tech landscape.

References:
[1] https://www.ainvest.com/news/navigating-storm-risk-management-china-ai-chip-industry-china-tech-rivalry-2508/
[2] https://aronhack.com/the-new-ai-chip-diplomacy-navigating-the-us-china-tech-rivalry-under-trumps-policy-shift/
[3] https://www.researchgate.net/publication/384565291_Strategic_implications_of_the_US-China_semiconductor_rivalry
[4] https://www.weforum.org/stories/2025/08/us-policy-chip-sales-china-semiconductor-global-tech/