The relentless waves of political news coming from the US have had an interesting side effect. All of us, even those with only a glancing interest in these matters, now know the names of numerous important characters swirling around US politics besides Trump. His acolytes, his appointees, his financiers as well as many of those aligned with the battered opposition.
Besides “Xi”, how many of us can name one single other member of China’s Politburo? How about a powerful Chinese CEO? Jack Ma of Alibaba, perhaps, but that’s it.
We should know. Because China is just killing it. In every critical industrial and technological endeavour (with some notable exceptions) they are either leading the US (and everyone else) or they are likely to do so soon. By just about any measure, including research and innovation, there has been astonishing acceleration in the last 10 years, which is showing no signs of levelling off.
Take the automobile industry. Haval entered South Africa in 2017, the first to do so. Now it seems we are awash, even buried, in Chinese cars. There are 27 models available from manufacturers BAIC, BYD, Haval, Jaecoo, Chery, Foton, GAC, GWM, LDV and JAC. From compacts to sedans to SUVs to off-roaders to pick-up trucks. From petrol to diesel to hybrids to EVs. How many Chinese cars would you have been able to name 10 years ago? In my case, none.
Chinese auto exports have increased by nearly 500% in five years, from a little over 1 million units to about 6 million units by the end of 2024. How in the world is that possible? I mean, 10% would be believable. Maybe 20% if you are soaring.
But 500%? For what is, after all, a major financial commitment on the part of consumers—often the largest a person might make. The 400% increase in four years did not come from a sudden increase in the car-buying population, obviously. It was gained at the expense of all the other manufacturers. It is a colossal swing by any measure.
One third of all cars
Since 2019, when China was a distant third behind Japan and Germany, the country has become the largest exporter of cars globally, manufacturing one third of all cars in the world and two-thirds of all NEVs (new electric vehicles, i.e., electrics and hybrids).
And then there’s AI, the US’s most impactful (and probably proudest) achievement this decade. After the launch of ChatGPT in 2022, the US owned this field completely (aside from a plucky startup in France called Mistral). The applecart was most definitely upended on 20 January 2025 when a Chinese company called DeepSeek released a chatbot called DeepSeek-R1 that not only matched the performance of the most prestigious US “frontier” models from companies like OpenAI, Anthropic, and Alphabet, but exceeded them on many benchmarks.
Adding insult to injury, the system was built at a fraction of the cost of the US systems (a consequence of some astonishingly clever engineering and software) and furthermore, the system is open source (ChatGPT is not), which one would not expect in a secretive autocracy like China. DeepSeek has since been joined by other Chinese initiatives, all directly competitive with the best of the US.
Besides automobiles and AI, here is the list of sectors in which the Chinese have become world leaders or are becoming an imminent competitive threat: 5G, batteries, renewables, EVs, drones, space exploration (they just landed on the dark side of the moon), mobile, e-commerce, supercomputing, high-speed rail, robotics, biotech, quantum technologies, and (of course) high-quality precision manufacturing.
They are behind in aviation and advanced semiconductors, but the rates of progress in those sectors put them within years of parity with the rest of the world too.
High-tech future
This is as close to a definition of a high-tech future as one can imagine, and with the exceptions of manufacturing and mobile/e-commerce, none of these would have been on the list a decade or two ago.
How did this happen?
There are the obvious answers, like the focused (some would say brutal) STEM funnel that chooses the best and brightest at an early age and marches them in tightly monitored lockstep through schools and top universities. There is geographic good fortune to have access to most natural resources. There is a 1bn+ pool of human capital, and little attention (or money) spent on those who are merely mediocre or less than that. There is a hard-working and disciplined workforce. There is little internal dissent that might dilute the attention and competitive goals of the CCP.
But (as always), there is a bigger story here.
China regularly holds major sessions to discuss or, more often, to announce and table large policy decisions and strategic imperatives. This includes the annual Two Sessions, probably one of the two most important events in the CCP calendar, the other being the National People’s Congress. Key policy directives that have been publicly announced include Made in China 2025 (announced in 2015), the 10,000 Little Giants Initiative (2018), and the Future Industries List (2024).
These were not secret, but you would have found little reporting in the Western press, unless it was concerned with political matters like Russia or Taiwan. Industrial policies never really make the headlines, but all the aforementioned industries and technologies in which China has drawn ahead were the consequence of public announcements.
Punchline
Which brings us to the punchline. Unlike the West’s time-honoured practice of drawing on private risk capital to fuel and nurture the best and most profitable of new ideas, the Chinese model has capital distributed from deep government coffers. It is spread around numerous aspirants in specific sectors (like EVs), and then they are set free to compete, just like in the West. It is competitive venture capitalism in practice, except that the largest shareholder is always the party.
For over 100 years it has been common cause that Western-style capitalism has been the best way of building innovation. No one in their wildest imaginings would have dreamt that a dictatorship could achieve the same. And yet here we are, suddenly lagging China in areas where they were only recently not even on the West’s radar.
What are we to make of this. More importantly what can the West learn from them?
[Image: Reve)
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