West Must Learn from China's Technological Rise to Compete in Key Industries

A Turning Point in the Global Technology Race

China’s rapid technological rise over the past two decades has transformed global competition in industries ranging from electric vehicles and solar power to self‑driving cars and advanced medicine. While this ascent has led some to assume that future technological dominance will inevitably shift to Beijing, analysts argue that such an outcome is not predetermined. The West can still lead in key sectors if it draws the right lessons from China’s experience, reforms its own approach to innovation, and acts with urgency rather than complacency.

The central message emerging from current debate is not that China’s model should be copied wholesale, but that Western governments and companies must recognize how quickly the global landscape is changing. The technologies that will shape economic and geopolitical power in the coming decades are already moving from research labs into mass markets. The question is whether Western economies can adapt their policies, capital markets, and industrial strategies fast enough to remain competitive.

China’s Path from Follower to Contender

At the turn of the century, China was largely viewed as a low‑cost manufacturer rather than a source of cutting‑edge innovation. Its role in global supply chains revolved around assembling electronics, producing basic components, and leveraging cheap labor to serve foreign brands. Over time, however, a combination of state planning, infrastructure investment, and technology transfer helped the country climb the value chain, especially in advanced manufacturing and energy technologies.

A key feature of this ascent has been the sheer scale at which China has deployed emerging technologies. In sectors such as high‑speed rail, solar photovoltaics, and increasingly electric vehicles, the domestic market has provided a vast testing ground for new products and business models. Local companies, often backed by government subsidies and industrial policy, have been able to learn rapidly, stabilize supply chains, and drive down costs, eventually becoming global exporters rather than just domestic suppliers.

This evolution from follower to contender has altered the competitive environment for Western firms. Once confident that innovation and brand strength would shield them from rivals, companies in Europe and North America now face Chinese competitors that are technologically sophisticated, price‑competitive, and deeply embedded in strategic supply chains.

Electric Vehicles: Lessons from a Battery Superpower

The electric vehicle industry offers one of the clearest examples of China’s strategic approach. Over roughly a decade, Beijing used subsidies, procurement targets, and industrial coordination to foster a domestic EV ecosystem that now spans mining, refining, battery production, vehicle assembly, and charging infrastructure. Chinese battery producers dominate global market share, while homegrown carmakers have become major exporters.

Western automakers, by contrast, often treated EVs as a niche product until relatively recently, focusing on incremental improvements to internal combustion technology and high‑margin SUVs. While many are now investing heavily in electrification, the earlier hesitation allowed Chinese firms to seize a lead in battery technology and scale. The result is a cost gap that has put intense pressure on European and American manufacturers, especially in the mass‑market segment.

The primary lesson for the West is not that heavy subsidies alone guarantee success, but that long‑term policy clarity and alignment across the supply chain matter. When battery development, raw material security, charging networks, and consumer incentives move in tandem, learning curves steepen and unit costs fall. Without that coordination, even technologically advanced companies can struggle to commercialize innovation at scale.

Self‑Driving Cars and the Race for Data

In autonomous driving, both China and the West are still in the experimental phase, but the contours of competition already reveal important differences. Chinese cities have allowed extensive real‑world testing of self‑driving taxis, buses, and delivery vehicles in carefully defined districts, generating vast quantities of driving data under varied conditions. Large technology companies and automakers collaborate closely, supported by urban authorities eager to showcase innovation.

Western countries, especially in Europe, have moved more cautiously, emphasizing safety and privacy concerns. While the United States has seen pockets of rapid experimentation, regulatory fragmentation across states and cities has sometimes slowed the rollout of large‑scale pilot projects. As a result, companies must navigate a patchwork of rules, often repeating compliance efforts and limiting the scale of their trials.

The lesson is not that Western regulators should ignore legitimate concerns over safety or data governance. Rather, it is that predictable frameworks and clear thresholds for testing and deployment are essential if firms are to gain real‑world experience. In a field like self‑driving technology, where performance improves with data, countries that can safely enable large test fleets may have an edge in refining algorithms and validating systems.

Solar Power and the Economics of Scale

Few sectors illustrate China’s impact on global technology and energy markets as dramatically as solar photovoltaics. Over the past decade and a half, Chinese manufacturers—supported by low‑cost financing, infrastructure, and a coordinated push up the value chain—have driven down the cost of solar panels to levels that were once unthinkable. Those price declines have accelerated the global shift toward renewable power, but they have also devastated many Western solar manufacturers that struggled to match China’s scale and cost structure.

Historically, Western firms played a leading role in photovoltaic innovation, pioneering many of the core technologies used today. Yet rising labor costs, fragmented industrial policy, and reliance on imports for intermediate inputs left the sector vulnerable. As China expanded capacity, Western producers encountered repeated cycles of price pressure and consolidation, leaving only a handful of globally competitive players.

The experience underscores the importance of aligning research and development strength with long‑term manufacturing strategies. High‑value innovation in laboratories must be matched by policies that support commercial deployment and scale, or the economic benefits—jobs, exports, and supply‑chain resilience—risk flowing elsewhere. For the West, rebuilding some solar manufacturing capability may be as much about energy security and strategic independence as about direct industrial competition.

Medicine and Biotech: Innovation Under Pressure

In medicine and biotechnology, the West remains a powerhouse, with world‑leading pharmaceutical companies, research universities, and regulatory agencies. However, China has moved quickly to expand its own capabilities, investing heavily in genomics, biologics, and medical AI. Clinical trial capacity has grown, and domestic firms are increasingly filing patents and partnering with global players.

The contrast between the two systems is sharp. Western healthcare and regulatory structures prioritize rigorous, transparent approval processes and strong intellectual property protections, which help sustain high‑risk research but can slow commercialization. China has sought to speed up certain pathways and attract investment, even as it works to strengthen regulatory oversight and quality standards.

For Western policymakers and industry leaders, the critical issue is how to preserve scientific excellence while ensuring that breakthroughs translate into manufacturing capacity, job creation, and competitive export industries. Streamlined regulatory processes for low‑risk innovations, targeted public‑private partnerships, and long‑term funding for translational research can all help bridge the gap between laboratory success and global market impact.

Historical Context: From Post‑War Leadership to Multipolar Innovation

To understand today’s technology rivalry, it is necessary to place it in a broader historical context. After the Second World War, the United States and its Western allies emerged as the dominant centers of scientific research and industrial innovation. Government spending on basic research, space exploration, and defense technologies helped seed many of the breakthroughs that underpin modern computing, aviation, and telecommunications. Europe and Japan also became hubs for advanced manufacturing, automotive engineering, and electronics.

From the late 20th century onward, globalization and the offshoring of production reshaped this landscape. Western companies sought efficiency gains by shifting manufacturing to lower‑cost countries, including China, while retaining design and high‑end research at home. For a time, this division of labor seemed stable: innovation in the West, production in the East. But as China invested in education, infrastructure, and state‑backed industrial upgrading, it began to move beyond low‑cost assembly toward full‑spectrum technological capability.

The shift has culminated in today’s system of multipolar innovation, where cutting‑edge capabilities are spread across regions rather than concentrated in a single bloc. This diffusion offers benefits—more sources of innovation, faster adoption of clean technology—but it also intensifies competition and complicates questions of standards, supply‑chain resilience, and economic security.

Economic Impact on Western Industries

The economic implications for Western economies are profound. In sectors where China has gained significant cost or scale advantages, traditional manufacturers face margin pressure, job losses, and the risk of technological dependency. Yet the same dynamics also create opportunities. Lower prices for key technologies, such as solar panels and batteries, can accelerate domestic energy transitions, reduce operating costs for businesses, and support broader climate goals.

For workers and communities in legacy industries, however, the transition can be painful. Automaking regions that long relied on internal combustion engine production must adapt to a world where value is increasingly concentrated in batteries, software, and power electronics. Regions that once hosted competitive solar factories have seen closures and layoffs as imports surged. Without proactive retraining, investment incentives, and infrastructure upgrades, the benefits of new technology may bypass areas most in need of renewal.

Financial markets also feel the impact. Investors now assess not only the technical merit of Western firms, but also their ability to withstand price competition, secure critical materials, and comply with evolving regulations. Capital tends to favor companies with clear strategies for electrification, automation, and digitalization, rewarding those that can demonstrate credible long‑term plans in the face of intensifying global rivalry.

Regional Comparisons: United States, Europe, and Asia

Within the broader “West,” different regions have responded in distinct ways. The United States retains major strengths in software, semiconductors, cloud computing, and venture‑backed innovation. Recent industrial policies have sought to reshore advanced manufacturing, support battery and chip plants, and protect critical technology. Yet political polarization and shifting policy priorities can complicate long‑term planning for companies evaluating multibillion‑dollar investments.

The European Union, meanwhile, has emphasized climate policy, regulatory standards, and consumer protection. Its ambition to be a leader in green technology and digital regulation is clear, but it has often struggled to produce home‑grown tech giants at the scale seen in the United States or to match China’s pace of infrastructure deployment. Complex decision‑making among member states can slow the adoption of unified industrial strategies, even as European firms remain highly competitive in areas such as automotive engineering, industrial machinery, and certain segments of clean energy.

Beyond China, other Asian economies also play critical roles. South Korea and Japan are central to global supply chains for batteries, electronics, and advanced materials. Emerging players in Southeast Asia and India are attracting investment as alternative manufacturing hubs. For the West, this diverse regional landscape underscores the need to think not only in terms of bilateral rivalry with China, but also in terms of partnerships and competition across a wider network of technologically capable states.

Key Lessons for Western Policymakers

Several practical lessons emerge for Western governments seeking to remain competitive in self‑driving cars, medicine, electric vehicles, solar power, and related fields:

• Long‑term policy consistency: Businesses making large capital investments need stable, predictable frameworks spanning more than one electoral cycle. Frequent reversals of incentives or regulations undermine confidence and delay projects.
• Coordinated industrial strategy: While market forces remain central, targeted support for critical supply chains—batteries, semiconductors, rare earth processing, and advanced manufacturing—can reduce vulnerability and foster domestic ecosystems.
• Investment in skills and education: Competing with China’s scale requires a highly skilled workforce. Expanded training in engineering, data science, and advanced manufacturing, alongside support for vocational pathways, can help fill crucial gaps.
• Support for translational research: Bridging the “valley of death” between fundamental research and commercial deployment demands funding mechanisms, public‑private partnerships, and testbeds where companies can refine products in real‑world settings.

By focusing on these areas, Western economies can strengthen their capacity to convert scientific excellence into globally competitive industries.

The Role of Private Sector Leadership

While public policy sets the framework, private companies will ultimately determine whether the West maintains a technological edge. Corporate leaders face a strategic imperative to move beyond short‑term earnings targets and invest in long‑horizon innovation that may take years to pay off. This includes building robust in‑house R&D, forming alliances across borders, and embracing new manufacturing technologies such as automation and advanced robotics.

Strategic risk management is also becoming more complex. Firms must navigate geopolitical tensions, supply‑chain disruptions, and shifting regulatory regimes while continuing to innovate. Diversifying production locations, securing alternative suppliers for critical inputs, and investing in digital resilience have become central elements of corporate planning.

At the same time, public expectations are rising. Consumers, employees, and investors increasingly judge companies on how they contribute to sustainable growth, national resilience, and technological leadership. Businesses that can align commercial success with broader societal goals may find it easier to attract talent, capital, and public support.

A Window of Opportunity, Not Inevitability

The narrative that China is destined to dominate future technologies overlooks both the enduring strengths of Western innovation systems and the uncertainties facing all major economies. Demographic trends, debt burdens, and structural challenges will test Beijing’s growth model in the years ahead. Similarly, the West must confront its own obstacles, from political division to infrastructure gaps, if it is to translate scientific prowess into durable industrial advantages.

What is clear is that passivity is not an option. The industries that will shape transport, healthcare, energy, and data in the mid‑21st century are being built now. The West still has the capacity to lead in self‑driving cars, advanced medicine, electric vehicles, solar power, and other critical technologies—but only if it learns quickly, acts decisively, and treats the current moment as a genuine inflection point rather than a distant concern.

The competition ahead is not solely about one country overtaking another. It is about whether the global technology system will be characterized by resilient, diverse sources of innovation or by concentrated dependencies that leave economies exposed to shocks and political leverage. For the West, drawing the right lessons from China’s technological rise may prove to be one of the defining economic and strategic choices of this generation.