China’s technological dominance is reshaping the global landscape, as highlighted by the Australian Strategic Policy Institute’s 2025 Strategic Technology Tracker. Released last week, the report reveals China’s leadership in seven out of eight artificial intelligence categories, complete dominance in advanced materials and manufacturing technologies, and a commanding presence in defense, space, robotics, and transportation sectors. Additionally, China excels in nine out of ten energy and environment categories and five out of nine in biotechnology, genes, and vaccines.
This ascendancy in technology is remarkable, especially considering China’s economic structure. Despite having only half the number of billionaires compared to the United States, China’s technological prowess continues to grow. This raises questions about the underlying factors driving this technological surge.
China’s Unique Approach to Technology
China’s rise as a technological powerhouse is driven by a unique blend of state-driven policies and strategic planning. Unlike the West, where private billionaires often spearhead technological advancements, China’s Communist Party plays a central role. The party’s strategic focus on technology is evident in events like the 27th Hi-Tech Fair in Shenzhen, showcasing innovations such as humanoid robots and eVOTL vehicles (electrical vertical take-off and landing).
Faustine Delasalle, Executive at Industrial Transition Accelerator, notes, “There’s an acceleration in China that we’re not seeing in the rest of the world.” This acceleration is a result of China’s shift from catching up with the West to setting the pace for global technological advancement.
The Engineering State vs. The Lawyerly Society
Analyst Dan Wang, in his book Breakneck — China’s Quest to Engineer the Future, explains the contrast between China and the United States. He describes China as an “engineering state” that cannot resist building, while America is characterized as a “lawyerly society” that often obstructs innovation. Wang highlights China’s commitment to engineering, as demonstrated by its substantial government investment in industry policies like “Made in China 2025” and the 14th five-year plan, which allocates US$1.4 trillion over several years for new infrastructure projects.
“As the United States lost its enthusiasm for engineers, China embraced engineering in all its dimensions,” Wang states.
The “Whole of Nation” Approach
Blogger Noah Smith describes China’s “whole of nation” approach as a departure from the standard innovation model. In this model, the government coordinates the efforts of academics, corporations, and financiers towards a unified goal. This strategy involves identifying technological objectives and working backward to achieve them, funding research, and supporting commercialization efforts.
“The government now tries to take innovation ‘from bean to bar’, as the chocolate shops say,” Smith explains.
Global Implications and Challenges
China’s technological dominance extends to critical minerals and rare earths, essential for modern technology, granting it significant geopolitical influence. However, this rapid advancement also brings challenges, such as overcapacity and “involution,” characterized by intense competition and diminishing returns. The government is now attempting to curb these issues.
In contrast, Australia’s recent “National AI Plan” appears lackluster. The plan, which includes a $30 million AI safety institute, is criticized for relying on existing funding rather than new investments. This pales in comparison to China’s US$56 billion investment in AI development for 2025 alone.
The New Global Order
China’s rise is prompting a shift in global dynamics. The United States, acknowledging China’s strength, has moved from a policy of containment to one of co-management, referring to the two nations as “G2.” This shift suggests a division of global influence, with China potentially assuming greater control over the Asia-Pacific region.
The implications for Australia and other nations are profound. In a G2 world, countries must navigate a new geopolitical landscape where China’s influence is undeniable. As China continues to shape the modern world, the challenge for other nations is to adapt and find their place within this emerging order.
