Article
Scott Singer, Matt Sheehan
{
"authors": [
"Matt Sheehan"
],
"type": "commentary",
"centerAffiliationAll": "dc",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [
"Dynamic Technology Risks in Asia",
"China and the World"
],
"englishNewsletterAll": "asia",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "AP",
"programs": [
"Asia"
],
"projects": [],
"regions": [
"United States",
"China"
],
"topics": [
"Technology"
]
}
Source: Getty
Commentary
How China Became an Innovation Powerhouse
And what the United States must to do retain its competitiveness.
By Matt Sheehan
Published on Jan 10, 2023
Conventional wisdom often suggests that technological breakthroughs proliferate in an environment of free markets, free speech, and democracy. In short, if you want to innovate, you need to operate like the United States. But over the past twenty years, China has transformed from a technological backwater into an innovation powerhouse.
Today, China directly competes with the United States on key emerging technologies, such as artificial intelligence and quantum computing. And it has managed to accomplish this feat even as its government has tightened controls on markets, speech, and politics.
In this video, I argue that three main factors have turbocharged China’s rise as a technological powerhouse: a large, semi-protected market; ties with researchers and companies around the world; and waves of financial, human, and physical capital invested in promising fields like AI. To keep the United States competitive, Washington should explore certain elements of China’s strategy, including a willingness to experiment with pro-innovation policies and an ability to accept a certain amount of “waste” when catalyzing technological upgrading.
More on China and technology:
About the Author
Matt Sheehan
Senior Fellow, Asia Program
Matt Sheehan is a senior fellow at the Carnegie Endowment for International Peace, where his research focuses on global technology issues, with a specialization in China’s artificial intelligence ecosystem.
- China Is Worried About AI Companions. Here’s What It’s Doing About Them.
- Have Top Chinese AI Researchers Stayed in the United States?Commentary
Matt Sheehan, Sophie Zhuang
Recent Work
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie Endowment for International Peace
- Taking the Pulse: Is it Worth it for Europeans to Placate Trump?Commentary
After spending much of 2025 trying to placate Donald Trump, some European leaders are starting to change posture. But is even a hostile Washington still so important to Europe that the U.S. president’s outbursts are worth putting up with?
Rym Momtaz, ed.
- Outlooks on Open-Source Innovation at the India AI Impact Summit 2026Article
Drawing on ten public discussions from the India AI Impact Summit 2026, this article highlights key outlooks on open source in AI that are likely to shape policy and governance conversations going forward.
Shruti Mittal
- The Geopolitical Debates Over Controlling Cloud ComputeArticle
If U.S. policymakers continue down the path of restricting China’s access to frontier AI, they will eventually have to implement some sort of restriction on cloud access.
Noah Tan
- Europeans Are Quiet Quitting the United StatesCommentary
European leaders have now not only lost faith in Donald Trump’s U.S. presidency, but also in America’s hegemony as a whole. But short-term challenges make an immediate divorce unwise.
Rym Momtaz
- In Fraught Geopolitical Times, Accountability for Russian Aggression Remains Crucial Despite U.S. Policy ReversalsPaper
As the war in Ukraine enters its fifth year, it is worth examining where accountability efforts currently stand, how U.S. policy on Russian aggression has shifted, and what the Ukrainian experience reveals about the challenges of holding international aggressors to account.
Federica D’Alessandra
