Year of snakes, ladders
As China celebrates the Lunar Year of the Snake, the first angpow (red packet gift) was the DeepSeek AI software that shook Wall Street to the tune of nearly $1 trillion in market capitalization.
For decades, the prevailing assumption in technology circles has been that the West, led by the United States, enjoys an unassailable dominance in advanced research and innovation.
For decades, the prevailing assumption in technology circles has been that the West, led by the United States, enjoys an unassailable dominance in advanced research and innovation. However, recent developments suggest that China is not only closing the gap but, in some cases, surpassing expectations despite significant restrictions on technology imports. The rapid rise of a Chinese AI firm, which developed a competitive large language model with a fraction of the resources used by its Western counterparts, is a case in point. The ability to achieve such efficiency without access to the most advanced semiconductor technology raises important questions about the effectiveness of Western sanctions. China’s technological prowess extends well beyond AI.
Its recent test flight of what appear to be nextgeneration combat aircraft indicates that it is narrowing the military aviation gap with the United States. The un veiling of a new amphibious assault ship, equipped with an electromagnetic aircraft launch system, suggests that China is also improving its naval capabilities. Even in the energy sector, the country is making significant strides, as seen in the world record set by its experimental nuclear fusion reactor, which maintained a sustained reaction far longer than previous attempts. These breakthroughs are not isolated incidents but the result of a long-term strategy meticulously executed by the Chinese leadership. For decades, China has pursued a dual approach: acquiring technology from abroad ~ through both legal means and aggressive state-backed efforts ~ while simultaneously investing in domestic innovation. This has allowed it to absorb, modify, and, in some cases, reimagine foreign technologies to suit its strategic needs. The emphasis on self-reliance has only intensified in response to US sanctions, with Beijing doubling down on research in areas where access to Western technology is restricted.
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The recent pronouncements from the Chinese leadership reinforce this direction. The call for “new productive forces” signals a shift towards an economy driven by advanced research and manufacturing, rather than merely providing cheap labour for global supply chains. Key areas of focus include photonic computing, brain-computer interfaces, and nuclear fusion ~ fields that could define the next industrial revolution. Equally significant is China’s push to nurture a new generation of scientists, with particular emphasis on researchers under the age of 35. What these developments reveal is that restricting China’s access to cutting-edge technology is unlikely to halt its progress.
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If anything, these measures appear to be accelerating its drive for self-sufficiency. While economic challenges such as a declining birth rate and property market troubles persist, Beijing’s long-term bet on scientific and technological advancement remains firm. The global tech race is no longer a one-sided affair, and the assumption that China will always be playing catchup is proving increasingly flawed. Whether the world is prepared for the full implications of China’s innovation surge is another question entirely
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