The Fortress That China Built for Its Battle with America
Beijing is racing ahead in advanced technology, including in robots, satellites and AI—and in some cases is catching up with the U.S.
By Brian Spegele May 21, 2025 The Wall Street Journal
The storm clouds for China were gathering when leader Xi Jinping convened the country’s top scientists at the Great Hall of the People in Beijing in May 2018. The U.S. was beginning to clamp down on selling technology to China, with more restrictions on the way.
China must not be forced to beg others for technology, Xi said. Only through self-reliance “can we fundamentally safeguard national economic security,” he said.
Since then, China has raced ahead in many strategic sectors—and in some cases is catching up with the U.S. Its electric-car companies are among the world’s best. Chinese AI startups rival OpenAI and Google. The country’s biologists are pushing the boundaries of pharmaceutical research, and its factories are being filled with advanced robotics.
At sea, Chinese-made cargo vessels dominate global shipping. In space, the country has been launching hundreds of satellites to monitor every corner of the Earth. Beyond frontier technology, Beijing is pursuing greater self-reliance in food and energy, and has bulked up its military.
These successes and many others are helping to fortify China and its economy as Xi prepares the nation for an era of sustained hostilities with the U.S., including the continuing trade war. The two sides are entering complex negotiations, with many of the latest tariffs temporarily suspended.
The advances are making China less dependent on the rest of the world for goods and services. Imports overall fell to less than 18% of gross domestic product in 2023 compared with about 22% a decade earlier.
Yet China is unlikely to ever be fully self-reliant, having imported more than $2.5 trillion worth of goods last year, including $164 billion from the U.S. The sheer size of its population means that in some areas, total self-sufficiency is virtually impossible.
Xi says China’s system of socialism and state planning is well-suited to winning the race for technologies of the future, allowing the state to concentrate resources where needed. His effort could also backfire, with massive waste from the self-reliance campaign exacerbating China’s mountain of debt, and threatening to hold back its economy over the long run.
Money talks
China’s efforts to become more self-sufficient were well under way before Trump first took the White House. In 2015, a policy dubbed “Made in China 2025” identified 10 sectors as national priorities, including robotics, aerospace and new-energy vehicles.
Xi took on a more nationalistic tone after Trump launched a trade war against China in 2018. Calls for “self-reliance” became more prominent, especially after the pandemic struck, leading China to largely close its borders. Chinese officials gained confidence that their economy could survive reduced contact with the outside world when it grew 2.2% in 2020, the only major economy to expand that year.
China’s resolve strengthened in the Biden years, as Washington sought to work with European allies to choke off China’s access to advanced technologies such as semiconductors. “Western countries, led by the U.S., have implemented all-around containment, encirclement and suppression against us,” Xi said in 2023. He warned China to prepare for “extreme scenarios,” a thinly-veiled reference to the risk of conflict with the U.S.
Much of China’s success stems from its ability to direct enormous sums of money to prized sectors.
Last year, China invested $500 billion on research and development, triple from when Xi took office in 2012. China spends nearly as much on R&D as the U.S., adjusting for purchasing power parity, according to the Organization for Economic Cooperation and Development. Investment in AI is a major focus. One study last year found that Chinese government venture-capital funds invested nearly $200 billion across 9,600 AI firms between 2000 and 2023.
Local government investment arms have helped the push, backing companies such as Zhipu AI—one of the Chinese AI firms rivaling U.S. companies. The AI startups are also taking in capital from private venture funds and Chinese companies such as Alibaba and Tencent.
China’s technology push is boosting its manufacturing prowess. Chinese companies have been buying as many industrial robots as the rest of the world combined, enabling some factory owners to experiment with highly automated plants that can operate in the dark. For much of the past decade, three-quarters of the robots installed in China came from foreign manufacturers, such as in Japan or Germany. By 2023, Chinese robot makers captured nearly half of the local market, according to the International Federation of Robotics.
In the more intricate field of humanoid robotics, Chinese companies such as Shenzhen-based UBTech are competing with U.S. firms such as Elon Musk’s Tesla. In electric-vehicle factories, humanoid robots are being trained to work together to sort auto parts or lift heavy-duty containers and place them onto shelves.
UBTech says that 90% of its more than 3,000 suppliers in recent years were based in China—a sign of how much China can rely on its own growing ecosystem of suppliers. The company is also incorporating technology from Chinese artificial-intelligence pioneer DeepSeek to help the robots make better decisions.
The self-sufficiency drive extends to highly sensitive areas such as nuclear power. At the Sanmen nuclear power plant, 150 miles south of Shanghai, the first two reactors put under construction in 2009 came from Pennsylvania-based Westinghouse, with key components shipped from the U.S. and American engineers on-site to help get the project online.
The next two reactors were also based on Westinghouse’s technology. Now, a new pair will be totally Chinese. Known as Hualong One, China’s homegrown reactor model allows Beijing to better control costs and construction timelines, while eliminating the danger that the U.S. could one day refuse to sell China more reactors.
Efficient government coordination, readily available financing from state banks and a highly-developed nuclear supply chain means China has already managed to build some Hualong One reactors in about five or six years. The latest Westinghouse reactors in the U.S. took more than a decade to complete, at far higher costs.
In many emerging sectors, China seeks to go beyond government subsidies and other financial support, pushing companies to compete with each other to boost efficiency and innovation.
Two of China’s leading battery makers, Contemporary Amperex Technology and BYD, have disclosed several billion dollars in subsidies between them over the past three years. At the same time, they say they have spent more than $20 billion combined on R&D.
Within weeks of one another recently, CATL and BYD each announced that they had developed new fast-charging systems that could bring down charging times for EVs to just five minutes.
In space development, a key focus for Beijing has been improving Chinese satellites that capture images and other data for civilian industries such as construction, as well as for defense purposes. Last year, when a group of U.S. think tanks ranked the world’s best such commercial satellite systems, Chinese firms won five out of 11 gold medals. The U.S. had four.
One winner, Chang Guang Satellite Technology, was launched in 2014 with $30 million in intellectual property from a research institute under the state-run Chinese Academy of Sciences.
Today, the firm is well on its way to building the world’s largest constellation of commercial remote-sensing satellites. With 117 satellites already in orbit, the company says it can observe any point on Earth up to 40 times a day. Some Chinese users claim to have used the network to scope out the U.S.’s latest stealth bomber at an air base in the Mojave Desert.
In its push for self-sufficiency, China now has roughly two-thirds of global corn reserves, despite only having about 17% of the world’s population, and has built massive stockpiles of oil and metals. It is slowly expanding the use of its yuan currency in foreign trade and developing alternatives to Western financial payment systems. The Defense Department estimates that China has tripled its nuclear warhead stockpile to more than 600 in recent years.
Projecting power
China’s leaders present the self-reliance drive as something like insurance that must be paid to guard against foreign aggression. And it does confer advantages.
Last year, Chinese shipyards delivered 53% of global tonnage, according to shipping-information provider Clarksons Research, compared with 8% in 2002. Those gains reflected decades of state support, including cut-rate prices for land to build shipyards, favorable loans and subsidized steel. The U.S. made up just 0.1% of global commercial tonnage last year.
China’s shipbuilding prowess has helped it to build the world’s largest navy, with more than 370 ships and submarines today.
Meanwhile, Huawei and other Chinese firms have made progress in reducing one of China’s biggest vulnerabilities: its lack of advanced semiconductors.
Washington in recent years has used export controls to try to choke off China’s access to the most sophisticated chips, such as Nvidia’s best-performing products—galvanizing China to build up its domestic production.
In 2023, Huawei grabbed U.S. attention when it released a high-end smartphone powered by an advanced processor that industry analysts say was locally produced in China. More recently, it has been gearing up to test a new chip it hopes will be more powerful than Nvidia’s H100 chip, released in 2022.
As China’s chips improve, Morgan Stanley projects the country’s self-sufficiency rate in graphics processing units—essential in creating AI systems—will jump to 82% by 2027 from 11% in 2021.
For all of China’s technological progress, it still faces enormous economic challenges, with sluggish growth and mounting fears domestically that standards of living might not catch up to those in the U.S.
One explanation, economists say, is that structural issues such as high debt levels and tanking real-estate prices are overriding gains from technology improvements.
Another possibility is that China’s state-led model is a big part of the problem. Financial waste and fraud have plagued the government’s spending on self-reliance. This month, the former chairman of a government-supported chip conglomerate was handed a de facto life sentence for alleged crimes including illegally acquiring $65 million of state assets.
In electric cars, 500 companies initially raced into the market to tap easy money from local governments. Most have since flopped, and many that remain are unprofitable.
The inefficient allocation of money has contributed to slowing productivity growth. Absent reforms, China may be able to sustain GDP growth of just 2.8% on average from 2031-2040, according to economists at the International Monetary Fund, compared with an average of around 6% over the past decade.
“In every country, even a country as vast as China, resources are limited,” said Carnegie Mellon economist Lee Branstetter. “If they’re used inefficiently, this will hold back living standards in the long run.”