By Doug Kelly, CEO of American Edge

Earlier this month, China’s President Xi Jinping declared his nation’s intent to dominate key technologies. This raises a critical question: will Western governments hinder their own innovation with excessive regulations, or will they empower private companies to compete and win against China?

At the Chinese Communist Party’s (CCP) annual legislative meeting, President Xi prioritized innovation as key to China’s success, and he instructed officers in People’s Liberation Army to build up China’s “strategic capabilities in emerging [tech] areas,” most of which have dual military and economic uses. 

This is the latest push by China to become the global technology leader. China has vigorously executed a three-part strategy for success, including: 1) investing more than $1.4 trillion to boost its domestic high-tech manufacturing capabilities; 2) stealing what they can’t build to help accelerate their gains; and 3) making the world increasingly dependent on Chinese technology in order to give Beijing economic and geopolitical leverage.

China’s efforts are paying off. A study by the Australian Strategic Policy Institute found China has surged ahead of America in 37 of 44 critical technologies, positioning China “to excel not just in current technological development in almost all sectors, but in future technologies that don’t yet exist.” Other studies have found similar results.

In fact, Beijing is so determined to secure the strategic technologies of the future that it is mobilizing its entire society in the effort. China is even building a new artificial intelligence (AI)-powered database designed to systematically track, identify, and co-opt the world’s top scientists and cutting-edge techs. Dubbed “Supermind,” the database has details on 300 million research papers and 120 million patents that can help it preemptively corner the market on critical technologies like AI, quantum computing, cybersecurity, and more.  

As China makes gains, it’s working to remove American companies from the Chinese market. Just last week, The Wall Street Journal uncovered China’s “Delete America” plan, designed to push any American-made technology out of China in order to become totally self-reliant. 

So how is the West responding? It’s mixed. On the positive side, Western private sector companies, primarily led by large U.S. tech innovators, are accelerating their efforts to bring new technologies and innovations to market and playing vital roles in the U.S.-China tech race. In fact, of the critical and emerging technologies listed recently by the White House as “vital” to national economic security, the top six American tech companies – Alphabet, Amazon, Apple, Meta, Microsoft, and NVIDIA – are heavily involved in advancing 13 of the 18 technologies, with each company involved in multiple research lines. 

The scale of these companies allowed them to invest $234 billion in combined research and development (R&D) in 2023 alone and a whopping $837 billion in R&D since 2019. For comparison, the Pentagon’s record R&D request for FY2025 is only $143.2 billion, or barely 60 percent of America’s top six tech companies invested two years ago. 

However, misguided laws and excessive regulations by Western governments are undermining our ability to compete with China. In the United States, ideologically-driven antitrust lawsuits, restrictions on pro-competitive mergers and acquisitions (M&A), and potential AI regulations can stifle innovation and growth. In the European Union (EU), its Digital Markets Act (DMA) targets top U.S. tech firms with onerous new regulations, high potential fines, and data sharing requirements with foreign competitors. Astonishingly, no EU tech companies and only one Chinese tech company are impacted by the new law. This trend of lopsided regulations is now spreading to other countries, and risks crippling Western innovation, especially as the EU moves to regulate American AI efforts.

Rather than punish our private sector innovators and make us less competitive with China, Western governments need to focus on accelerating innovation, especially in strategic technologies like microchips, AI, quantum, and others. This can be done through public-private initiatives that leverage capabilities, streamlining regulatory hurdles, increasing government R&D, and expanding support for innovation ecosystems wherever they are found. 

If policymakers fail to embrace private sector companies as essential strategic partners in our tech competition with China, we will lose this race, and hand China a decades-long advantage in national security, economic prosperity, and the advance of their values, not ours.