Twenty years ago, few observers expected that China would become a serious competitor to US technological leadership. Authoritarian countries, it was argued, would be unable to foster technological innovation.
But the Chinese Communist Party (CCP) has adapted, transforming China from the world’s assembly line to an innovation superpower. The result is a geopolitical and military challenge far greater than the world’s leading liberal countries ever envisioned.
Democratic doubters
In the 1990s, many observers doubted China’s stunning economic growth could continue. The ‘miracle’ economies of Singapore, South Korea, and Taiwan showed that authoritarian states can be adept at mobilizing the inputs and capital needed for early-stage growth. But many observers argued that authoritarian governments are incapable of cultivating the innovation needed to sustain that growth past middle income status.
There were good reasons for that conclusion: Innovation requires significant capital investment – but autocrats are notorious for high consumption, providing supporters with lucrative government jobs and other ‘rents’. Innovation requires a high-quality workforce – but in autocracies, corrupt civil servants can plunder funds earmarked for education and research and development (R&D).
Authoritarian leaders themselves often expropriate funds, interfere in monetary policy, and manipulate exchange rates – destabilizing the economy and spooking investors. Innovation also thrives on networks and information flows provided by a vibrant civil society, which autocrats quash in order to control information and suppress opposition.
In what political scientist Samuel Huntington called the ‘king’s dilemma’, authoritarian rulers can exert tight political control, but this hinders innovation and growth. Or rulers could loosen control – but risk unleashing forces that could topple their regimes.
China’s ‘smart authoritarianism’
Faced with the king’s dilemma – in which Door #1 was economic stagnation, and Door #2 was regime collapse – China’s leaders chose Door #3: they adapted.
In what I call ‘smart authoritarianism’, China’s leaders combined firm political control with selective economic openness. Beijing invested heavily in cultivating human capital, building a highly trained workforce, and allowing its businesspeople, students, and scientists to travel and participate in global research networks. The CCP created stable macroeconomic conditions to reassure both domestic and foreign investors. Foreign direct investment became a powerful conduit for technology transfer into China’s industrial ecosystem.
The CCP also tolerated a bounded form of pluralism: allowing a thriving private sector, a vast private media, and increasingly well-regarded universities – even as these spaces remained under party oversight. This government-managed civil society has allowed the exchange and diffusion of ideas. And, as Jessica Teets observes, it has helped the CCP identify pressing societal problems and negotiate policy reforms.
Smart authoritarians created ways of controlling information far beyond mere censorship. Rather than blanket bans, the CCP employs what Margaret Roberts terms ‘friction’ and ‘flooding’: subtle tactics that delay access, drown dissenting views and desensitize the public to pervasive state control.
Over time, the CCP also shifted from high- to low-intensity repression, adopting selective and pre-emptive coercion in place of overt violence. Furthermore, as Lynette Ong has shown, the party relies on semi-private enforcers to distance itself from intimidation and violence. With the rise of artificial intelligence, facial recognition, and other biometric surveillance, the CCP increasingly maintains its grip through algorithms rather than force.
Technology superpower
China’s smart authoritarian rulers have overseen stunning results. This year China entered the top ten of the Global Innovation Index (GII), overtaking traditional powerhouses such as France, Germany, and Japan.
Chinese firms have become globally competitive (or outright dominant) in electric vehicles, clean energy, telecommunications, commercial drones, high-speed rail, and consumer electronics, led by flagship companies like BYD, CATL, and Huawei. Even in fields still led by American, Japanese, or European firms, such as industrial robotics and biotechnology, Chinese companies are closing the gap fast.
China is also competing with the United States for leadership in artificial intelligence. The country now rivals the United States in AI publications, patents, and venture capital funding. As James Kynge notes, companies around the world are increasingly adopting Chinese AI models – which are high performing, open-source, and far cheaper to run due to significant innovation in architecture and training.
China’s government has made AI a national priority – embedding it in industrial automation, logistics and financial services, and using AI to improve the People’s Liberation Army’s surveillance, command and control and autonomous systems.
In supercomputing, China now has more of the world’s fastest computers than any other country and is believed to have reached exascale computing: meaning computers powerful enough to handle more than a billion calculations each second. It has achieved this, in spite of US-led export controls on semiconductors, using domestically designed chips.
In quantum technologies, Chinese laboratories have achieved world-leading advances in quantum communication and encryption, while US research retains an edge in quantum computing hardware and software.
Western observers have been slow to change their perceptions of China as a ‘copycat’ of Western technology: even as Chinese innovation has made the country competitive – or dominant – in the high-tech sectors that will drive future commercial and military competition.
Managing an authoritarian superpower
Sceptics might say that the Chinese economy suffers from serious challenges that jeopardize its future strength. After all, China faces adverse demographics, a wobbly real estate sector, and a looming debt crisis. Innovation, critics say, has yet to translate to improved productivity. And in the trend of ‘involution’, firms engage in hyper-competition for shrinking profit margins and diminishing returns.
These challenges are real. But the nimble CCP has already managed daunting problems. It was once thought that frustrations over repressive COVID-19 controls would jeopardize the regime, and that the staggering task of environmental cleanup would strain China’s future growth. Neither came to pass.
Today’s doubters may ultimately be correct. But the responsible way to make policy is for the US, Japan, the UK, and others to assume that although China’s growth will inevitably slow, it will remain a major economic, technological, diplomatic and military player.