AMERICAN ENTERPRISE INSTITUTE
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China’s Technology Strategy:
Leverage Before Growth
June 2023
Whether China likes it or not, sustained and fast eco-
nomic growth is not in its present or future. Political
and military strategies dependent on fast growth are
no longer viable options. This hardly means Chinese
Communist Party (CCP) Chairman Xi Jinping has given
up. He has outlined new objectives, and his regime has
implemented new strategies flowing from those objec-
tives.
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The US and others have only partly recognized
this shift and have barely begun to respond to it.
Similar to its military strategy, the People’s Repub-
lic of China’s (PRC) current economic competitive
strategy is asymmetric. Beijing focuses on the PRC’s
“strengths,” which include being able to produce at
scale, having some of the world’s largest consumer mar-
ket segments, employing predatory regulatory prac-
tices, and using coercive technology acquisition. China
is trying to neutralize American advantages stemming
from an open, wealth-seeking, highly innovative econ-
omy. If the US keeps competing as if its rival is another
open-market economy organized for individual pros-
perity, it risks losing the crucial contest for economic
leverage and political influence. To defeat the PRC’s
geo-economic strategy, the US needs to ensure it no
longer helps Chinese companies seeking to catch up and
consider defending its most innovative companies.
Xi’s Vision
Despite obstacles to economic growth, Xi’s speeches
meant only for the party cadre exude optimism about
the Chinese socialist system’s ultimate victory over
American-style capitalism. In what may have been Xi’s
first speech to party leaders in January 2013 (kept secret
for six years), he called on Communist leaders to stick
to this ideological struggle, even if it takes a good while:
Facts have repeatedly told us that Marx and Engels’
analysis of the basic contradiction of capitalist
Dan Blumenthal and Derek Scissors
Key Points
• Unlike many commentators, Xi Jinping does not emphasize economic growth. He stresses
China’s system as best suited to win the long-term competition with the US. His strategy is to
use state tools to build economic leverage and political advantage. Technology is a central
component.
• As in its military strategy, China’s economic strategy is “asymmetric,” taking advantage of a US
system founded on openness and wealth creation. In contrast, China protects large firms at
home, coerces technology transfer, then seeks to eliminate leading foreign competitors.
• The US has done little to blunt Chinese predation, indirectly supporting it with money and tech-
nology. If the most innovative American companies lose intellectual property and market share
without consequence, China will control more sectors of the global economy.
