China has proved in the past decade that it can be an innovation powerhouse, moving far ahead of the United States in manufacturing and deploying electric vehicles, batteries, wireless telecommunications equipment, humanoid robots, and next-generation nuclear power. Its military now possesses what the Pentagon calls "the world's leading hypersonic missile arsenal," according to an analysis by L. Rafael Reif, president emeritus of the Massachusetts Institute of Technology, published in Foreign Affairs.
Ford CEO James Farley last year called China's electric vehicle industry "the most humbling thing I have ever seen," citing far superior in-vehicle technology, costs, and quality, "Hvylya" reports. China's rapidly growing pharmaceutical sector has nearly caught up to the United States in its pace of introducing new drugs to the market.
The transformation traces back to Beijing's 2015 launch of "Made in China 2025," a plan designed to reduce the economic and national security risks associated with China's dependence on foreign firms. By offering massive state support to companies in key sectors - information technologies, robotics, aerospace - Chinese leaders aimed to make domestic firms globally competitive. Ten years later, the plan has largely succeeded.
Reif proposed a concrete solution: a government corporation for emerging technologies, modeled on the Export-Import Bank. "The United States needs a single overarching entity focused on competitiveness that can help fund the industries of the future," he wrote. This entity would identify critical technologies, offer startups investments and loans at the riskiest stages, and organize government procurement guarantees. Its board would serve fixed terms independent of political cycles.
Reif pointed to a precedent from his own institution. In 2016, MIT founded The Engine, an incubator for tough-tech startups. One of its early portfolio companies, Commonwealth Fusion Systems, developed a revolutionary superconducting magnet for fusion energy. "Because there is no supply chain for such magnets, the company needed to build its own factory to make them," Reif wrote. With initial support from The Engine, Commonwealth attracted $3 billion in funding, and Google agreed to buy half the power from the company's first grid-scale fusion power plant in Virginia.
Earlier, "Hvylya" explored China's looming demographic challenge that may limit its window for technological dominance.