Facing a deep crisis, China turns to innovation
Confronted with a marked economic slowdown, a prolonged property crisis, and rising geopolitical tensions, China is searching for a new growth engine. Beijing is now clearly betting on technological innovation to overcome what is shaping up to be its most serious economic challenge in decades.
A multi-layered crisis
China’s long-standing growth model—driven by heavy investment, real estate, and exports—is losing momentum. Domestic consumption remains weak, household confidence is fragile, and youth unemployment and local government debt continue to weigh on the economy.
At the same time, Western—especially U.S.—technology restrictions have limited China’s access to advanced semiconductors and critical technologies, adding pressure to an already strained system.
Innovation as a way out
In response, Chinese authorities are accelerating a strategic shift toward innovation:
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Advanced technologies: artificial intelligence, semiconductors, robotics, and quantum computing.
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Green industries: electric vehicles, batteries, and renewable energy, where China already holds a strong global position.
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Research and development: sustained increases in public investment, support for national champions, and backing for deep-tech start-ups.
The goal is twofold: reduce technological dependence on foreign suppliers and create new, high-value sources of growth.
A risky bet
This strategy, however, comes with clear challenges:
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Innovation cannot be engineered by the state alone and requires a dynamic private sector.
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Geopolitical tensions restrict access to global markets and international talent.
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High-tech sectors cannot quickly offset the slowdown of massive industries such as real estate.
Global implications
China’s innovation push will have worldwide consequences:
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tougher competition for European and U.S. companies,
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increased pressure on global supply chains,
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an acceleration of the technological race, particularly in AI and the green transition.
Bottom line
By turning to innovation, China is attempting to reinvent its economic model under increasingly difficult conditions. The strategy is unavoidable, but its success will depend on Beijing’s ability to restore confidence, give more room to private initiative, and navigate an increasingly fragmented global economy.