Advanced technologies, especially artificial intelligence (AI), semiconductors, and quantum computing, have emerged at the heart of most nations' national strategic planning. China also developed national plans for technological breakthroughs. However, unlike most other countries, China's current plans are heavily influenced by unprecedented US export curbs on acquiring technology. These steep and targeted export curbs are intended to prevent China from acquiring high technologies to maintain the US monopoly. They started during the first term of US President Donald Trump (2017-2021), continued during the Biden administration, and intensified since Trump's second term.
Tthe US led a coordinated campaign persuading close allies, especially Japan, the Netherlands, South Korea, and Taiwan, to implement aligned export controls on China. For instance, in 2023, Japan and the Netherlands followed Washington's lead, banning the sale of advanced lithography and chipmaking tools by ASML, Nikon, and Tokyo Electron to Chinese firms. Taiwan and South Korea subsequently tightened restrictions on TSMC and Samsung's dealings with China, limiting high-end chip exports and tools under US pressure. By 2024-2025, the effort expanded to European and Middle Eastern partners through multilateral restrictions coordinated by the US Department of Commerce and supported by its allies, establishing a unified framework to limit China's technological rise in semiconductors, AI, and defense-related computing.
China's Strategic Framework for Self-Reliance
Beijing recognized vulnerabilities in global supply chains, particularly in critical technologies such as semiconductors, AI, and advanced manufacturing, where reliance on foreign suppliers, especially those from the US and its allies, posed a strategic risk. It devised a long-term, multifaceted strategy to counter those curbs as explained.
The Big Fund
Semiconductors are the foundation of modern technology policy, enabling competitiveness in artificial intelligence (AI), defense, communications, and economic security. To advance this critical sector, China launched the China Integrated Circuit Industry Investment Fund, commonly known as the 'Big Fund,' in September 2014. While the program was conceptualized earlier, US export curbs accelerated its prioritization. The Chinese government committed tens of billions of dollars across multiple phases.
This state-backed semiconductor investment initiative aims to achieve technological self-sufficiency and reduce dependence on foreign suppliers, particularly in response to US export restrictions. Chinese authorities expect it to strengthen domestic chip manufacturing, design, and materials industries, enhance production equipment capabilities, support AI-grade semiconductor research and development, and mitigate exposure to US controls. Through these objectives, the fund aims to secure China's strategic autonomy within the global semiconductor ecosystem.
The Big Fund supports domestic champions such as Semiconductor Manufacturing International Corporation (SMIC), Yangtze Memory Technologies Corporation (YMTC), ChangXin Memory Technologies (CXMT), and Hua Hong Semiconductor, all integral to China's long-term ambitions for independent innovation. The goal is to achieve about 50 percent self-sufficiency in semiconductor equipment by 2025, a sharp increase from approximately 13.6 percent in 2024.
Dual Circulation Strategy
In 2020, President Xi Jinping, at a Chinese Communist Party (CCP) Politburo Standing Committee meeting, introduced the 'dual circulation strategy,' which was later enshrined in the 14th Five-Year Plan (2021-2025). This economic policy framework incorporated significant technological dimensions. It prioritized domestic consumption and innovation ('internal circulation') while engaging selectively with global markets ('external circulation') to enhance self-reliance and resilience against external shocks. The policy was partly conceived in response to Donald Trump's first-term trade and technology restrictions, including tariffs and export limitations that disrupted China's access to advanced technology and US markets.
Modernized Whole‑Nation System
China's 'Whole‑Nation System' is a governance and resource‑mobilization model designed to concentrate the country's collective capabilities toward achieving major strategic goals - particularly in science, technology, and national defense. It reflected a deeply institutionalized mechanism of Party‑state coordination that blends central‑planning principles with selective market incentives to advance national priorities. The system originated in the 1950s under Mao Zedong and was revived in a modernized form by Xi Jinping in 2019 as the 'new‑style Whole‑Nation System.' This placed China as a mission-oriented state, enabling rapid coordination of political, financial, and technological resources. Analysts view it as a structural advantage in addressing US-imposed technological restrictions, as it channels national capacity toward self-reliance and systemic resilience.
Talent Development and 'Reverse Brain Drain'
Acknowledging that technology is driven by people, China devised initiatives to attract top-tier global talent. It rolled out programs aimed to reverse the brain drain by attracting overseas Chinese and recruiting international talent through economic incentives, visa facilitations, and local government benefits. Some of the most prominent schemes include the Thousand Talents Plan (launched in 2008), the High-End Foreign Expert Program (introduced in 2019 as part of the National High-End Foreign Experts Recruitment Plan), and the Overseas Young Talents Program. In 2025, provincial and municipal governments expanded financial and professional incentives for returnees, particularly graduates from top global universities. Analysts argue that China's recently announced K-visa scheme (2025) also targets highly skilled young foreigners in STEM (Science, Technology, Engineering, and Mathematics) fields.
The reverse brain drain has accelerated due to both push factors, such as US visa restrictions and security scrutiny over research grants, and pull factors, such as competitive salaries, substantial research funding, housing benefits, and leadership opportunities in academia and industry.
Subsidies
China has intensified subsidy programs to accelerate self-reliance in high technologies, using a combination of direct public investment, tax incentives, and industrial guidance funds. In 2025 alone, government funding accounted for approximately 400 billion yuan of the nation's projected 600-700 billion yuan ($84-98 billion) in AI capital expenditure, reflecting Beijing's drive to narrow the technological gap with the US. The State Council also launched a multi-billion-yuan national venture capital guidance fund to promote breakthroughs in quantum computing, hydrogen energy, and next-generation information technology.
Promoting STEM Education Domestically
STEM education is the foundation of advanced technologies. Given its importance, China has made STEM education a pillar of its long-term strategy for technological self-reliance and closing existing technology gaps. Since 2020, Beijing has aligned education reform with strategic goals of innovation, talent cultivation, and self-reliance in core technologies, effectively integrating education policy with industrial policy. At the March 2025 Two Sessions, the Government Work Report explicitly called for 'fully implementing the strategy of invigorating China through science and education' and listed this as one of ten major tasks for 2025 in building an innovation-driven economy.
As a result, China ranked second globally, only behind the US, in STEM education development. China's current education and STEM strategy represents a comprehensive, state-directed model aimed at cultivating indigenous innovation capacity and advancing 'education modernization' through initiatives such as the National Education Plan (2024-2035). This plan expands enrollment at top universities, strengthens links to vocational and technical education, and emphasizes AI integration, including the establishment of a National Digital University to promote lifelong and digital learning.
Expanded Export Controls and Rare Earth Leverage
In October 2025, China implemented its most extensive and sophisticated export control regime to date, covering rare earth elements, related technologies, and processing equipment. Under Ministry of Commerce (MOFCOM) Announcements No. 61 and 62, issued on October 9, the new framework restricts exports of heavy rare earths such as dysprosium, terbium, lutetium, holmium, and erbium; magnetic materials; superhard and diamond-based industrial inputs; and advanced battery technologies. The measures introduce extraterritorial provisions similar to the US' 'foreign direct product rule,' extending Chinese jurisdiction to overseas exports of goods that incorporate Chinese-origin materials or technologies.
The tightened regime is part of China's broader strategy to maintain control over upstream resources critical to semiconductors, defense systems, and clean-energy supply chains. By modeling aspects of US-style export containment, Beijing aims to reassert leverage across the global industrial ecosystem while countering foreign restrictions on advanced technologies. The controls also signify a shift from volume management to capability management, as China now limits the transfer of processing know-how, refinery equipment, and magnetic-material manufacturing methods to protect its technological leadership.
These policy measures illustrated China's seriousness and that the state is doubling down on technology as a cornerstone of sovereign power and international competitiveness.
Emerging Outcomes of Self-Reliance Policies
In August 2025, the Hangzhou Municipal Government and Zhejiang University unveiled 'Xizhi,' China's first commercial electron beam lithography (EBL) machine, marking an advance in research tools for quantum and early-stage semiconductor development. Advanced photolithography is critical to the mass production of cutting-edge semiconductors. The EBL enables nanometer-scale precision (0.6 nm accuracy, 8 nm line width). Thus, Hangzhou's breakthrough represents a meaningful but niche step in toolchain self-reliance, not a full challenge to ASML's EUV monopoly.
China has achieved multiple breakthroughs in chip design and production. Notably, Beihang University began mass production of the world's first non-binary AI chip, integrating hybrid stochastic computing to overcome traditional semiconductor limits—an achievement hailed as evidence of China's capacity to innovate beyond Western models. In parallel, Chinese researchers unveiled QiMeng, an AI-driven chip design platform that autonomously generates complete processors, significantly reducing reliance on imported chip-design software. Additionally, China launched its first commercial e-beam lithography machine, signaling progress toward less dependence on foreign lithographic tools.
In September 2025, China's big tech firms, such as Huawei and Alibaba, made competing revelations of major breakthroughs in technological fields. Alibaba Group Holding signed a contract with China Unicom, the country's No. 2 wireless carrier, to deploy AI accelerators from its semiconductor unit Pingtouge, or 'T-Head', in a major data center project. The announcement did lead to a notable increase in Alibaba's stock price, rising over 5%. The partnership between Alibaba and China Unicom deployed domestically developed Pingtouge AI chips, marking a strategic milestone in China's push for tech self-reliance, showcasing its growing capability to reduce dependence on foreign semiconductors amid intensifying global tech competition.
On the heels of it, Huawei publicly unveiled its first detailed three-year AI chip roadmap. The announcement included next-generation Ascend chips, large-scale 'SuperPod' clusters capable of linking up to 15,000 accelerators, and a plan to open-source its CANN (Compute Architecture for Neural Networks) platform by the end of 2025. Given these breakthroughs, no wonder Chinese companies showed lukewarm interest in Nvidia's controversial chips.
In September 2025, Baidu announced it was training new Ernie AI models using its in-house Kunlun P800 chips and deploying a 30,000-card Kunlun cluster, marking China's first hyperscale use of domestic accelerators; the news boosted its shares over 40% that month and won a 1 billion yuan China Mobile cloud contract. The same month, Cambricon Technologies unveiled surging Siyuan‑series AI chip orders and a multibillion‑yuan expansion plan aimed at rivalling Nvidia, reporting a 14-fold revenue increase and cementing its role in China's national AI infrastructure drive.
Conclusion
China has set clear national targets for technological advancement. These targets gained heightened priority as the US, often in coordination with its allies, imposed targeted export restrictions to constrain China's progress in advanced technologies and preserve its dominance in these areas. This rivalry has increasingly shifted from an economic to a security-driven contest. Beijing adopted a long-term, multi-layered national strategy by increasing funding for R&D, attracting global talent, and consolidating STEM education to achieve greater self-reliance in high-technology sectors. It achieved significant breakthroughs in electron-beam lithography tools, non-binary AI chips, AI-driven chip design platforms, and the deployment of domestic AI accelerators and hyperscale compute clusters. While complete technological autonomy remains unlikely in the near-to-medium term, China is rapidly strengthening its domestic innovation ecosystem, expanding industrial capacity, and building policy resilience to reduce external dependencies.
