Don’t Linearly Extrapolate China’s Tech Rise
| AUTHOR | Pranay Kotasthane |
| DATE | October 20, 2026 |
| CATEGORIES | China High Tech Geopolitics Geopolitics |
I recently joined a panel at the Pune International Centre’s China Conference on “China’s Technology Advancement: Strategic Implications and Competitive Response.” My fellow panellists were Kiran Karnik, Sruthi Kalyani, Konark Bhandari, and Rajeev Mantri. The recording is at the end of this post.
Making sense of China’s technological rise is a cottage industry with Chinese characteristics, which is to say it is exceedingly large. I am also a part of that jamaat. So I’ll stick my neck out and say that linear extrapolation of China’s tech capabilities does not make sense.
Beyond the usual explanations
Three explanations are commonly cited for China’s success: state capitalism, forced technology transfer, and IP theft. This view discounts the role of China’s massive private sector, a fiercely competitive domestic economy (monikered “Hunger Games capitalism”), and an environment that enables experimentation and rapid iteration.
After all, technology transfer is not just about getting access to a few files and products. It is a complex process undergirded by domestic capabilities. China now leads in global patent filings and has become a top contributor to scientific research across multiple high-tech sectors.
Ingredients and recipes
A better way to understand China’s rise is to separate ingredients from recipes. Ingredients are the underlying conditions; recipes are the specific policy mixes that combined them at a particular time. Recipes are not to be replicated.
China’s ingredients were:
- high investment in capabilities and infrastructure;
- state focus, which is better described by Tai Ming Cheung’s model of selective authoritarian mobilisation and innovation than by “state capitalism”;
- foreign technology transfers;
- the use of high-tech talent, as in the Chengdu High-Tech Industrial Zone’s offshore technology acquisition centres; and
- land, education, and bureaucratic decentralisation.
For the techno-security lens on China’s innovation system, read Tai Ming Cheung’s Innovate to Dominate.
The recipes have changed over time. An innovation-driven development strategy, where the government followed rather than led and China was not one actor, gave way to a phase of large capital inflows and corruption. That, in turn, gave way to more centralised control. And now, the world’s perception of China’s geopolitics has changed.
Where is this headed?
China will continue to capture global attention for its technological breakthroughs over this decade. But it is unlikely to sustain them over the long term, because the ingredients and recipes that made it a technological superpower have changed significantly. Several structural problems point the same way:
- escalating geopolitical tensions, which create the impulse to accelerate innovation elsewhere;
- private-sector woes and capital flight;
- fiscal stress in local governments;
- a diffusion deficit; and
- the cost of geopolitical backlash, as international collaborations dry up.
What should India do?
The most important foreign policy for India is 8 per cent growth. Beyond that, India should distinguish dependency from vulnerability. A dependency becomes a vulnerability only when the item is non-substitutable, when the technology gap is learned rather than easily bridged, and when a rival dominates the supply chain.
On China’s own weaknesses in critical mineral supply chains, see my seven points on China’s rare earth gameplay.
That calls for a small yard with a high fence, decided by two criteria: strategic relevance and existing export capabilities.
- In tech-heavy sectors where India has weak export capabilities, such as EV cells and machine tools, there is a case for actively allowing Chinese investment, imports, and talent. Where India does have proven export capabilities, there is a case for balancing tariffs with a permissive investment environment.
- In tech-heavy sectors with national security implications and little or no Indian export capability, there is a case for attracting investment through joint ventures. Critical sectors with proven Indian export capabilities can continue to limit any exchange with China.
I compiled the many reported proposals for allowing Chinese investment into India here.
At home, the ingredients matter more than any recipe. India needs to fix land, capital, and education, and connect research institutions that remain isolated from universities and industry. A more generous R&D incentive would help. The goal should be atmashakti (strength), not atmanirbharta (self-reliance).
Above all, India’s response to China should be guided by pragmatism.