2025 will go down as the year when China properly flexed its muscles in the global arena. The year began with DeepSeek, a Chinese AI company showing what it had achieved at a fraction of the resources available to the American BigTech. Even better was how China dealt with Trump’s tariff tantrums with its leverage on rare earth minerals. The world has finally accepted China’s leap from a source of cheap manufactured goods to a leader in cutting edge technology as evidenced with its dominance in robotics, solar technology and electric vehicles. This piece in the Economist points to two other areas where its global dominance is imminent – autonomous vehicles (or robotaxis) and new drug development.
“China’s progress in each of these important areas has been staggering. A robotaxi revolution is gathering pace, which could reshape transport, logistics and everyday urban life. The country’s autonomous taxis, constructed for a third of the cost of Waymo’s in America, are racking up millions of kilometres of driving and are forging partnerships in Europe and the Middle East. In medicine, meanwhile, China has turned itself from a copycat maker of generics into the world’s second-largest developer of new drugs, including those tackling cancer. Western rivals are licensing its firms’ wares. The day when a pharma giant emerges from China no longer seems so remote.
The rise of both industries says much about how Chinese innovation works. A deep pool of talent, a broad manufacturing base and huge scale combine to propel it rapidly up the value chain. The production of robotaxis has piggybacked on mass EV manufacturing and a dominance in the supply of lidars and the other sensors needed for self-driving; scale has also helped bring down costs. Armies of patients enlisted in clinical trials and profits from generic drugmaking have speeded up pharma innovation.”
Clearly, the role of government is central to this development: “As in other industries, local governments have offered firms cheap credit and other help. But it is agile rulemaking that has really turbo-charged progress. Soon after political leaders set out their ambition for China to become a “biotechnology superpower” in 2016, the country implemented a number of reforms. The drug regulator’s workforce quadrupled between 2015 and 2018, and a backlog of 20,000 new drug applications was cleared in just two years. The time taken to secure approval for human trials shrank from 501 days to 87. Last year firms in the country ran a third of the world’s clinical trials.”
Another feature of Chinese progress has been the model to instil intense competition domestically to let the winner emerge to become globally competitive and make profits overseas: “Cut-throat competition at home imposes harsh conditions on individual companies, but the survivors are conditioned into becoming hypercompetitive export champions. China’s robotaxi operators compete with each other and with cheap human-driven taxis in an economy gripped by deflation. New technologies receive subsidies that ultimately come out of the pockets of its underpaid people. Many lossmaking enterprises will not survive the resulting price wars. But those that do will look overseas to make money.
…China’s cheap medicines could bring benefits, and particularly to the developing world. But for its companies America’s lucrative market, which is the source of 70% of global pharma profits, is the juiciest prize. And China’s importance for the pipelines of Western drugmakers means that the relationship could even be symbiotic.”
The Economist followed up this cover story with in-depth pieces in each of the two industries which can be accessed here and here.
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