What can Europe learn from China’s critical-tech innovation push?

This Policy Brief examines China’s rapid ascent in frontier innovation across artificial intelligence, semiconductors and quantum computing, and the most important companies behind these breakthroughs. In these three areas, the United States leads overall, but China continues to narrow the gap and now excels in areas including semiconductor fabrication, AI video and audio processing and aerial vision. China lags the most in quantum computing. The European Union lags significantly behind both the US and China in patent breakthroughs, with slightly better relative performance in quantum.When it comes to the diffusion of such breakthroughs, Chinese and US innovators are much faster than their European counterparts at replicating novel patents from other countries. European innovators take more than twice as long to replicate US or Chinese breakthroughs, whether in AI, semiconductors or quantum. That Chinese replication happens nearly as rapidly as US replication, even in areas subject to strict export controls, is another signal of China’s rapidly advancing innovation capabilities in critical technologies.China stands out in terms of the diversity of companies and institutions that dominate the filing of novel patents. In the US, breakthroughs are heavily concentrated in the big-tech companies. Novel patents originating in the EU are filed by a mix of companies and public research centres, with the telecoms sector dominating more than in other geographies.Furthermore, China is moving up the ladder in homegrown innovation in basic research. This is offering an edge, especially in semiconductors, to which China has dedicated huge energy and funding resources. By contrast, Europe’s fragmented markets and reliance on public research limit scale and hold back commercialisation. To close the gap, Europe must increase research and development in critical technologies while further integrating its national innovation ecosystems.