 "From biotech to AI China is giving US a run for its money. AP")
Despite President Trump’s pledges to boost American dominance in artificial intelligence (AI) and biotechnology, recent policy moves risk undermining US leadership just as China surges ahead. Trump’s administration has imposed sweeping restrictions on the export of critical chip design software and advanced semiconductors to China, aiming to choke off Beijing’s access to the tools needed for cutting-edge AI development.
However, these curbs have prompted China to double down on its domestic innovation efforts, accelerating the development of home-grown AI chips and large language models, and pushing for self-sufficiency in key technologies.
At the same time, US funding cuts and freezes for biomedical research—especially at the NIH—are raising alarms among experts, who warn that this could stifle early-stage biotech innovation and allow China to set the pace in life sciences.
China now conducts more clinical trials than the US and is rapidly becoming a linchpin in global drug development, licensing new discoveries to American companies and leveraging a decade-long national strategy to dominate biopharma. As the US tightens controls and reduces public investment, it risks ‘shooting itself in the tech foot,’ potentially ceding ground to China in both biotech and AI at a critical moment in the global innovation race.
What’s happening in China
The world is seeing a big change in science leadership: China has passed US in the number of clinical trials. This is a critical moment in the global race to lead in biotechnology. China’s rise is the result of many years of government support, many trained researchers with PhDs, and more use of artificial intelligence (AI) in research. These efforts have helped China move from copying others to leading in biotech innovation.
The Wall Street Journal reports that Chinese companies, which used to only make copies of Western medicines, are now creating new treatments and selling them to big international drug companies. A key moment in this shift was Pfizer’s recent deal with China’s 3SBio Inc. Pfizer agreed to licence a cancer drug called SSGJ-707 for over $6 billion. The deal includes a $1.25 billion upfront payment, up to $4.8 billion in future payments based on progress and a $100 million investment in 3SBio’s stock.
Impact Shorts
More ShortsChina’s growth in biotech didn’t happen on its own. Bayer, a global drug company, has started a life sciences incubator in Shanghai. This shows how much Bayer values China’s growing pool of talent and its low-cost, creative way of doing research. Bayer’s head of development, Dr Juergen Eckhardt, said Chinese companies are “getting more and more competitive”. Many people in the pharma investment world agree.
Licensing flows reversed: From copying to leading
Pfizer’s landmark licensing deal is not an outlier. It is part of a fast-expanding trend of Western companies sourcing cutting-edge drug candidates from China. Investment bank Stifel noted that approximately 30 per cent of all licensing deals by major pharma companies in 2023 and 2024 involved Chinese biotech firms, up from just 12 per cent in previous years. This reversal signals a major transformation: China is no longer merely copying Western drugs — it is now creating them.
US-based venture capitalists have responded swiftly. Firms like SR One and Lux Capital are not just investing in Chinese biotech but are reorienting their business strategies around it. SR One has built a three-pronged China strategy that includes acquiring Chinese assets, encouraging clinical trials in Asia, and spinning off startups based on Chinese research. According to SR One’s CEO Dr Simeon George, some of the molecules being developed in China are “world-class,” compelling US firms to rethink how and where they place their bets.
Verdiva Bio, a UK startup backed by global investors including Forbion and General Atlantic, recently raised $411 million to develop anti-obesity drugs licensed from China’s Sciwind Biosciences. This is a telling example of how Chinese innovation is now forming the backbone of new ventures across borders.
US slips while China surges
Amid China’s ascendancy, many American scientists and industry leaders worry that Washington is undermining its own future. In contrast to Beijing’s long-term planning, US policy under the Trump administration has leaned toward budget tightening and regulatory overreach, particularly in biomedical funding.
Bipartisan commissions have warned that America is ceding ground in what is now a globally strategic domain. These experts argue that the US needs urgent investment and greater coordination in biotech to prevent a long-term erosion of leadership. Yet the response so far has been tepid. The country’s fragmented research funding, slow approval timelines and political gridlock have created an increasingly uncompetitive environment.
Meanwhile, China is conducting faster, more cost-effective clinical trials thanks to a large population pool and efficient regulatory processes. US investors, like David Yang of Lux Capital, noted that Chinese labs are quicker to act on promising research.
Export curbs backfire in AI battle
On another front, AI — a core driver of biotech innovation — has become the centre of escalating tech tensions between the US and China. The Biden-era export restrictions on high-end chips from Nvidia have been fully embraced and continued under President Donald Trump. These curbs, meant to prevent China from developing advanced military AI capabilities, are instead spurring massive Chinese efforts to build indigenous alternatives.
Nvidia CEO Jensen Huang has criticised the export controls, warning they jeopardise not just US corporate revenues but also long-term strategic influence. In a recent interview with CNBC, Jensen pointed out that China houses half of the world’s AI researchers, forming a vast developer ecosystem that is essential for maintaining a global tech edge. He said that cutting off such a large market undercuts America’s soft power in tech.
The numbers are staggering. Jensen estimated that Nvidia has already lost $8 billion in sales due to the controls, with up to $50 billion annually at stake. He described China as a “$50 billion-a-year opportunity” that could help the US balance its trade deficit and create thousands of high-paying jobs. But the policy, focussed on national security over commerce, has prioritised caution over cash flow.
China’s response: De-Americanise the tech stack
Beijing has not taken the restrictions passively. Instead, it has accelerated its campaign to “de-Americanise” its technology stack, as declared by President Xi Jinping at an April Politburo study session. The Chinese leader called for breakthroughs in fundamental AI research, domestically produced chips, and software platforms that are independent from Western influence.
Sinocism’s Bill Bishop noted that Xi’s statement clearly signaled an intent to remove US companies like Nvidia from the core of China’s digital infrastructure. The strategy aligns with national security goals and longer-term economic sovereignty. Though China’s domestic chips still lag behind Nvidia in performance, the government’s resolve — and deep coffers — have launched an all-out sprint toward tech self-sufficiency.
This means that even if export curbs are relaxed, American companies may have already lost their window of dominance. Nvidia’s market share in China, which once stood at 95 per cent, has dropped to 50 per cent and continues to shrink as local competitors like Huawei scale up.
Strategic technologies in a Cold War framework
Both biotech and AI are now viewed through the lens of national security, not just economic competitiveness. The new tech cold war pits China’s long-term, state-driven strategies against America’s market-based, often short-term policymaking. The stakes are existential. As AI becomes the engine behind breakthroughs in drug development, materials science and military applications, whoever leads in these fields may shape the rules of the 21st century.
Jensen, while highlighting Nvidia’s loyalty to US interests, warned that technological dominance cannot be ensured by sanctions alone. Instead, sustained investment in domestic innovation, workforce development and global alliances are needed. “We want the world to build on American technology stack,” he told CNBC’s Jim Cramer. But cutting off half the world’s AI developers — in China — from those platforms could prove to be a self-inflicted wound.
In biotech, the story is no different. Licensing deals from Chinese firms are already reshaping Western pharmaceutical pipelines. US hesitancy or regulatory isolationism could end up bolstering China’s global position further, as both partners and competitors increasingly look East.
Call for US action grows louder
With bipartisan commissions sounding the alarm, pressure is mounting for Washington to counter China’s advances not with bans, but with bold initiatives. These groups are urging a Manhattan Project-scale investment in biotechnology, citing the sector’s potential to transform not only medicine but also national security and economic productivity.
They are calling for coordinated action across federal agencies, enhanced public-private partnerships and more resilient supply chains. But such a response requires strategic patience — something Washington rarely musters. In contrast, China’s leadership is playing the long game, aligning its research, education and industrial policy with an unwavering focus on tech supremacy.
If current trends continue, the US risks losing its innovation edge not because China is stealing it, but because America is neglecting it. Trump’s policies, while rooted in legitimate national security concerns, may be inadvertently accelerating China’s rise by walling off critical markets, talent and partnerships.
The verdict: Who’s winning the future?
The global contest for biotech and AI leadership is no longer speculative — it’s already playing out in clinical labs, investment firms and code repositories. China, with its concerted push toward innovation and self-sufficiency, appears to be pulling ahead. The US, meanwhile, risks handicapping itself through underfunding, isolationist trade policies and a lack of cohesive vision.
Pfizer’s partnership with 3SBio, Nvidia’s lost billions and Xi’s tech directives all tell a consistent story: the balance of power in high technology is shifting. Whether the US regains its footing or allows this slip to become a fall depends on the choices it makes now.