[Video] AI, robots, innovative drugs: China’s high-tech trio rattles the West

Since its policy of reform and opening up began in 1978 and especially after joining the World Trade Organization (WTO) in 2001, China became the world’s factory. With a vast, cheap workforce and big factories, it mass-produced clothes, furniture and home appliances and exported them at rock-bottom prices.

But it found itself at the bottom of what economists call the “smile curve”. The real money sat at both ends, in research and development (R&D) and design on one side and branding and services on the other. China did the assembly in the middle and kept the thinnest slice.

The “new three” of electric vehicles (EVs), lithium batteries and solar cells changed that. China’s technological breakthroughs challenged the stereotype of cheap, poor-quality goods, and its products came to be seen as advanced and impressive. At the same time, China kept its ability to produce at a scale and price few could match. By 2025, “new three” exports reached nearly US$192 billion. That year, BYD sold 2.26 million battery-powered cars, overtaking Tesla’s 1.64 million for the first time. 

Then came what China calls the “new ‘new three’”: artificial intelligence (AI), robotics and innovative drugs.

AI

In January 2025, Chinese startup DeepSeek released its R1 model and rattled Silicon Valley, reportedly matching top US systems at a fraction of the cost. Alibaba says its Qwen family has since passed 3 billion downloads, with developers building over 300,000 derivative models on top of it. In July, Moonshot AI released Kimi K3, at 2.8 trillion parameters the largest open-weight model to date.

Open-weight models can be downloaded, modified and run by anyone for free. That openness is the strategy. China’s open AI models have been downloaded over 10 billion times worldwide. Their appeal lies in strong performance at low cost. Airbnb’s chief executive Brian Chesky has said the company relies heavily on Qwen for its customer service agent, calling it fast and cheap.

And China is not just exporting the models. It is also exporting the algorithms, computing power, digital solutions and hardware that come with them.

Robotics

In the first half of 2026 alone, Chinese companies accounted for more than 97% of the world’s humanoid robot shipments. Industrial robot exports reached US$930 million, sold to 141 countries and regions, and surgical robot exports more than tripled.

Zoom out, and the numbers get bigger. From January to May this year, China exported over 10 million robots of all kinds, worth nearly US$3 billion dollars.

Chinese robots are also cheaper than Western rivals, because almost every part is made at home. Many of those parts come from the EV boom. The electric motors, batteries, sensors and control chips China mass-produced for electric cars are the same building blocks a robot needs.

And buyers get more than a machine. They also get the software, data and training that make it useful on their own factory floor. Some Chinese firms even design and build end-to-end automated production lines for overseas factories.

Many of the world’s top robot vacuum brands, such as Roborock, Ecovacs and Dreame, are also Chinese. Together, Chinese brands ship nearly 70% of robot vacuums worldwide.

Innovative drugs

An innovative drug is a new medicine protected by its own patents. It may attack a disease in a new way, work significantly better than existing treatments, or have an entirely new chemical structure.

In the first half of this year, Chinese firms signed about US$110 billion in licensing deals. Eight of the world’s ten biggest pharma deals involved a Chinese company, including Bristol Myers Squibb’s deal with Jiangsu Hengrui, worth over US$15 billion.

By the end of 2025, China had about a third of all innovative drugs in development worldwide, more than any other country. Some are already on the market: BeOne’s blood cancer drug Brukinsa, which sells over US$1 billion a quarter worldwide, was developed in China.

A new era of ‘Made in China’

The new “new three” share three traits. They need huge upfront R&D spending, run on specialist knowledge and are hard to copy. What China exports is shifting too: less the finished product, more the software, standards, patents and research behind it.

From factory-driven to innovation-driven. From exporting labour, to technology, to knowledge. That’s how China’s exports have evolved.

So how did China pull it off?

First, money. China spent 3.92 trillion RMB on R&D last year, 2.8% of GDP. Policy has steadily shifted towards funding the new “new three”.

Second, each wave built the next. For example, the supply chain built for EVs now powers robots.

Third, a huge home market. Companies can test, fail and improve at home, at scale, before going abroad.

Put it together: massive scale keeps costs down, a complete supply chain speeds up delivery, and bundled services like maintenance, training and software make the product stickier. 

And the new “new three” aren’t replacing the old ones. The old three still employ millions and anchor China’s trade. With digital upgrades, they’re moving upmarket. The “new three” keep extending China’s lead in the green industry. And the new “new three” sit on top, giving everything below the tools to upgrade.

The missing pieces

Yet the climb is far from complete. Three main challenges remain.

The first is trust. Some countries have barred DeepSeek from government devices over data security concerns. Critics also worry that Chinese models may carry built-in content filters. In late July 2026, the US banned imports of new Chinese humanoid robots on national security grounds. As tech rivalry intensifies, more countries are tightening controls on technology, patents and market access in AI, biotech and high-end equipment.

The second is self-reliance at the very top of the supply chain. China makes most of the parts it needs, but still depends on foreign high-end AI chips, as well as imported components and materials for some advanced medical equipment. Its research base is also comparatively thin. Basic research accounted for only about 7% of China’s R&D spending in 2025, against roughly 15% in the US and 23% in France. Chinese state media itself acknowledges a shortage of top research talent and weak links between industry, universities and research institutes.

The third is that the rules have yet to catch up. Regulation on AI ethics, international drug approvals and global robot standards all lag behind the pace at which these industries are growing.

Beijing’s response is twofold: close the remaining gaps at the top end of its supply chain, and push for a greater say in how global rules are written.

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