While the Trump/Vance administration cuts/delays/reallocates billions of dollars of funding provided for by the CHIPS and Science Act without providing an alternative investment plan (their “strategy” relies mainly on high tariffs and tighter export controls), China remains steadfast in its commitment to funding the research and development and manufacturing of “hard technologies” like quantum computing, new A.I. models, robotics, and semiconductors.

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One of the projects China designed in its pursuit of economic self-reliance – something called Made in China 2025, launched in 2015 – is a state-run initiative that uses government subsidies to upgrade its manufacturing sector from low-cost goods to an innovative, highly advanced dynamo. As a result, China’s manufacturing ascendency happened quickly during Phase One. The share of Chinese global production increased from 3 percent to over 30 percent between 1990 and 2022 and is projected to account for 45 percent of global manufacturing by 2030.

 

As it stands today, the United States accounts for roughly 18 percent of global manufacturing value added (and shrinking) while China controls 30 percent (and growing). In August 2022, the U.S. Congress passed the CHIPS and Science Act, authorizing around $280 billion over ten years for semiconductor manufacturing, scientific R&D, innovation, workforce development and related programs. This legislation was in response to the fact that the U.S. manufactures only 10 percent of the world’s semiconductors – a significant drop from roughly 37 percent in 1990.

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This is a major national security issue because semiconductor manufacturing – particularly production of the world’s most advanced chips – is heavily concentrated in East Asia, including Taiwan, just across the Taiwan Strait from China. Taiwan has historically produced over 90 percent of the world’s most advanced logic chips… just one Taiwanese company, for example, manufactures over 70 percent of the microcontroller units used in automobiles, technology that is used in practically every vehicle in the entire world. (Please believe, we recognize that $280 billion is a ton of money and, if we invest in things like this, cuts will have to be made elsewhere... read more here).

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Within two years of the CHIPS Act passing, the U.S. Commerce Department reported that the U.S. was on track to manufacture almost 30 percent of the world’s leading-edge chips by 2032. In its 2025 report, the Semiconductor Industry Association said the legislation had ignited over 100 projects in 28 states, totaling over half-a-trillion dollars in private investment. These projects were expected to create and support over 500,000 American jobs and help triple U.S. chip-making capacity by 2032. Projects included the construction of new manufacturing facilities for advanced logic, memory, analog, and legacy chips; expansions of existing sites; and facilities that supply the key materials and equipment used in chip manufacturing. >

 

The CHIPS Act certainly wasn’t perfect. But it was at least a start – at a time when China’s research and development budget has been growing at an average of 8.9 percent a year… and that was before Beijing announced a new $138 billion state-backed research and development fund in March 2025.

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China doubled down on this the following October – nine months into Trade War 2.0 – when Xi Jinping announced yet another new strategy that will take “extraordinary measures” to help China secure a global lead in advanced manufacturing and technology, saying, “The balance of global power is undergoing profound readjustment, and breakthroughs in a new phase of technological revolution and industrial transformation are accelerating.”

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“Unilateralism and protectionism are raising their heads, and the threats from hegemony and power politics are escalating.” So, China must “seize the window of opportunity to consolidate and expand our strengths, break past bottlenecks and surmount weaknesses, to gain the strategic initiative in intense international competition.”

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Nevertheless, Republicans immediately went after the legislation upon Donald Trump’s return to the White House – again, with zero strategy of their own to replace it. The president went so far as calling the CHIPS Act a “horrible, horrible thing” and telling lawmakers to “get rid” of the law in his joint address to Congress on March 4, 2025… which means Donald Trump and congressional Republicans all but ensured the United States will fall behind.

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The Information Technology & Innovation Foundation warns that data from the Organization for Economic Cooperation and Development (OECD) shows that “U.S. growth in Gross Domestic Expenditures on R&D (GERD) is slowing, while China’s has remained relatively high and stable. In three key categories of research and development that contribute to GERD, U.S. spending growth is now only a fraction of China’s. Even when adjusted for GDP, China’s growth still exceeds that of the United States. At this rate, China will soon surpass the United States in gross R&D investment.”

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“Moreover, because Chinese R&D is less expensive than U.S. R&D, China likely already conducts more R&D activity than the United States… for every U.S. R&D worker supported by $100,000 of R&D spend, a Chinese firm spending $100,000 on R&D can throw 2.3 workers at the [same] problem.”