China's State-Backed Quantum Ecosystem: Implications for US Competitiveness

Quantum technology is set to transform the global economy by revolutionizing computation, communication, and measurement. As this technology advances, the United States must closely monitor China's quantum ecosystem, which benefits from a government-led, top-down approach to research and development, according to experts at the Special Competitive Studies Project (SCSP). The nonprofit and nonpartisan initiative aims to strengthen America's long-term competitiveness in AI and other critical technologies.

Quantum technology, which harnesses the physics of subatomic particles, is not new, but recent hardware and software advancements enable broader applications. These include quantum navigation systems that could mitigate GPS vulnerabilities like outages and cyberattacks, secure communication networks, and quantum computing that accelerates scientific research and optimizes supply chains by quickly identifying optimal solutions among vast possibilities.

A thriving quantum ecosystem requires support across supply chains for semiconductors, nanotechnology, and photonics, along with collaboration among tech companies, academia, government agencies, and startups. According to SCSP experts, China has built an expansive, state-backed quantum ecosystem. Data from Datenna, an intelligence platform analyzing Chinese primary data, reveals that state-affiliated telecom giants, led by China Telecom, fund a network of quantum startups. Dr. Damien Bérubé, a researcher in Emerging Technology Policy and Quantum Science at SCSP, noted, “Many of these firms trace their origins to state laboratories or university research groups, where Beijing retains influence through funding, ownership, procurement, or institutional ties.”

In an SCSP newsletter, Bérubé highlighted how Datenna data estimates China's quantum activities. The data shows that China is creating demand for quantum technology before the market can sustain itself, with state-backed customers and government subsidies enabling Chinese companies to build capacity before competing globally. For instance, the Chinese quantum firm Origin Quantum, supported by the Chinese Academy of Sciences (CAS), is preparing for an IPO with a valuation of approximately $1 billion, according to Datenna.

SCSP experts caution that while Chinese quantum firms do not immediately threaten to replace US and allied companies in high-end markets, they pose a longer-term risk. By surviving on protected domestic demand, Chinese suppliers can eventually enter foreign markets at lower prices, undercutting competitors. The experts concluded, “A network map of these contracts should therefore be read less as a list of isolated transactions and more as an industrial policy map: which buyers sustain certain suppliers, which sectors are receiving demand signals, and which firms are being positioned to scale.”

For more insights, visit SCSP.