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, where a top-down government approach is shaping research and development, according to experts at the Special Competitive Studies Project (SCSP), a nonprofit initiative focused on U.S. competitiveness in critical technologies.
Quantum technology exploits the physics of subatomic particles and, while not new, recent hardware and software advances enable broader applications. These include enhanced security through quantum navigation systems that could mitigate GPS vulnerabilities like outages and cyberattacks; secure communications via quantum networks; and powerful computing that can accelerate scientific research or optimize supply chains.
Building a quantum ecosystem requires support across multiple supply chains, including semiconductors, nanotechnology, and photonics, with collaboration among tech companies, academia, government agencies, and startups. China has built a vast, state-backed quantum ecosystem, as highlighted by SCSP experts. Data from Datenna, an intelligence platform analyzing Chinese primary data, reveals that state-affiliated telecom giants like China Telecom fund a network of quantum startups. "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," said Dr. Damien Bérubé, an SCSP researcher in Emerging Technology Policy and Quantum Science.
In a recent SCSP newsletter, Bérubé noted that Datenna data helps estimate China's quantum activities. The data indicates China is creating demand for quantum technology before the market is sustainable. State-backed customers and subsidies enable Chinese companies to build up before competing globally. For instance, Origin Quantum, supported by the Chinese Academy of Sciences, is now preparing for an IPO with a valuation of approximately $1 billion, according to Datenna.
According to SCSP experts, the rise of Chinese quantum firms does not pose an immediate threat of replacing U.S. and allied firms in all high-end markets. However, Chinese suppliers that survive on protected domestic demand will eventually enter foreign markets at lower prices. "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," the experts concluded.
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