Quantum technology is poised to permeate all corners of the global economy by dramatically changing the way the world computes, transmits, and measures information. As the technology evolves, the United States must monitor China's quantum ecosystem and how the government's top-down approach impacts research and development, according to experts at the Special Competitive Studies Project (SCSP), a nonprofit initiative focused on strengthening America's long-term competitiveness in AI and critical technologies.
Quantum technology involves the physics of subatomic particles and is not new, but current hardware and software allow for more widespread use. Potential applications include security, such as quantum navigation systems that could reduce GPS vulnerabilities; communications, where quantum networks could support more secure information transfer; and computing, which could accelerate scientific research or optimize supply chains.
Quantum technology requires an entire ecosystem, including supply chains for semiconductors, nanotechnology, and photonics, and collaboration among companies, academia, government agencies, and startups. China currently has an expansive state-backed quantum ecosystem, according to SCSP experts. Data from Datenna, an intelligence platform analyzing Chinese data, shows state-affiliated telecom giants, led by China Telecom, funding 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, a researcher in Emerging Technology Policy and Quantum Science.
In a recent SCSP newsletter, Bérubé highlighted how Datenna data estimates China's quantum activities. China is creating demand for quantum technology before the market can sustain itself, with state-backed customers and subsidies helping companies build up before competing globally. For instance, the Chinese quantum firm Origin Quantum, supported by the Chinese Academy of Sciences (CAS), is now preparing for an IPO with a valuation of approximately $1 billion, according to Datenna.
The rise of Chinese quantum companies does not pose an immediate risk of replacing U.S. and allied firms in every high-end market, but Chinese suppliers that survive on protected domestic demand will eventually enter foreign markets at lower prices, SCSP experts said. "A network map of these contracts should 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," they concluded.
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