For years, manufacturing products in China seemed like a smart business move for major American tech companies like Apple. The logic was simple: lower production costs would lead to higher profits. But this pursuit of greater margins overlooked a critical reality—that these same companies would become key sources of revenue, technology, and innovation for China, America’s long-term strategic rival.
Today, China possesses industrial, technical, and human capabilities unmatched by any other nation, largely built through producing goods like mobile phones and electric vehicles for foreign corporations in its factories. While U.S. firms were using China for cheap manufacturing, China was using them to accelerate its own technological development.
This was no accident. According to Kyle Chan, a researcher affiliated with Princeton University, China deliberately attracted—and leveraged—companies like Apple to upgrade its entire economy. “It wasn’t just, ‘Hey, come manufacture in China, make a lot of money, and everyone’s happy,’” Chan explains. “The reality is: you have to contribute to China’s development.”
Other firms like Volkswagen, Bosch, Intel, SK Hynix, and Samsung also played a role in this strategy. Experts agree the center of gravity in the tech industry has shifted. Where the U.S. was once the unrivaled leader in world-changing innovation, it now faces stiff competition across nearly every sector.
In his book *Apple in China: The Capture of the World’s Greatest Company*, former Financial Times correspondent Patrick McGee details how Apple’s decision to produce over 90% of its goods in China was not only cost-effective but highly profitable. More importantly, Apple’s wealth and cutting-edge manufacturing expertise provided Chinese suppliers with funding, training, oversight, and supply chain know-how—skills Beijing is now using as leverage against the West.
Over time, foreign suppliers within Apple’s production chain were gradually replaced by Chinese companies, particularly in areas like screens, lenses, displays, camera modules, and chips. By 2024, nearly 90% of Apple’s suppliers had manufacturing plants in China, with more than half headquartered in China or Hong Kong.
Even as Apple tries to diversify its production locations, it remains heavily dependent on Chinese manufacturers and workers, who often earn just $1–2 per hour. McGee claims the Chinese government could shut down Apple’s production “overnight” if it chose to.
Beyond becoming a key supplier, China also learned to develop its own sophisticated smartphones, electric vehicles, and AI models—in many cases drawing directly from exposure to Western technology and engineering. Huawei, Xiaomi, and BYD are among the Chinese firms that have risen with the help of this transferred knowledge.
The competition is especially fierce in artificial intelligence. Although the U.S. still leads in foundational models like GPT-3 and GPT-4, China is catching up rapidly. Earlier this year, the Chinese chatbot DeepSeek emerged as a capable competitor to ChatGPT—reportedly developed at a fraction of the cost and using downgraded Nvidia chips in defiance of U.S. export controls.
These export restrictions, intended to slow China’s progress, may have inadvertently accelerated its push for self-reliance. When Huawei was cut off from Google’s Android system in 2019, it was forced to develop its own operating system and chips—something it may not have done otherwise.
China’s advantages lie in its long-term planning, intense internal competition, and vast market scale. With a population of 1.4 billion, it can test emerging technologies at a pace and magnitude few other nations can match. Centralized data systems, cashless payments, and AI-driven logistics are already deeply integrated into daily life in cities like Shanghai.
Still, challenges remain. As Han Shen Lin, China Director at The Asia Group, notes, China’s tech ambitions still depend on global cooperation and acceptance—particularly when it comes to setting international standards. Its Belt and Road Initiative and growing influence in multilateral organizations are part of its effort to expand its reach and shape the rules of tomorrow’s digital world.
The story is no longer about who makes the most products, but who controls the technology that defines the future. And in that race, China is no longer just following—it’s leading in key areas.
