Tech Edge: A Living Playbook for America’s Technology Long Game
Published January 20, 2026
By Navin Girishankar, Mark P. Dallas, Sree Ramaswamy, Scott Kennedy, Philip Luck, Joseph Majkut, Ilaria Mazzocco, Erin L. Murphy, Matt Pearl, Richard M. Rossow, Sujai Shivakumar, Chris Borges, Ray Cai, and Ryan Featherston
In the ongoing narrative of global technological competition, China is frequently depicted either as an unstoppable powerhouse dominating sectors like electric vehicles (EVs), batteries, and solar panels, or conversely, criticized for a lack of frontier-pushing creativity. Meanwhile, the United States is alternately hailed as the unrivaled leader in artificial intelligence (AI) or chastised for a declining manufacturing base and worrisome dependence on foreign rivals. However, the reality of technological leadership and competition between these two giants is far more nuanced and provides critical lessons for the future.
The Current State of Technology Competition
In 2025, China made significant strides in AI despite facing chip constraints, and it achieved notable breakthroughs in robotics and quantum computing. Additionally, Beijing successfully weaponized its dominant control over rare earth element processing, a critical component in many high-tech manufacturing processes. Nonetheless, China still struggles with producing certified jet engines and competing in advanced machine tool production.
Conversely, the United States controls approximately 90 percent of the global market for AI chips and produces many of the most advanced AI models available today. However, it faces severe challenges in manufacturing capacity, especially at the scale required for mass production, and depends on international rivals for critical raw materials.
The Concept of Technological Dexterity
Traditional measures of technological competition—such as R&D spending levels, patent counts, and market share—only capture fragments of the broader picture. The report introduces the concept of technological dexterity as a more profound explanation for why some countries lead in certain domains and lag in others.
Technological dexterity refers to the ability to build and sustain strengths across various technology types, recognizing how advantages in one domain can compound advantages in others. For example, AI chips are essential for AI software models to function effectively; rare earth processing underpins chip manufacturing; and precision machine tools are necessary for aerospace components.
However, these interdependent technologies only thrive when supported by the right ecosystems—comprising firms, research institutions, policies, and networks—that foster innovation while enabling scale and speed in deployment.
A Long Game: Ecosystem-Building versus Flashy Breakthroughs
China’s technological ascent is the result of deliberate, systematic ecosystem-building over decades. The country has strategically developed capabilities in rare earth processing, scaled manufacturing ecosystems, and invested heavily in bridging the so-called “missing middle” —the critical phase between laboratory breakthroughs and market-ready production.
Meanwhile, the United States has often failed to maintain a similarly focused approach on ecosystem foundations despite its edge in frontier research. The key challenge is whether the U.S. can rebuild and sustain essential manufacturing and supply chain capabilities faster than China consolidates its compounded advantages.
Ecosystem Drivers of Technological Leadership
Moving beyond snapshot analyses, the report emphasizes that durable technology leadership stems from dynamic ecosystems characterized by four foundational building blocks:
- Economy-wide fundamentals: Macroeconomic stability, adherence to the rule of law, and efficient factor markets.
- Technology-specific enablers: Robust infrastructure for R&D, strong intellectual property rights, clear standards, and talent pipelines.
- Ecosystem governance: Public-private coordination and adaptive regulatory frameworks.
- Enterprise strategies: Innovation cycles, global production networks, and effective intra-firm coordination.
These components collectively determine how well a country converts scientific discoveries into scalable industrial output and sustained competitive advantage.
Categorizing Technologies and U.S.-China Comparative Strengths
Technologies can be categorized into four types based on their application breadth and production complexity:
- Stack technologies (e.g., AI and advanced semiconductors): Require capital markets, collaborative research, and platform orchestration.
- Precision technologies (e.g., jet engines and lithography): Depend on long-term partnerships and rigorous certification regimes.
- Production technologies (e.g., high-end machine tools): Need patient capital and continuous vocational training.
- Base technologies (e.g., rare earth elements, batteries, steel, aluminum): Require coordinated supply chains and processing infrastructure.
By examining examples from each category, the report sheds light on ecosystem strengths and weaknesses between the U.S. and China:
- The United States dominates Stack technologies, controlling 90 percent of the AI accelerator market and leading in the number of notable AI models (40 vs. China’s 15).
- In Precision technologies like jet engines, the U.S. maintains leadership owing to decades-long industry moats; China has yet to produce a certified commercial jet engine despite significant investment.
- China leads in Base technologies, processing 90 percent of rare earth minerals worldwide and producing more steel than any other country.
- On Production technologies like machine tools, the U.S. has lost ground historically. Notably, China is still unable to compete at the highest tiers of machine tool manufacturing, a field dominated primarily by the European Union and Japan due to strong supplier networks and vocational training regimes.
Challenges and the Path Forward for America
While the U.S. excels in pioneering research, it struggles with the capital-intensive phases of engineering, testing, and mass manufacturing—the critical “missing middle” that allows competitors to climb steep learning curves rapidly.
Despite this, America retains foundational advantages that Beijing finds hard to replicate: openness to international collaboration, institutional trust, the attraction of global talent, and the ability to orchestrate complex alliances with partners.
However, the slow diffusion of innovation within the U.S. ecosystem limits the country’s ability to scale inventions effectively and rapidly.
Conclusion
Tech Edge: A Living Playbook for America’s Technology Long Game calls for a renewed focus on technological dexterity—strengthening ecosystem building blocks that interlock various technology domains. The long game of technological supremacy demands not only breakthroughs but also robust manufacturing, supply chains, governance, and enterprise strategies.
America’s future technology leadership hinges on its capacity to rebuild and sustain diversified technological ecosystems faster than China’s compounding industrial advantages.
For the full report and executive summary, visit the Center for Strategic and International Studies (CSIS) website.
Photo credit: Siarhei/Adobe Stock
