China has long been dismissed as the world’s factory floor—a country that excels at manufacturing technologies invented elsewhere yet is unable to invent anything radically new on its own. But it has proved in the past decade that it can be an innovation powerhouse. China is now far ahead of the United States in manufacturing and deploying advanced technologies such as electric vehicles, batteries, wireless telecommunications equipment, humanoid robots, and next-generation nuclear power. China’s rapidly growing pharmaceutical sector has nearly caught up to the United States in its pace of introducing new drugs to the market. And China’s military now has technological capabilities the United States lacks, including what the Pentagon calls “the world’s leading hypersonic missile arsenal.”

China’s success stems from pouring resources into all parts of its innovation ecosystem, from basic scientific research to educating scientists and engineers to commercializing new products. In 2015, Beijing launched an ambitious plan called “Made in China 2025” to accelerate its goal of becoming a global technology leader. By offering massive state support to companies in key sectors, such as information technologies, robotics, and aerospace, Chinese leaders aimed to reduce the economic and national security risks associated with China’s dependence on foreign firms and make its own high-tech firms more competitive.

Ten years since launching Made in China 2025, China has largely succeeded. Its product innovations in electric vehicles, for instance, are so impressive that last year Ford’s CEO, James Farley, called China’s electric vehicle industry “the most humbling thing I have ever seen,” with far superior in-vehicle technology, costs, and quality. Even in sectors in which China has failed to dominate, it has made major strides. In semiconductors, China has not managed to manufacture leading-edge chips to train the most advanced artificial intelligence models, but it has built the world’s largest production capacity for legacy chips that are used in cars and ordinary electronics. In its 2025 annual report to Congress, the U.S.-China Economic and Security Review Commission, which analyzes the national security implications of the two countries’ economic relationship, found that “China now possesses a hyper-charged, state-directed manufacturing base without historic parallel.” More direly, the commission also assessed that “China is now positioned to develop and scale new technologies and attain first-mover advantage in many industries of the future.”

The United States, meanwhile, has lost its focus. After more than 80 years as the world’s undisputed innovation leader, Washington has failed to fully appreciate the threat posed by China’s increasing domination of the innovation chain—from basic research to high-tech manufacturing. And policymakers’ recent actions are making the problem worse. Instead of rising to the occasion to meet this challenge, the current administration is undermining the United States’ strengths in innovation and failing to address its weaknesses.

The United States needs to once again embrace science and innovation as crucial to American strength. This requires investing in basic science, which focuses on expanding fundamental knowledge and which is the source of truly disruptive new technologies. It also means attracting, educating, and retaining the world’s best science and engineering talent. And it demands exploring new ways of turning cutting-edge research into marketable products and scaling them more quickly. China is moving ahead; if the United States fails to correct course, it risks ceding the future to its greatest geopolitical rival.

A commitment to basic science has been at the heart of U.S. technological leadership since the mid-twentieth century. The best innovation generally occurs where the best science occurs. Although humans have been inventing new technologies throughout history, it was only during the Industrial Revolution that technology began spurring sustained economic growth. As the historian Joel Mokyr has shown, the key factor underlying this growth was seventeenth- and eighteenth-century advances in science and the culture of science in the West, which spread knowledge of the principles that explain natural phenomena. Before that, Mokyr writes, “it was a world of engineering without mechanics, iron-making without metallurgy, farming without soil science.” A society that understands why something works can more easily improve how it works, a process that builds on itself and accelerates technological development.

In the United States, universities are the largest performers of basic scientific research, and the federal government is its largest funder. Before World War II, universities conducted relatively little scientific research, concentrating instead on their educational mission. But the war forced a reckoning. Vannevar Bush, President Franklin Roosevelt’s science adviser, enlisted academic scientists to develop new technologies—including many that proved key to victory, such as microwave radar, the atomic bomb, and penicillin. When the war was over, Bush urged U.S. leaders to continue to support scientific research at universities. “New products and processes are not born full-grown,” he wrote. “They are founded on new principles and new conceptions which in turn result from basic scientific research.” Bush saw universities as the right place for research to develop these new principles and conceptions. They are under less pressure for immediate and tangible results than industrial laboratories and are the training ground for young scientists. In the early years of the Cold War, American officials set up agencies such as the National Science Foundation to fund such exploratory research.

This government-university partnership created the world’s greatest and most diverse collection of research universities. The United States not only led in basic research; it also effectively transformed new ideas into foundational technologies, including the Internet and smartphones. Funding from the National Institutes of Health, which supports biomedical research at U.S. universities, medical schools, and academic medical centers, contributed to nearly every drug approved by the Food and Drug Administration between 2010 and 2019. After the Bayh-Dole Act of 1980 allowed universities to own and license discoveries that came from federally funded research and to share........

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