China’s Race for Innovation, Cultural Diplomacy and Soft Power

For decades, the United States has been the dominant global leader in technological output

and diplomatic influence. With the most powerful military and the largest economy, the

United States has shaped international affairs through alliance building and has long served

as the model that many nations aspire to emulate.

In 2025, however, social media feeds are inundated with stories about the increasingly

negative outlook among younger Americans. A reported 97 percent of Gen-Z Americans say

they face barriers to home ownership, with 47 percent citing rising housing prices as a major

obstacle. Medical expenses remain the leading cause of bankruptcy in the United States,

contributing to over 60 percent of filings.

Meanwhile, on the other side of the world, the glowing skylines of Chinese megacities and rapid advances in robotics and artificial intelligence challenge the idea that the United States remains the unrivaled technological powerhouse. As a result, China is becoming a more attractive model for some observers.

This shift is not coincidental. Recent periods of American isolationism, particularly following

the start of the second Trump administration, have created a geopolitical vacuum. Many

countries have gradually moved away from relying on the United States and have turned

instead to Chinese manufacturers, benefitting from lower labor costs, fewer worker

protections, and cheaper energy sources. 

Over the years, China has invested significantly in initiatives to help boost its economic prowess and has narrowed the R&D expenditure gap between itself and the US. As per the OECD, China’s R&D expenditure grew by 8.7% in 2023, surpassing that of the OECD area, the US (1.7%) and the EU (1.6%) in 2023, signifying that China’s R&D expenditure reached 96% of US GERD, up from 72% ten years prior. 

With China possessing the advantage of having a population of 1.4 billion people, China also produces more STEM graduates than any other country annually, creating a vast domestic talent network despite having fewer graduates per capita than the US. 

China also has a significant geographic advantage compared to the US, which had led

Chinese president Xi Jinping to launch the Belt and Road Initiative in 2013, one of the most

ambitious infrastructure projects to date. It has the goal of creating a network of high-speed

railways, energy pipelines and highways linking China to neighboring countries, which has

since expanded to parts of Europe, the Middle East and Africa. 

This initiative has become a cornerstone of Chinese foreign policy and aims to promote financial cooperation with developing countries, expanding the use of the Chinese renminbi and streamlining the flow of goods and services by alleviating trade barriers. In exchange, China receives secure access to vital resources and supply chains across Asia, and ensures that participating countries align their national economic development strategies and regulatory standards with China's.

China’s strategy extends beyond building goodwill with developing nations. It also plays a

significant role in helping countries such as Russia, Iran, and North Korea circumvent

Western sanctions by increasing trade and offering diplomatic support. These partnerships

are driven by shared geopolitical interests and a common desire to challenge the dominance of Western-led financial institutions. 

After Western energy sanctions were imposed on Russia, China increased its purchases of discounted Russian oil, importing around 1.5 million barrels per day in the first half of 2025, which has been crucial in sustaining the Russian economy during the war in Ukraine. The partnership is further reinforced by joint military training, mutual defense arrangements, and deployments of military personnel to the region.

Concurrently, China has masterfully leveraged its state-coordinated economic engine to

close the technological gap, as evidenced by its aggressive lead in R&D expenditure growth.

This technological parity is not being developed in isolation, it is being seamlessly integrated

into a strategic geopolitical vision. 

The question for the coming decades is no longer whether China will challenge the status quo, but whether the Western world can devise a coherent, competitive strategy that addresses its own structural weaknesses while effectively countering China’s unified, long-term vision for the world.