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China is entering a new phase of its industrial development. Following its integration into global value chains and the rise of Chinese companies as competitors to Western providers, Beijing’s strategic focus is now shifting to the key technologies of the future. A new study by the FERI Cognitive Finance Institute, in collaboration with the China strategy consultancy Sinolytics GmbH, examines this development and its implications for Europe. „China’s third wave will have a much greater impact on the West than the previous two,“ says Dr. Heinz-Werner Rapp, founder and director of the FERI Cognitive Finance Institute. „This poses a fundamental challenge for Germany and Europe, as many of the success models of the past decades were based on a technological edge.“
The first wave of China’s rise, following its accession to the WTO in 2001, transformed China into a global manufacturing hub. The second wave is currently hitting Europe with full force. Chinese companies have emerged as serious competitors in industries such as automotive, mechanical engineering, and chemicals—albeit along technological paths that the West had laid out. That is precisely what is changing now. „The third wave marks the transition from a technological catch-up race to actively shaping its own, parallel technological paths,“ explains Björn Conrad, CEO of Sinolytics GmbH and co-author of the study. „China is increasingly establishing decoupled and competitive technological solutions in strategic fields of the future.“ The focus is on semiconductors, generative and industrial AI, robotics, drones, and other technological fields of the future.
China is not leaving its technological advancement to the market. Through government funding, strategically directed capital, and targeted support for future-oriented industries, Beijing is creating the conditions necessary to rapidly develop new technologies and scale them up industrially. The goal is to reduce technological dependencies, strengthen its own industrial base, and increasingly establish Chinese technologies on the international stage. The new national venture capital fund of funds, which is expected to mobilize approximately one trillion renminbi (131 billion euros), illustrates the scale of this industrial policy approach.
European policymakers and businesses have long underestimated the momentum of China’s rise and have been too slow to react. Now, the third wave is further intensifying the challenge. The global technology system is increasingly splitting into a U.S. and a Chinese sphere, each with its own standards, platforms, and supply chains. This creates a strategic dilemma for European companies: They benefit from high-performance and cost-effective Chinese technologies, but in doing so, they increasingly risk conflicts with U.S. market access and technology restrictions. „This development is particularly relevant for German small and medium-sized enterprises,“ Rapp emphasizes. „Ironically, it is precisely those core industrial competencies that have shaped Germany’s competitiveness for decades that are now coming under pressure.“
„The key question is where value will be created in the next stage of technological development,“ said Rapp. „Not only will market share and corporate profits depend on this in the future, but also the international competitiveness of entire economies.“ For investors, this shifts the focus to companies that occupy key positions in the emerging industrial platforms, value-creation networks, and technological ecosystems of the third wave. China’s success is by no means guaranteed. Technological bottlenecks, geopolitical countermeasures, overcapacity, and misallocations of capital could slow its rise. But even if not all goals are achieved, China’s attempt to attain technological leadership will already influence the global distribution of corporate profits, investment flows, and market shares.
The recent study „Chinas ‚dritte Welle‘: Globale Disruption bei KI, Robotik und Zukunftstechnologien“ by the FERI Cognitive Finance Institute was produced in collaboration with the China strategy consultancy Sinolytics GmbH. The analysis (in German) is available in the download section of this page.