The most common critique of China’s innovation goes like this:
"Sure, China leads in solar panels and batteries – but those were invented elsewhere. And research dominance doesn't mean commercial success.“
It seems like a reasonable critique, but the data doesn't support it.
China now leads the US in open-source AI downloads (17% vs 16% globally). It has 8x more industrial robots installed in factories. And it's running more active clinical trials in biotech than the US.
These aren't legacy industries or lab metrics. They're consumer products, factory floors, and drug pipelines.
The question is not whether China is catching up, but whether the West has a good plan for a world where China is leading.
The second Trump presidency has fueled a widespread belief in Europe that Washington has gone soft on China and Russia. But the data tells a different story. US arms sales to Taiwan have accelerated dramatically from a record $11 billion in 2025 to a rumored $20 billion package for 2026. Meanwhile, US sanctions on Russia's two largest oil companies, Rosneft and Lukoil, triggered in October 2025 a collapse in Russian energy revenue to its lowest point in five years, directly threatening the stability of Moscow's war economy.
After many years of mainly talk, the EU has grown more ambitious in the past two years, and this trend is accelerating in 2026. Last year, Europe's ambition was driven by an 800 billion euro defense investment plan, in addition to Germany rewriting its constitution to enable bigger government investments. But Europe's two most ambitious projects in 2026 are more structural than these spending programs. First, a trade deal with India - now the world's fourth-largest economy but trading little with Europe - that could open a massive market for European industry. Second, the Industrial Accelerator Act, which will introduce "Buy European" legislation directing EU procurement toward EU suppliers. The biggest challenge remains that some member states oppose projects that lower trade barriers (such as France), whereas others oppose projects that raise them (such as the Netherlands). However, given the current momentum in Europe and the highly uncertain geopolitical situation, the probability that both projects advance is significant. If they do, this could contribute to European stock markets' continued outperformance versus the US, as in 2025.
