It’s hard to tell who will ultimately win the tech race, but this year’s Nobel economics prize gives us some clues.

China and the United States are locked in a contest for technological supremacy. While it’s impossible to predict the ultimate winner and loser, this year’s Nobel Prize winners in economics may serve as a useful guide to where the two rivals are heading.

The US is currently still ahead when it comes to science and technology. But when it comes to STEM (science, technology, engineering and mathematics) education, China has a clear edge, which is likely to grow even larger in the coming years.

Beijing’s heavy investment in STEM education and research as a national priority is a big reason why China is closing the gap with the US. The country’s whole-of-government commitment to tech as a main driver of economic growth is as good a bet as any. It certainly follows the playbook of Nobel winners Joel Mokyr, Philippe Aghion and Peter Howitt.

Meanwhile, despite its lead, the US can no longer take its long dominance in tech innovation for granted. The crackdown by the Trump administration on leading US universities and immigration certainly goes against the insights of the Nobel trio.

Large corporations, especially those in tech, increasingly stifle competition by buying out innovative upstarts or killing their market shares and by lobbying regulators for favourable treatment. But in the mathematical modelling of Aghion and Howitt, as explained by the Royal Swedish Academy of Sciences in announcing the award, this undermines growth.

“When a new and better product enters the market, the companies selling the older products lose out,” said the academy, citing the work of Aghion and Howitt. “The innovation represents something new and is thus creative.

“However, it is also destructive, as the company whose technology becomes passé is outcompeted.”

Established firms will always try to undermine competition to maintain dominance.

“Creative destruction creates conflicts,” the academy’s statement further explains. “Innovation will be blocked by established companies and interest groups that risk being put at a disadvantage.” That’s why “economic growth cannot be taken for granted”, and big firms must not be allowed to prevent creative destruction, lest we “fall back into stagnation”.

There is a parallel to be drawn between firms that try to kill innovative upstarts and the US, which seeks to undermine China’s tech drive through sanctions, blacklisting, prosecutions and the bullying of allies. If we go by Aghion and Howitt, the US has a better chance of maintaining growth and its tech leadership by focusing on its own science and tech development rather than playing dirty.

Now, though, is the US still ahead? It’s always difficult to quantify where a country or economy stands relative to others in science and tech. But “the critical and emerging technologies index”, run by the Harvard Kennedy School’s Belfer Centre for Science and International Affairs, is as good a gauge as any.

It covers 25 economies across five key tech sectors: artificial intelligence, biotechnology, semiconductors, space and quantum technologies.

As the second on the index with a total score of 65.6 out of 100, China is still behind in all five categories: AI (14.5), biotech (16.8), semiconductors (22.1), space (8.4) and quantum (3.8). With a total score of 84.3, the US remains the top dog: AI (22.7), biotech (17.2), semiconductors (26.4), space (13.8) and quantum (4.2).

However, few experts doubt China is catching up, and Mokyr’s work may explain why. According to the Swedish academy, for Mokyr, tech and growth are inseparable; modern tech creates a never-ending cycle of new products and production methods replacing old ones. “This is the basis for sustained economic growth,” said the press release.

But it can stall. It’s certainly counterproductive for Trump to effectively declare war on its best universities and research institutes and reduce or cut their funding while reversing one of America’s best sources of talent: immigrants.

China is far ahead of the US in the number of schools, research centres, researchers and graduates in STEM. China accounted for more than 40% in 2020, compared with 20% in the US. China awarded more than 50,000 STEM doctorates in 2022, compared with about 34,000 in the US

The US has been underestimating China for decades. The hare should realise the tortoise is getting really close.

Republished from South China Morning Post, 22 October 2025

The views expressed in this article may or may not reflect those of Pearls and Irritations.