Quantum technology, which harnesses the physics of subatomic particles, is set to revolutionize computing, communications, and security. However, as the United States races to develop its own quantum capabilities, experts at the Special Competitive Studies Project (SCSP) warn that China’s top-down, state-backed approach is creating a formidable ecosystem that could eventually dominate global markets. In a recent analysis, SCSP researchers highlighted how Beijing is using government funding, state-owned enterprises, and protected domestic demand to nurture quantum startups that are poised to scale internationally.
According to data from Datenna, an intelligence platform that analyzes Chinese primary data, state-affiliated telecom giants—led by China Telecom—are funding a network of quantum startups. Many of these firms trace their origins to state laboratories or university research groups, where Beijing retains influence through funding, ownership, procurement, or institutional ties, explained Dr. Damien Bérubé, an SCSP researcher in Emerging Technology Policy and Quantum Science. This state-driven demand is creating a market where quantum companies can grow without needing to compete on technical merit alone, allowing them to build scale and lower costs before entering foreign markets.
One example is Origin Quantum, a quantum computing firm that received early support from the Chinese Academy of Sciences (CAS) and is now preparing for an initial public offering with a valuation of approximately $1 billion, according to Datenna. Such government backing enables Chinese firms to survive on protected domestic demand, ultimately positioning them to export quantum products and services at lower prices than U.S. and allied competitors. SCSP experts note that while Chinese quantum companies do not yet pose an immediate risk of replacing Western firms in every high-end market, their ability to scale with state support could lead to significant market share in the future.
The implications for U.S. competitiveness are clear: as SCSP experts put it, “a network map of these contracts should therefore be read less as a list of isolated transactions and more as an industrial policy map: which buyers sustain certain suppliers, which sectors are receiving demand signals, and which firms are being positioned to scale.” The United States must closely monitor China’s quantum ecosystem and consider strategic investments to maintain its edge in this critical technology domain. For more insights, visit scsp.ai.
