World Still Underestimates China's Tech Rise, London Economist Warns

Global Perceptions Still Catching Up to China's Industrial Advance

When John Ross sat down with CGTN's Global Watch program on August 27, the former director of economic and business policy for the mayor of London delivered a blunt assessment: global perceptions are still catching up with the pace and breadth of China's industrial and technological advancement. The interview lands at a moment when the gap between what China's economy has become and how much of the world still perceives it is itself becoming an economic risk, particularly for competitors like Japan that must plan against a moving target.

Ross, a senior fellow at the Chongyang Institute for Financial Studies at Renmin University of China, has spent more than a decade tracking the Chinese economy. His core argument, repeated in interviews and conference addresses through 2025 and 2026, is that the world's underestimation of China's technological capacity is rooted in outdated statistical habits, comparing China to its own past rather than to its current competitors.

From Follower to Leader in a Single Plan Period

Ross's central observation is how quickly China's industrial position changed. When China entered its 14th Five-Year Plan in 2021, he argues, it was still primarily a supplier of medium-technology goods. By the time that plan ended, China had achieved technological leadership in a growing series of economic sectors: electric vehicles, drones, solar energy, wind power, key areas of telecommunications, expanding segments of pharmaceuticals, batteries, and increasingly significant areas of artificial intelligence.

That shift matters for the 15th Five-Year Plan, which begins in 2026. In remarks at the Global Times Annual Conference in December 2025, Ross projected that on International Monetary Fund forecasts China will make the world's largest contribution to global growth over the plan period. Measured in purchasing power parities, he estimated China's economy would expand by $13.1 trillion over the plan horizon, compared with $6.2 trillion for the United States.

R&D Scale and the Investment Multiplier

The economist's argument rests on two mechanisms. First, China's research and development expenditure is already the world's second highest after the United States. Using purchasing power parity data cited by the U.S. National Science Foundation, Ross puts China's R&D spending at $812 billion, against $923 billion for the United States and $542 billion for the European Union. As a share of GDP, China's R&D intensity of roughly 2.6 percent is the highest of any developing country.

Second, and more importantly in Ross's framework, is the ability to turn research into products. He notes that for the world's 10 largest economies the correlation between net fixed investment as a share of GDP and economic growth is extraordinarily high, at 0.95, while the direct correlation between R&D intensity and growth is weak. China's gross fixed investment is 41.9 percent of GDP, against 21.3 percent for the United States; net of depreciation, the figures are 15.8 percent and 5.1 percent. In absolute terms, China's net fixed capital formation of about $2.8 trillion leads the United States by more than two to one. The practical consequence, Ross argues, is that for every dollar available to turn an American scientist's innovation into a new product, roughly two dollars are available for a Chinese researcher.

Where China Is Already Irreplaceable

The sectors where this investment advantage shows up most clearly are the green industries. China produces about 80 percent of the world's solar panels, roughly 70 percent of wind power installations, and around 76 percent of electric vehicle battery production. Ross describes China as an enabler of the global energy transition, noting that renewable energy is already cheaper than fossil fuels in about 86 percent of electricity generation cases.

The pattern is repeating in artificial intelligence. A study by MIT and Hugging Face cited by Ross found Chinese open-weight AI models have overtaken comparable U.S. models in global adoption, a finding consistent with the rapid spread of Chinese open models such as Qwen across Asia and beyond. On the research side, Nature's tracking of articles across 145 science journals found that nine of the world's top 10 research institutions by output are Chinese.

Why Japan Should Care About the Perception Gap

The underestimation Ross describes is not an abstract debate for Tokyo. Japan still spends heavily on research, at roughly 3.4 percent of GDP, one of the highest rates among advanced economies. But Japan's absolute R&D investment is now a fraction of China's, and the gap in converting research into deployed products is widening in the very industries where Japanese companies once led.

Nowhere is that clearer than in electric vehicles and batteries. Chinese EV makers have moved from exporting to Japan to announcing local production plans, while Japanese automakers are racing to catch up in software-defined vehicles. Tokyo's own industrial policy has shifted in response: the Ministry of Economy, Trade and Industry revised its battery and power industry strategy in June 2026, and Japanese firms have signed battery-supply partnerships with Chinese producers. In semiconductors, the same dynamic plays out in memory chips, where China's YMTC parent is preparing a Shanghai listing after overtaking Japan's Kioxia to become the world's third-largest NAND maker.

There is also a direct information risk. If Japanese companies, investors, and policymakers calibrate their competitive assumptions against a perception of China's technology sector that lags reality, they will misjudge both the threat and the opportunity. The underestimation runs in both directions, Ross's argument implies: it blinds competitors to Chinese strength in the same way it blinds Western observers to the scale of the transition already under way.

What the 15th Five-Year Plan Means for Asia

The launch of the 15th Five-Year Plan makes 2026 the year in which China's official development framework will reflect the technological leadership Ross describes. The plan's emphasis on innovation, advanced manufacturing, and strategic emerging industries is expected to deepen China's role in regional supply chains, including in Southeast Asia, where Chinese investment in batteries, solar, and EV assembly has accelerated.

For Japan, the plan's trajectory carries both competitive pressure and commercial opportunity. Chinese open-source AI models and battery technology are already inputs into Japanese industrial products, and China remains Japan's largest trading partner. The question is no longer whether China's technology sector will shape the region, Ross's analysis suggests, but whether Japanese and other Asian institutions will adjust their strategies quickly enough to the reality.

What to Watch For

Three signals are worth watching in the months ahead. First, how the 15th Five-Year Plan translates into concrete industrial targets, particularly for AI, semiconductors, and advanced energy, and how quickly those targets show up in export data. Second, whether Japan's response, from METI's battery strategy to corporate EV and AI partnerships, narrows the deployment gap that Ross identifies as China's decisive advantage. Third, whether the perception itself shifts, as more Western and Asian economists and institutions update their assessments of Chinese innovation capacity.

Ross's warning is that the world has repeatedly underestimated China's technological rise, and that the cost of underestimation rises as the gap between perception and reality widens. For Tokyo, the lesson is practical: plan against China's demonstrated industrial capability, not against an outdated image of it.

By Kenji Tanaka, Staff Writer

This article was produced with AI-assisted research and editorial support. Sources: CGTN, Global Times, CCTV.com.