China is catching up with America in quantum technology – Crypto News

Few industries outside of arms-making are so sensitive. Quantum computers could one day perform calculations in minutes that would take the world’s cleverest supercomputers billions of years or longer. Communications using quantum bits, or qubits, are ultra-secure. Although the commercial opportunities remain uncertain, spies and soldiers have taken a keen interest in quantum technology.

This is why China closely guards its industry. Little is known about how its supply chain for components works, and the Chinese government restricts exports of some related technologies. America, too, protects its quantum secrets. In October the Treasury Department imposed stringent restrictions on American investment in China’s quantum industry.

Both countries have developed areas of strength. China is the undisputed leader in quantum communications. In quantum sensing, another sub-field focused on detecting faint changes in magnetic fields, the two are neck and neck. But in quantum computing—the sub-field with the biggest potential—America holds a wide lead. Quantum computers made by its companies have far higher qubit counts than Chinese ones, an important metric for gauging their power. In December Google made waves with a new quantum chip that can correct for many of the errors made by the computers.

China may be closing the gap, however. Although the country still relies on Western suppliers for many of the components needed to make quantum computers work, such as specialised lasers, that is changing. As Chinese companies get better at manufacturing the necessary equipment, Western producers are expecting to sell less of it there, says Jean-Francois Bobier of BCG, a consultancy.

One example of this is dilution refrigerators, which produce the ultra-low temperatures needed to operate quantum computers. During 2024 several Chinese companies and labs announced breakthroughs. In September, for example, a company called Zhileng Low Temperature Technology said it had created a refrigerator capable of hitting record-low temperatures that meets all the requirements for quantum computing.

Given all the secrecy, it is hard for outsiders to verify how well Chinese-built dilution refrigerators perform and whether they are good enough to run quantum computers. If the claims are true, however, they represent an important achievement for China. Dilution refrigerators are a fixture of the quantum supply chain. For many years BlueFors, a Finnish company, has supplied most of the refrigerators used in the world’s quantum computers. In September America’s government introduced export controls on high-performance cooling systems, along with other quantum components.

Quantum interference

China and America’s quantum rivalry pits two starkly different models of innovation against one another. In America large tech companies—including Google, IBM, Intel and Microsoft—are the driving force behind innovation in quantum computing, alongside startups backed by venture capital (VC). University research plays an important role, but government involvement is limited.

In China, by contrast, private-sector investment is modest but the state is omnipresent. Much of the research takes place in the labs of state-controlled universities; half of quantum publications are funded by the National Natural Science Foundation of China, a body tied to the central government. The most prominent quantum startups are all either controlled or supported by the state. The University of Science and Technology of China in Hefei invests in many of them, including Origin, and acts as a connector between labs, companies and policymakers. Meanwhile, Chinese tech giants including Alibaba and Baidu have given up their research in the field and handed their equipment over to the government.

China’s approach could have advantages. A recent survey of experts conducted by the Information Technology and Innovation Foundation (ITIF), a think-tank based in Washington, suggests that reliable state investment might be more important than private-sector funding when it comes to developing quantum computing. Participants in the ITIF survey said that the fragmentation of funding sources in America leads to a lack of co-ordination and slows innovation.

Some American investors are anxious to start seeing returns from the money they have poured into quantum computing. There is also talk of reluctance among Western manufacturers of components to scale up production owing to limited demand and uncertain future prospects for the industry, notes Edward Parker of the RAND Corporation, a research-and-consulting firm based in California. He notes that the best gear is still made in the West, but adds that China’s top-down, government-led model may have benefits when it comes to developing a large-scale supply chain for a technology with unclear time horizons and payoffs.

Perhaps. But China’s model also carries risks. The system has fostered less competition, with firms having little incentive to outdo each other. What is more, state co-ordination means resources are focused on the specific approaches to quantum technology that the government thinks will succeed. This could pay off in a big way for China’s rulers. But there is also a chance they are placing losing bets.