In a modern factory situated in southeastern China, robotic arms perform intricate, synchronized movements, meticulously winding long strips of metal into rolls and shaping them into compact bricks. These components are the nascent cells of lithium-ion batteries, foundational to an array of global applications.
Under the vigilant observation of workers clad in white coveralls, these developing batteries are carefully encased in aluminum. Following this, they undergo a crucial process referred to by workers as “given life” — an initial electrical charge that imbues them with the energy destined to power electric vehicles, vast data centers, and various other technologies worldwide.
This industrial complex, operated by Contemporary Amperex Technology Company Ltd., universally known as CATL, represents the world’s most extensive and technologically advanced concentration of battery manufacturing facilities. Within its expansive walls, a significant rebalancing of the technological and economic relationship between the United States and China is actively unfolding.
For several decades, American corporations maintained a substantial technological advantage over their Chinese counterparts. Historically, U.S. firms established manufacturing operations in China, leveraging lower production costs. As a condition for market entry, the Chinese government frequently mandated joint ventures, enabling Chinese companies to absorb advanced technologies and learn best practices from their foreign partners.
However, in several critical sectors, this long-standing dynamic has demonstrably reversed. China is now positioned at the forefront of technological advancement, surpassing the United States in areas such as battery production, solar panel manufacturing, the processing of rare earth minerals, and certain life sciences disciplines. The nation is not only developing cutting-edge technologies but is also rapidly implementing comprehensive strategies to secure dominant positions in these global markets.
CATL stands as a prime illustration of this strategic shift. The company has introduced a battery technology that, according to its own statements, is capable of powering an electric vehicle for approximately 250 miles with less than 10 minutes of charging. This represents a charging speed roughly three times faster than that of batteries commonly found in many contemporary electric vehicles. CATL’s advanced battery technology is currently integral to millions of cost-effective electric vehicles that China is exporting globally, reshaping international automotive markets.
The company has openly expressed its ambition to expand its presence within the enormous American automotive market.
“Of course, if there’s an opportunity in the U.S., we wish to pursue it,” stated Fred Zhang, a spokesperson for CATL, underscoring the company’s interest in direct engagement with the American market.
These rapid advancements and China’s growing market dominance are prompting significant policy deliberations among U.S. officials. Concerns center on the potential risks associated with an excessive reliance on Chinese technology. A number of lawmakers and certain administration officials contend that China has employed what they describe as predatory economic practices—including state subsidies, intellectual property acquisition, and market dumping—to establish a commanding position in industries such as battery manufacturing. They argue that this approach has weakened the industrial capacity of other nations, including the United States, and has globally expanded the influence and leverage of the Chinese government.
Over the past year, Beijing has demonstrated its willingness to utilize its control over vital global supply chains as a strategic tool. Examples include restricting exports of critical minerals and reportedly threatening to disrupt U.S. factory operations in response to previous tariff disputes. Furthermore, China has articulated its control over other industries, such as pharmaceuticals, as a potential future source of leverage over foreign governments, highlighting the strategic dimension of its industrial policies.
Representative John Moolenaar, a Republican from Michigan and the chairman of the House Select Committee on China, has publicly stated that China has heavily subsidized CATL “to undercut non-China competitors and build worldwide dependence.” He characterized the prospect of entrusting a critical industry to the company as “a grave error,” emphasizing national security and economic sovereignty concerns.
Conversely, another perspective suggests that a policy of disengagement from leading Chinese firms like CATL could lead U.S. companies to lag technologically, thereby eroding America’s competitive standing in crucial industries. Proponents of this view also argue that isolating the world’s most dynamic economies could potentially hinder broader scientific and technological progress, and impede global collaborative efforts to address pressing challenges such as climate change.
“For decades now, we’ve been used to a world where the technology and innovation comes out of the West,” observed Kyle Chan, a fellow at the Brookings Institution, a prominent Washington-based think tank. He concluded, “The tables are turning,” signaling a fundamental shift in global innovation leadership.
The United States currently finds itself at a critical juncture, facing a strategic decision: whether to integrate and utilize China’s technologically advanced and often more cost-effective battery technology, or to embark on a significantly more expensive path to develop an entirely independent domestic supply chain for an industry poised to become foundational to much of America’s future energy infrastructure.
U.S. officials have expressed strong opposition to Chinese car imports, viewing their widespread introduction as a direct threat to the viability of the domestic U.S. auto industry. However, opinions are more divided concerning the batteries that power vehicles, grid-scale energy storage, and data centers, primarily because many of the world’s leading battery manufacturers are foreign entities, not exclusively Chinese.
General Motors, for instance, has strategically invested in partnerships with South Korean battery manufacturers to establish a non-Chinese supply chain for its electric vehicles. In contrast, other major U.S. automakers already consider CATL a significant and vital partner. Tesla procures batteries from CATL, and Ford Motor Company has entered into licensing agreements to utilize CATL’s technology in its battery production facilities planned for Michigan and Kentucky.
Ford had initially collaborated with the South Korean battery maker SK On for its Kentucky factory project, but this partnership was ultimately dissolved in December of the previous year. Concurrently, political developments in the United States, including the rescinding of certain Biden administration incentives for electric vehicles by Republican lawmakers, have contributed to a cooling of the domestic EV market. Consequently, Ford announced earlier this year that it would pivot the focus of its Kentucky plant to manufacturing batteries specifically for energy producers and data centers—a sector where Congress continues to provide supportive subsidies.
CATL’s potential and actual presence in the United States has frequently been a source of controversy. In 2023, the then-governor of Virginia, Glenn Youngkin, notably blocked a proposed Ford-CATL factory in his state, publicly characterizing it as a “Trojan horse” for the Chinese Communist Party, citing national security concerns.
Further complicating its standing, in 2025, the U.S. government added CATL to a list of companies designated as having ties to the Chinese military, stating the firm was “indirectly affiliated” with top bodies of the Chinese government. CATL swiftly refuted this designation, which prohibits the company from securing U.S. defense contracts, asserting that it was “a mistake” and unequivocally denying any involvement in military business.
Testing the Waters
Chinese investment in the United States already navigates a complex landscape of significant obstacles. These include rigorous federal security reviews, as well as specific state-level restrictions on Chinese acquisitions of real estate and agricultural land. For example, in Michigan, a proposed electric vehicle battery factory by the Chinese company Gotion was ultimately blocked following considerable local protests and political opposition.
Additionally, the United States maintains high tariffs on imports of Chinese cars and batteries, and has implemented a ban on the use of Chinese software in vehicles starting with model year 2027, further segmenting the market.
Despite these existing barriers, both American and Chinese companies are closely observing signals regarding potential shifts in U.S. policy. Speculation revolves around whether former President Trump’s expressed openness to conducting business with China, coupled with his stated intentions to meet with Chinese leader Xi Jinping again this year, might create avenues for renewed or expanded partnerships between the two nations.
During his recent visit to China last month, Mr. Trump reportedly welcomed investment from Japan and Europe, and Chinese officials have actively encouraged their U.S. counterparts to consider investing within the United States. Following Mr. Trump’s visit, both countries announced an agreement to establish a “board of investment,” signaling a potential mechanism for facilitating future economic engagement.
Why This Matters
The rapid technological ascent of Chinese companies like CATL in critical sectors such as battery manufacturing represents a profound geopolitical and economic shift with far-reaching implications. For the United States and its allies, this development forces a re-evaluation of national industrial policy, economic security, and strategic competition.
**Economic Sovereignty and Supply Chain Resilience:** China’s dominance in key technologies raises concerns about potential economic coercion. A heavy reliance on a single nation for essential components like batteries, which power everything from electric vehicles to defense systems, could expose countries to supply chain vulnerabilities and give Beijing significant leverage. This pushes nations to consider the trade-off between cost-efficiency from globalized production and the strategic imperative of establishing resilient, independent supply chains, even if it entails higher domestic production costs.
**Technological Leadership and Innovation:** The shift in technological leadership from West to East challenges the long-held assumption of Western preeminence in innovation. If the U.S. fails to keep pace in critical emerging technologies, it risks losing its competitive edge in future industries, impacting job creation, economic growth, and its global influence. The debate over engagement versus decoupling from China’s tech sector directly influences the pace and direction of global innovation.
**Climate Change and Energy Transition:** Batteries are central to the global transition away from fossil fuels. They are indispensable for electric vehicles, renewable energy storage (solar and wind), and modernizing power grids. Limiting access to the most advanced or cost-effective battery technologies, regardless of origin, could potentially slow down global efforts to combat climate change, making sustainable energy solutions more expensive or less accessible. Striking a balance between geopolitical concerns and climate action is a complex challenge.
**Geopolitical Competition and Alliances:** The U.S.-China technological rivalry is a defining feature of 21st-century geopolitics. How the U.S. responds to China’s rise in critical technologies will shape its relationships with allies, influence global trade rules, and determine the future balance of power. Decisions made today regarding partnerships, tariffs, and investment will have lasting impacts on international relations and the structure of the global economy.
**Consumer Impact and Industry Transformation:** The cost and performance of batteries directly affect the affordability and appeal of electric vehicles and renewable energy solutions for consumers worldwide. The strategies adopted by major automotive and energy companies in navigating this complex landscape will profoundly reshape entire industries, influencing everything from manufacturing jobs to the environmental footprint of global transportation and energy systems.
U.S. and China Grapple with Investment Dilemmas Amidst Economic and Security Tensions
The intricate relationship between the United States and China, characterized by both deep economic ties and escalating geopolitical tensions, is particularly evident in the realm of cross-border investment. While U.S. companies express interest in leveraging Chinese technological advancements, particularly in sectors like electric vehicles, both governments are enacting stricter controls over foreign investment and technology transfer, driven by national security concerns and strategic industrial ambitions. This evolving landscape presents a complex dilemma for businesses seeking growth and for policymakers aiming to protect national interests.
U.S. Approach to Chinese Investment: Balancing Engagement and Security
On May 14, Scott Bessent, the U.S. Treasury Secretary, indicated in a CNBC interview that a new board would be established to “decide upfront what are the nonstrategic, nonsensitive areas where it would be possible for the Chinese to invest.” This statement signals an intent to create defined pathways for certain types of Chinese capital, potentially mitigating the broader freeze on investment that has characterized recent years. However, the Trump administration, and indeed subsequent administrations, have been acutely sensitive to criticisms that Chinese investments could compromise U.S. national security, particularly in critical infrastructure, emerging technologies, and defense-related sectors. Reflecting this cautious stance, Jamieson Greer, the U.S. Trade Representative, stated in May that the board’s primary focus would be on resolving specific complaints from U.S. companies rather than fostering a comprehensive “program of mutual investment.” This suggests a reactive, rather than proactive, approach to bilateral investment, prioritizing protection and dispute resolution over broad economic integration.
U.S. Business Interests and the Lure of Chinese Technology
Despite the political headwinds, U.S. firms harbor significant interest in partnerships that could grant them access to advanced Chinese technology and help them maintain competitive electric vehicle (EV) lineups without incurring prohibitively high costs. Reva Goujon, a director at Rhodium Group, a research firm specializing in global economic trends, noted that companies like Ford and Stellantis are actively exploring such collaborations. Stellantis, for instance, has already established a joint venture with CATL, a leading Chinese battery manufacturer, in Europe and is in the process of constructing a battery factory in Spain. Goujon interprets these moves as U.S. companies “testing the political waters,” positioning themselves for a potential “thaw” in U.S.-China investment relations. Their strategic goal is to absorb Chinese technological expertise, particularly in battery production and EV components, to enhance their own manufacturing capabilities and market position.
China’s Strategic Control Over Technology and Outbound Investment
While the Chinese government has encouraged its companies to expand internationally, it maintains stringent control over technology sharing, especially in strategically vital sectors like advanced batteries. Significant questions persist regarding how much proprietary technology Beijing will permit its domestic firms to share with foreign partners. In a move to assert greater control, China has recently added new restrictions on the export of battery manufacturing technologies and established a more rigorous system to review outbound technology investments. This follows prior actions, such as flexing its control over mineral exports essential for many high-tech industries. Ms. Goujon explains that China’s overriding imperative is “to hold on to the crown jewels for any technology,” indicating a strong reluctance to allow significant intellectual property transfer. She anticipates Beijing will be “very, very strict” when it comes to more overt forms of technology transfer, viewing it as critical to its long-term industrial and geopolitical strategy. Concrete examples of this protective stance include Beijing reportedly scuttling Meta’s acquisition of Manus, a Singaporean-based artificial intelligence company with Chinese origins, and blocking Elon Musk’s efforts to acquire equipment that would enable Tesla to manufacture solar products in the United States.
The “How” of Investment: Potential Benefits and Risks
The implications of Chinese investment for the U.S. economy depend critically on the “how,” according to Rush Doshi, an assistant professor at Georgetown University and former China director for the Biden National Security Council. Doshi suggests that if Chinese companies, such as CATL, establish operations in the U.S. and extensively utilize American suppliers, workers, and software, such investments could indeed benefit the United States by creating jobs and fostering local industrial growth. However, he warns that if these companies primarily import all high-value components and intellectual property directly from China, the impact on U.S. industry would be detrimental. “If we import Chinese batteries without making our own, we will lose a critical industry of the future,” Mr. Doshi emphasized, underscoring the importance of local content and supply chain integration in evaluating the true economic value of foreign direct investment.
‘Trojan Horse’ or Key Partner? The Rise of CATL
Contemporary Amperex Technology Co. Limited (CATL) stands as a testament to China’s industrial prowess. Founded in 2011, emerging from an electronics firm that initially gained prominence by manufacturing batteries for the Apple iPod, CATL has rapidly ascended to become a global leader. From its factory complex in Ningde, where a showroom proudly declares “Together for the energy freedom!”—and the building itself is ingeniously shaped like a lithium battery—CATL now produces approximately 40 percent of the world’s electric vehicle batteries. Furthermore, it accounts for 30 percent of batteries used for grid-scale energy storage, essential for stabilizing electricity grids and integrating renewable sources like solar and wind power. The company attributes much of its success to its significant investment in research and development, claiming its R&D spending surpasses that of other battery companies combined. With 22,000 of its 185,000 employees dedicated to R&D, including over 700 Ph.D. holders, CATL positions itself as an innovation-driven entity.
The Role of Chinese Industrial Policy in Global Success
While CATL touts its R&D expenditures, the company’s meteoric rise and broader Chinese dominance in key industrial sectors are inextricably linked to extensive government support. Beijing has directed hundreds of billions of dollars into the electric vehicle and battery sectors, implementing a comprehensive suite of financial incentives for Chinese consumers to purchase EVs. Beyond direct subsidies, directives from the highest echelons of the Communist Party have actively encouraged battery research and development, while regulatory frameworks have often discouraged the use of non-Chinese batteries, effectively pushing American and other foreign firms out of the domestic market or into disadvantageous positions. U.S. officials have consistently criticized these industrial subsidies, asserting that they create an unfair competitive environment and distort global markets. There are few indications that these practices are abating.
A June study by the Organization for Economic Cooperation and Development (OECD) revealed that Chinese industrial firms received between three and eight times more government support over the past two decades compared to companies in the 38 mostly wealthy OECD member nations. Furthermore, a recent report by the U.S. Chamber of Commerce and Rhodium Group characterized China’s industrial policy as increasingly pervasive and systemic, dubbing it an “industrial policy of everything,” indicating a broad and sustained effort to steer economic development.
Alternative Perspectives: China’s Investment in Science and Talent
Conversely, some argue that China’s rapid technological advancements are not solely attributable to subsidies but also stem from significant, long-term investments in fundamental research, education, and talent development—policies that the United States could benefit from emulating. Albert Bourla, the Chief Executive Officer of Pfizer, highlighted this perspective in March. He described harnessing “the meteoric rise” of China’s scientific capabilities amidst ongoing geopolitical tensions as one of Pfizer’s most significant challenges. Mr. Bourla predicted that China is poised to surpass the United States in biopharmaceutical innovation within the current decade, attributing this trajectory to a decades-long strategic plan implemented by Beijing. This plan, he noted, included comprehensive reforms to regulations, encouragement of patent filings, substantial funding for research initiatives, and concerted efforts to cultivate a highly skilled scientific and technical workforce. “They built their science. So this is where we need to become better,” Mr. Bourla concluded, suggesting a need for the U.S. to re-evaluate its own approach to scientific and technological investment.
Li You contributed research. Jack Ewing contributed reporting from New York.
Why This Matters
The complex interplay between U.S. and Chinese investment policies holds profound implications across multiple global dimensions:
- Global Economic Stability and Trade: The escalating competition and protectionist measures threaten to fragment global supply chains and trade networks, potentially leading to higher costs for consumers and reduced innovation due to restricted market access and technology transfer. The ongoing debate over industrial subsidies and fair competition directly impacts the principles of a free global market.
- Technological Leadership and Innovation: The contest for technological supremacy, particularly in critical sectors like artificial intelligence, electric vehicles, advanced batteries, and biopharmaceuticals, will determine future economic competitiveness and national power. Restrictive policies on technology sharing risk slowing global innovation, while open yet secure collaboration could accelerate progress.
- National Security and Supply Chain Resilience: For the United States, concerns about national security are paramount. Uncontrolled foreign investment in strategic sectors could create vulnerabilities in critical infrastructure, compromise sensitive data, or grant adversaries access to dual-use technologies. Ensuring resilient and secure supply chains, especially for essential components like EV batteries, is vital to economic and military independence.
- Future of Key Industries: The “how” of Chinese investment in the U.S.—whether it leads to job creation, local manufacturing, and technology absorption, or merely serves as an import conduit—will shape the future of American industries. The ability of the U.S. to foster its own domestic battery and EV manufacturing capabilities, for example, is seen as crucial to avoiding dependence on foreign supply.
- International Relations and Geopolitics: The investment relationship is a critical barometer of the broader U.S.-China relationship. How these economic tensions are managed will influence regional stability, alliances, and the global balance of power, affecting everything from climate change cooperation to international governance.
- Consumer Impact: Ultimately, these policy decisions will affect consumers through product availability, pricing, and the pace of technological advancement in critical areas like clean energy and healthcare. The push for domestic manufacturing could lead to higher prices in the short term, but potentially greater long-term security and innovation.