When the Chinese Communist Party (CCP) came to power in 1949 China’s economy was overwhelmingly agrarian. It was among the poorest countries in the world, with a GDP per capita of $95.
In the 1950s and 1960s it began importing tanks, fighter jets, and submarines from the USSR. During the 1970s and 1980s, after its re-engagement with the West, it imported some non-lethal technology from France and Israel. Even the US sold it a few transport helicopters. That stopped in 1989 after the Tiananmen Square massacre. The West imposed arms embargoes, and Russia became its arms supplier.
But post-Soviet instability forced China to begin innovating domestically. By the early 2000s it had increased its R&D budget and began improving domestic capabilities in electronics, missiles, and naval power.
That coincided with the beginning of globalisation and a period of sustained economic growth for China. It channelled its new-found riches into the development of defence capabilities.
Both of those trends accelerated after Xi Jinping came to power in 2012. American consumers bought more Chinese-made products, and the CCP spent that money developing more military capability.
Many nations manufacture their own weapons and ammunition. But China suddenly became one of the foremost defence technology innovators. How?
The reason is doctrinal: the CCP has pioneered a principle called civil-military fusion. Everything, from AI research at Baidu to quantum computing labs at Tsinghua, is potentially dual-use. The boundary between civilian and military R&D is deliberately porous. Xi Jinping even created a commission to ensure its correct implementation.
That would feel very unusual in the West, where we instinctively separate defence and civilian innovation. But for China it’s a guiding principle. One which has transformed its entire tech ecosystem into a military supply chain.
After importing Russian fighter jets for years, in the 1990s China acquired the right to manufacture Russian Su-27s domestically. This enabled it to study modern aircraft design and paved the way for the domestically developed Chendgu J-10.
Still in service, the J-10 is a modern fighter comparable to Western fighters like the F-16. Its first combat use was last month when Pakistani J-10s reportedly shot down some French-made Rafales used by India’s air force.
China is now developing a 6th generation fighter, dubbed J-36. It is optimised for long-range supersonic flight and notable for its stealth features and tailless design, putting China ahead of the US in the race to field the next generation of fighter jet. Both J-36 and the American F-47 are larger aircraft with longer range and better stealth capabilities than antecedents, hinting at a new type of air power competition.
In just 30 years, China has gone from coastal defence force to technologically advanced blue-water navy. It is one of just five countries capable of domestically building aircraft carriers, and its Type 055 destroyer is broadly regarded as the best in its class.
It has developed a number of innovative platforms which are unique among militaries. One is a barge with a bridge that can extend from the bow onto a beach. The barges can connect to form giant causeways. That is useful if you want to get troops and vehicles onto, say, a nearby island.
It is also the first country to build a drone ‘aircraft carrier’. Many navies have understood that drones will be a feature of naval air power in the future, but China is the only country to have built a ship dedicated to the technology.
It has also developed long-endurance underwater unmanned vehicles (UUVs), a large trimaran-design unmanned surface vessel (USV), a deep-sea cable cutting device and the ‘underwater great wall’ – a network of seabed sensors and sonar arrays across the South China Sea.
What began as a state programme focused on prestige space missions has evolved into a powerful dual-use ecosystem. China now operates a full-spectrum space capability including launch vehicles, its own satellite navigation system (BeiDou), Earth observation satellites, anti-satellite weapons and a modular space station (Tiangong).
China was the first country to launch a quantum communication satellite (Micius) in 2016. It followed this up in May 2025 with quantum-secured communications across a distance of 12,900km between China and South Africa.
It has developed a bullet-shape satellite designed for very low earth orbit (VLEO) – an initial step towards building a 300-satellite constellation for remote sensing and communications.
It has tested hypersonic orbital glide vehicles which blur the line between spacecraft and weapon system. These could pose a novel challenge to existing missile defence systems and probably form part of the rationale behind Trump’s Golden Dome project.
Some Chinese satellites have demonstrated the ability to autonomously dock, capture, and manipulate other satellites, such as the Shijian-21. These are dual-use technologies which are useful for debris removal but also anti-satellite (ASAT) strategies.
Pete Hegseth is right to be concerned. Civil-military fusion has transformed the economics of Chinese defence tech and Western consumers have filled the coffers of the CCP.
Does any of this matter to Europe? For many on the continent, it doesn’t. At least not directly. Where the US sees China as its primary adversary, Europe sees Russia.
Will that change? Probably not in the short term – Russia will be an existential threat until Europe has properly re-armed. That is simply a matter of geography. In the longer-term Europe will not want China to replace the US as the world’s policeman. For the moment, that is a problem it has chosen to ignore.
Samuel Burrell is a Partner at Expeditions. He started his career in the military, where he was an officer in the Royal Marines. After leaving the military he joined a startup called ZipJet, before studying for an MBA at INSEAD. He has since been in venture capital, at Octopus Ventures, NKB Group and the National Security Strategic Investment Fund (NSSIF), a UK government fund focused on investing in national security and defence technologies. He joined Expeditions at the beginning of 2025 and is the lead for UK and US investments.
