The cutting edge of technology in 2023 is artificial intelligence, with the (sometimes creepy) ChatGPT nearing an “iPhone moment” as a revolutionary tool that is being adopted at record speed. But it could just be a sideshow to the real story: China’s emergence as the world’s tech superpower. From Baidu’s Ernie Bot to electric vehicles-maker BYD, China has had an answer for almost every technological development taking on the world. The U.S. has responded with trade restrictions that limit Beijing’s access to critical materials for making chips used to power gadgets. And President Xi Jinping has, in turn, advocated for China to become self-reliant when it comes to technology. A think tank study partly funded by the U.S. State Department found China’s lead is “sometimes stunning” and that Western democracies are floundering.
The study by the Australian Strategic Policy Institute (ASPI), based in Canberra, found that in 37 out of 44 areas covering crucial technology such as defense, space, artificial intelligence and robotics, China is clearly in the lead. And while the U.S. occupies second place in most categories, China is far ahead thanks to its stellar research, knowledge imported from overseas and years of policy work geared towards tech talent and investments.
“Western democracies are losing the global technological competition, including the race for scientific and research breakthroughs,” said the ASPI report, which tracked “high-impact” research based on citation numbers to measure the areas in which countries were having breakthroughs. The think tank urged western governments to invest more in research and development.
The project was funded by the State Department’s Global Engagement Center and a grant from The Special Competitive Studies Project. ASPI also said a 2021 project on critical technologies funded by Australia’s Department of Prime Minister and Cabinet helped inform its direction.
The few areas where the U.S. remains the leader include vaccines and quantum computing, the study found. It did note, however, that China and the U.S. are far above any other country worldwide. Other tech powers such as the U.K., India, Germany and Japan are trailing in the distance, with smaller pools of research and investment in their respective technology fields.
“It’s important that we seek to fill this gap so we don’t face a future in which one or two countries dominate new and emerging industries.” the report said. “In the long term, China’s leading research position means that it has set itself up to excel not just in current technological development in almost all sectors, but in future technologies that don’t yet exist.”
The report identified that China was boosting its knowledge from overseas, particularly in the “Five Eyes” countries—the U.K., U.S., Australia, Canada and New Zealand. Locally, the Chinese Academy of Sciences has won the top rank in several critical technologies identified by ASPI.
In the coming years, China could have a monopoly in 10 different fields ranging from electric batteries to 5G. ASPI cautioned that if China’s technological dominance is left unchecked, it could skew “global power and influence” in a way that is no longer transparent and available to public access or scrutiny.
ASPI did not immediately return Fortune’s request for comment.
The report comes as Xi Jinping renews his push for investments in domestic research and technology. Last year, he appointed a number of scientific experts in A.I., aerospace and other fields to leadership positions in the Communist Party. In October, Xi famously used “research” several times during the CCP’s congress, emphasizing the role that technological advancement will have in coming years.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.