China Biotech 2026: America Against America 

Authored by Morgan Xu, PhD, JD (LinkedIn) dictated, ChatGPT transcribed; 

Part II — Everyone Is Driving 120 MPH

Last year I described one of the defining trends in China biotech as “Made in China, Monetized Globally.” Chinese companies were developing assets efficiently at home and licensing them to global pharmaceutical companies.

One year later? The deal flow intensified even more. China-origin licensing is no longer a sideshow to global pharma BD. It is part of the main show.

An easy explanation is China’s central planning-based industrial policy. That’s true, but awfully incomplete. Beijing identifies strategic sectors, and provincial and municipal governments provide capital, facilities, incentives and talent programs. Yet China does not simply select one ADC company or cell-therapy company as a national champion. Hundreds compete. Shanghai competes with Suzhou; Beijing with Shenzhen; local governments compete for companies; companies compete for capital, scientists and partners.

China combines top-down industrial prioritization with bottom-up Darwinian competition.

That competition is intense. During three weeks in China, one thing was impossible to miss: people work incredibly hard. Cross-border BD calls happen late at night. Messages get answered over weekends.

Companies make decisions at astonishing speed. I consider myself a reasonably hardworking American lawyer, but I am not sure I want to enter a work-hours competition with the average Chinese biotech founder.

Speed and connectivity are the bedrock of China’s biotech ascent, and they permeate every facet of everyday life. It’s a culture where high-speed rail crews clear trains in seconds for the return leg and 24/7 connectivity is the default. I’ve fielded WeChat messages from remote national parks where I would have zero signal in America. In this environment, "always on" isn't a policy—it’s the air everyone breathes.

Indeed, everyone is driving 120 MPH—some because they love driving, others because the car behind them is going 121. That creates enormous execution speed. But it also raises a question I asked last year: if everybody is driving 120 MPH, who has time to look out the window?

True 0-to-1 innovation requires intelligence and hard work, but sometimes also failure, wandering, strange ideas, boredom and serendipity. Can a hypercompetitive ecosystem optimized for the next IND, financing round or licensing deal leave enough room for ideas whose payoff cannot fit into next year’s PowerPoint? I still don’t know.

It takes an ecosystem

One image from CPIC stayed with me: vendors everywhere—CRDMOs, CDMOs, CROs, testing companies, clinical-service providers and specialized technology platforms. China has built an enormous industrial infrastructure around drug developers. That ecosystem is an underappreciated reason companies can move quickly and increasingly cost-efficiently.

Speed is therefore not merely a characteristic of an individual company. Speed can become an ecosystem characteristic. A startup does not need to build everything when experienced suppliers surround it. Vendors compete aggressively. Scientists move between companies. Know-how diffuses. Experience compounds.

That begins to look less like “cheap Chinese R&D” and more like the cluster advantage China developed in other industries. A leading Shanghai ADC biotech founder told me that he could find anything his company needs within a hundred miles. Which raises an awkward question for American reshoring: can you match that advantage? You can subsidize a factory, but can you subsidize an ecosystem?

CPIC also revealed what may temporarily be an oversupply of innovation. The number of Chinese sellers seeking global capital and partners far exceeded the number of international buyers. That hurts valuations and bargaining power for individual Chinese companies, but having too many potentially interesting therapeutic assets is a rather enviable industrial problem. For global pharma, it creates a buyer’s market. I can witness that asymmetry in the term sheets themselves, although it looks different depending on which side of the table I am sitting on.

goVernment Capital

Last year I jokingly called China’s system “Venture Capitalism with Chinese Characteristics”—VCCC. One year later, I might simplify it: VC increasingly stands for goVernment Capital.

There are obvious problems. Government capital can misallocate resources, encourage duplication and keep weak companies alive. But dismissing it altogether also misses something. Biotechnology is exceptionally capital-intensive, has long development cycles and generates benefits that private investors may not fully capture. Private capital optimizes returns; governments sometimes optimize industrial capacity.

So what happens when government-backed capital competes with conventional venture capital? Which tolerates losses longer? Which allocates resources better? Which creates breakthrough science, and which builds industrial capacity? The answer is probably different over different time horizons.

America retains another difficult-to-measure advantage: its tolerance for failure. In Boston or Silicon Valley, a failed startup can become part of an entrepreneur’s résumé: you tried, failed, learned, and try again. The scar can become a medal. Chinese entrepreneurial culture has traditionally been less forgiving. That matters because radical innovation requires people willing to look stupid and occasionally fail spectacularly.

0 → 1 → 10 → 100

Here is the mental model many increasingly adopt. America historically excels at 0→1: fundamental discovery, new biology, new targets and modalities. China is becoming extraordinarily good at 1→10: engineering, optimization, preclinical work, manufacturing and early clinical development. America remains dominant at 10→100: global development, commercialization, capital markets and value capture, helped enormously by the economic power of the U.S. pharmaceutical market.

Reality is obviously more complicated, but the model raises an important question: if America increasingly loses 1→10, can it keep 0→1 forever?

Innovation ecosystems have feedback loops. Graduate students need careers. Medicinal chemists need projects. Process-development experts need facilities. Experienced industrial scientists become founders, investors and mentors. You cannot hollow out the middle of an ecosystem indefinitely and assume the beginning remains unaffected.

The same is true of talent. America’s ultimate advantage has never simply been money; it has been its ability to attract ambitious people from everywhere.

Many Chinese biotech leaders I know or meet were educated or trained in America and understand American science, business culture and capital markets remarkably well. Ask the reverse question—how many American biotech executives understand China with comparable depth?—and the asymmetry is striking.

Talent votes by feet. Today talent has more places to vote for.

There is also a growing first-mover problem. Patent applications publish, scientific data travel instantly, global CRO infrastructure makes experiments easier to reproduce, and AI makes published information dramatically easier to find and synthesize. Particularly in biologics, competitors need not copy the pioneer molecule; they can design different molecules around a validated target.

Is being first still economically valuable enough to pay for being first? The patent system trades disclosure for exclusivity, yet the disclosure can arrive many years before a drug reaches market. Protect pioneers too much and you suppress competition. Protect them too little and eventually fewer people want to pioneer. In my experience, filing and claim-scope sequencing decisions made years before a molecule reaches the clinic quietly determine how easy a design-around will be.

 Meticulously planned publication timing and lifecycle planning can be as consequential as the initial patent filing.

That brings us to the collision between efficiency and resilience. If China can produce a promising clinical asset faster and with less capital, why shouldn’t American pharma license it? Patients want good drugs; companies want pipelines; investors want returns. Cancer does not carry a passport.

Governments, however, optimize for things capital markets do not: employment, supply chains, domestic capabilities, national security and future industrial capacity.

The cheapest individual transaction is not necessarily the cheapest national strategy.

That is where my China trip runs directly into Washington D.C., my home base.

Next: Here come the clubs.