RESOLVING THE LEDGER
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Washington has been stepping up efforts to curb Beijing's technological ambitions, but from artificial intelligence to electric vehicle batteries, Chinese technology is becoming increasingly embedded in the businesses of some of the world's biggest companies.
Apple has tapped Alibaba and Baidu for AI in China, while Ford has turned to CATL for battery technology. Volkswagen has teamed up with Xpeng to develop smart EVs in China, while Stellantis is expanding its partnership with Leapmotor on EV production and joint purchasing.
Analysts say a broad shift is underway, with Chinese companies becoming sources of technology and innovation that global businesses cannot easily sidestep.
"Five years ago, China was primarily where global companies went to sell. Today, in certain sectors, it is where they go to source capability," Kitty Fok, managing director at market research firm IDC China, told CNBC.
That development comes even as Washington has expanded efforts to restrain Chinese technology.
Since blacklisting Huawei in 2019, it has imposed sweeping curbs on advanced chips and chipmaking equipment, restricting certain U.S. investments in Chinese semiconductors, quantum technology and AI, and proscribing firms including contract chipmaker Semiconductor Manufacturing International Corporation, or SMIC.
China has built formidable positions across a growing number of technology industries.
Automakers including BYD, Changan and Chery accounted for nearly 63% of the global electric vehicle market in 2025, while battery makers including CATL, BYD, CALB and Gotion held close to 70%, according to Soumen Mandal, principal analyst at Counterpoint Research.
Mandal pointed to cost, scale, manufacturing depth, supply-chain integration and the speed of innovation as powerful reasons for global companies to continue engaging with Chinese firms.
"China's technological rise is shifting from low-cost manufacturing to scale, supply-chain depth, and speed of innovation," Mandal said, adding that global companies are maintaining a balance between geopolitical risk and commercial realities.
That shift is particularly advanced in electric vehicle batteries.
CATL has become deeply integrated into the global automotive industry. Ford, for example, is working with CATL to use its lithium-iron phosphate battery technology at a $3.5 billion battery plant in Michigan.
Fok said the integration of Chinese EV battery technology into global supply chains can be difficult to unwind.
"In EV batteries, the structural shift is already complete," she said. "Switching suppliers is not a procurement decision you make in a quarter. It takes years of engineering, testing, and recertification."
For some companies, however, working with Chinese technology firms remains primarily about competing inside China.
Multinational companies that need AI services or cloud infrastructure for their China operations have to work with local providers because of restrictions on foreign providers, according to Fok.
"Inside China, a lot of this isn't a choice," she said, pointing to Apple's work with Alibaba and Baidu.
Lian Jye Su, chief analyst at Omdia, said access to the Chinese market remains the primary driver for many such partnerships, particularly as global automakers increasingly turn to Chinese vendors for software, AI and other systems to sell in China.
But that is not the only driver. Su said a "slow yet persistent structural shift" was taking place in supply chains and innovation flows in areas including batteries, electric vehicles, energy storage and applied AI.
The trend is also beginning to play out in artificial intelligence, where increasingly capable Chinese models are challenging the idea that companies turn to Chinese technology mainly because it is cheaper.
An IDC survey of European companies earlier this year found security and compliance requirements and superior performance, not costs, were the top two reasons for extensive adoption of Chinese AI models.
"So the popular narrative that Western companies are rushing to Chinese AI because it's cheap gets this backwards," Fok said. "The decision is performance-led and compliance-gated."
Unlike U.S.-based Anthropic and OpenAI, Chinese firms including Alibaba and DeepSeek have focused on open-source models, making them more accessible to developers globally.
The Chinese AI advance comes even as U.S. restrictions have constrained Beijing in areas such as cutting-edge semiconductors, according to Su, while also accelerating domestic innovation.
"The key impact of the U.S. restriction is that it has become a catalyst for Chinese domestic innovation and efficiency," Su said, adding that Chinese vendors remain competitive in AI, batteries and automotive software.
Geopolitical considerations continue to shape how and where Chinese technology is adopted.
Su expects the resistance to Chinese technology to be strongest in areas including advanced semiconductors, services linked to cybersecurity, defense, and national security.
Rather than a straightforward technological boycott or embrace, analysts say Chinese technology adoption will vary by sector.
Counterpoint's Mandal expects Chinese technology adoption to expand globally across areas including EVs, batteries, consumer electronics, robotics, drones and selected areas of AI and semiconductors, leading to what he described as "a more fragmented but pragmatic global technology ecosystem."
Fok said the shift is already structural in batteries and electronics manufacturing, while AI is in transition and automotive software remains at an early stage.
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