China’s Quantum Technology: The 15th Five-Year Plan’s Push from Lab to Market

China’s quantum technology is entering a new phase as the 15th Five‑Year Plan positions the sector as a core future growth engine. The plan signals a stronger commercialization push, backed by rapid market expansion and targeted policy support for both domestic and select foreign players. This article outlines China’s evolving quantum landscape and the implications for companies navigating a more localized and regulated environment.

China’s recommendations for the 15th Five-Year Plan (2026–2030) identify quantum technology as the first among seven “future industries” positioned to become new economic growth points, signaling an elevated economic role for the sector.

China’s quantum computing sector reached RMB 11.56 billion (US$1.61 billion) in 2025, maintaining annual growth above 30 percent. Companies operating in the sector increased from 93 in 2023 to 153 in 2024, a nearly 40 percent rise in a single year. Beijing has also begun extending targeted policy support to foreign participants in selected quantum segments. Yet these opportunities exist within an increasingly localized supply chain environment, where export controls and indigenous innovation pressures are reshaping competitive dynamics.

Understanding China’s quantum technology landscape

China’s quantum sector breaks down into three subsectors at different commercial maturity stages. Quantum communications dominates current activity, representing roughly 60 percent of revenue. China operates the world’s longest operational quantum communications backbone, the 10,000+ kilometer Beijing-Shanghai trunk line, along with 16 metropolitan quantum networks. The Micius satellite, launched in 2016, remains the world’s only dedicated quantum communications satellite in operation.

Find Business Support

We help businesses develop robust, long-term entry strategies that maximize operational advantages while minimizing risks.

Quantum computing shows the fastest growth trajectory. Industry projections indicate this subsector will capture 41.2 percent of China’s total quantum market share by 2025. The Zuchongzhi 3.2 superconducting processor operates at 107 qubits, while the Tianyan-504 cluster system reaches 504 qubits. China has begun commercial deployments: the Hanyuan-1 neutral-atom quantum computer, a 100-qubit system, entered commercial sales in 2025, with customers including Pakistan’s government.

Quantum sensing applications remain in early commercialization, applying quantum precision to medical imaging, geological exploration, and industrial quality control. Contemporary Amperex Technology Co., Limited (CATL) and Gotion High-Tech use quantum sensors for battery manufacturing quality assurance.

Geographically, the industry has coalesced around four primary clusters: Hefei, Beijing, Shenzhen, and the Yangtze River Delta (Shanghai), each with distinct functional specializations, ranging from basic R&D to commercial manufacturing. Major companies include QuantumCTek (communications infrastructure), Origin Quantum (superconducting computers), and China Telecom Quantum Group (cloud operations).

The policy shift driving commercialization

The recommendations treat quantum as an industrial policy priority on par with semiconductors and artificial intelligence (AI). During the 14th Five-Year Plan period, most quantum programs were funded primarily through university research grants. The 15th Plan shifts resource allocation toward commercialization support, including government procurement, manufacturing subsidies, and application deployments.

The National Venture Guidance Fund allocated RMB 121.8 billion (US$17.5 billion) across three regional quantum-focused funds: Beijing-Tianjin-Hebei (quantum computing and sensing), Yangtze River Delta (quantum communications and industrial applications), and Guangdong-Hong Kong-Macao (commercial products). These funds announced 27 direct investment projects as of early 2026.

Market growth drivers and application expansion

National security imperatives drive adoption. Post-quantum cryptography integration into state infrastructure has become a priority as quantum computers pose threats to current encryption methods. The “Store Now, Decrypt Later” concern has accelerated government adoption of quantum-secured communications.

Industry applications have moved from pilots to revenue-generating deployments. Industrial and Commercial Bank of China (ICBC) has reported quantum-encrypted transmission of Beijing–Shanghai internet banking remote data using quantum communication technology. State Grid has deployed quantum-secured dispatch systems across multiple provinces. Organizations pay commercial rates for quantum security services.

China Telecom’s Tianyan quantum cloud platform has logged 37 million user visits and serves customers across 60+ countries, indicating early commercial traction. The sector attracted RMB 46.27 billion (US$6.45 billion) in investment during 2024. China filed over 10,000 quantum technology patent applications annually from 2022-2024, with 90 percent classified as invention patents. China accounts for more than 50 percent of global quantum technology patent filings.

Foreign investment opportunities and policy support

Several concrete forces drive China’s quantum market beyond policy directives. The updated Foreign Investment Encouraged Catalogue takes effect on February 1, 2026, bringing quantum computing R&D clearly within the scope of China’s preferential foreign investment framework. At the policy level, foreign-invested enterprises operating in qualifying high-tech and advanced manufacturing segments can access preferential policies, including tariff exemptions on imported equipment, priority land supply, and reduced corporate income tax rates in designated regions.

Find Business Support

We help businesses evaluate demand, competition, and regulatory feasibility across Asia through tailored research designed to s...

Supply chain analysis reveals where foreign competitive advantages persist. High-end instruments and measurement/control systems remain largely import-dependent. China continues to prioritize domestic capability building across key upstream quantum hardware, such as dilution refrigeration and control systems. However, supply-chain self-sufficiency still varies by component and subfield. This creates opportunities for foreign suppliers of precision measurement equipment, advanced control electronics, and specialized testing apparatus.

Materials supply presents another entry point. Helium-3, required for dilution refrigerators used in superconducting quantum computing, faces global supply constraints. Ultra-pure materials for quantum chip fabrication require specificationsthat few manufacturers worldwide can meet. While China has developed 10+ domestic dilution refrigerator manufacturers, quality gaps remain at the highest performance tiers.

Software and algorithm development offer opportunities less constrained by hardware export controls. Foreign software companies can license quantum algorithm packages to Chinese industrial users without triggering export control issues in most cases.

Partnership models exist within current regulatory frameworks. Joint R&D centers with Chinese universities allow foreign companies to access talent while maintaining control over core Intellectual Property (IP). University of Science and Technology of China (USTC) in Hefei, Tsinghua University and Peking University in Beijing, and Zhejiang University in Hangzhou actively seek international quantum research partnerships. Technology licensing for specific applications, rather than wholesale technology transfer, enables foreign companies to generate revenue while protecting core IP.

Component suppliers can enter the market through established channels. Rather than competing with state-backed champions in complete quantum computer systems, foreign firms can provide specialized components: precision lasers, specialized optics, quantum control electronics, or cryogenic components. Target sectors include industrial quantum sensors for manufacturing applications, where quality control creates immediate commercial value, and finance and pharmaceuticals for application development.

Choosing the right city for your quantum business

Foreign companies should select entry points based on technology focus and target applications rather than solely on financial incentives.

Hefei functions as China’s “quantum capital.” USTC anchors the ecosystem with some of the country’s strongest quantum research programs. Hefei developed the Zuchongzhi quantum computer series and houses Origin Quantum, one of China’s leading quantum computer manufacturers. The city also benefits from large-scale, government-backed venture capital programs targeting hard technologies, including quantum technology. These programs are intended to support startups, early commercialization, and the scaling of domestic manufacturing capacity. Consider Hefei for quantum computing R&D, academic collaborations, and component supply relationships, though Hefei’s focus on cutting-edge R&D means commercial applications may take longer to generate revenue.

Beijing serves as the national policy and standards hub. Beijing concentrates on quantum sensing and measurement technologies. Proximity to central government ministries and standards-setting bodies provides advantages for companies seeking to influence technical standards. Beijing suits companies pursuing standards development or quantum sensing partnerships.

Find Business Support

We guide clients through each stage of location analysis, using cross-regional comparisons to identify optimal entry points.

Shenzhen and Guangdong Province emphasize commercial applications and manufacturing scale. The world’s first photonic quantum computer production line operates in Shenzhen. Quantum-5G integration projects leverage Shenzhen’s telecommunications ecosystem. Shenzhen fits companies developing commercial quantum products or manufacturing sensors. Manufacturing partnership opportunities benefit from Shenzhen’s established electronics supply chains.

Shanghai and the Yangtze River Delta target finance and industrial applications. Shanghai’s financial services concentration creates demand for quantum security and quantum computing in banking. Industrial sensor applications fit the region’s advanced manufacturing base. Quantum cloud services benefit from proximity to Alibaba (based in nearby Hangzhou) and other tech platforms. Shanghai offers advantages for financial services applications, industrial automation, or quantum cloud platforms. The region’s international orientation makes market entry smoother than in other clusters.

Navigating challenges and strategic restrictions

Export control regimes in both Western countries and China are creating growing bifurcation risks for multinational companies. US and European restrictions on advanced computing components have accelerated China’s domestic substitution efforts, but they also leave firms managing increasingly complex, dual-track compliance requirements. Companies must balance home‑country export rules with China’s tightening data localization and cybersecurity mandates.

Market access also differs significantly by segment. Government and defense‑related quantum applications remain largely closed to foreign providers, and quantum communications infrastructure faces the most stringent restrictions. In contrast, commercial applications in finance, manufacturing, and healthcare are comparatively more accessible. Banks, pharmaceutical firms, and manufacturers can procure foreign quantum‑computing services without the limitations imposed on government-linked users.

Intellectual property and data security concerns require active, ongoing management. Some joint venture arrangements, particularly those involving government-affiliated clients, may include technology transfer expectations. China’s Cybersecurity Law and related regulations mandate that data generated in China be stored domestically, with formal assessment and approval procedures required before transferring such data overseas.

Competitive dynamics increasingly favor domestic players. State-supported champions benefit from subsidies that enable sub‑market pricing, while government procurement policies steer contracts toward local suppliers. Technological advantages that foreign firms once maintained for extended periods can now narrow within two to three years as Chinese competitors rapidly improve capabilities.

Strategic considerations for foreign businesses

Beyond location selection, foreign firms must also consider timing, regulatory exposure, and operating models.

China’s 15th Five-Year Plan marks quantum’s transition from research priority to industrial imperative. The rapid expansion of domestic industry participants indicates a narrowing window for foreign entry. As China accelerates its localization push, foreign suppliers face a critical timeline: establish market presence now before domestic alternatives mature, or risk being shut out.

The opportunity exists in supply chain gaps such as high-end instruments, specialized materials, and software and algorithms, as well as in commercial applications serving non-government customers. These buyers typically prioritize performance and commercial value rather than localization mandates.

Timing considerations favor action in 2026-2027. Regional quantum funds are expected to deploy most capital during the 2027-–2028 peak investment period. First movers can establish partnerships and customer relationships before domestic competitors fill all supply chain gaps.

The practical next step is to assess which quantum subsector aligns with your technology capabilities, identify the appropriate regional cluster for your target applications, and engage with development zone authorities before mid-2026 to position for the first wave of 15th FYP funding deployment.

Our Business Advisory service helps companies navigate Asia’s complex business landscape from initial market entry to ongoing expansion. We advise on corporate structuring, company setup, due diligence, legal contracts, intellectual property, and M&A transactions. Clients benefit from both standalone projects and integrated support from our in-house tax, audit, HR, and technology teams. To arrange a consultation, please contact China@dezshira.com. 

• Previous Article Hong Kong Budget 2026-2027: Driving Growth Through Technology and Innovation
• Next Article