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In the global race to get autonomous vehicles up and running, China’s government is giving domestic companies some distinct advantages.

Miao Wei, China’s Minister of Industry and Information Technology, said the autonomous vehicle (AV) market is projected to be worth 100 billion yuan ($14 billion) by next year. Potential demand for AVs in China, with its population of 1.4 billion, is expected to be huge. Consultants at McKinsey project $2 trillion by 2040. This enormity is matched, however, by the scale of the technological undertaking faced by Chinese carmakers and tech firms. AVs could still be a long way off, so for the moment, the focus is on the pursuit.

Companies developing AVs in the U.S. face regulatory hurdles that their Chinese rivals do not. But in nearly every other respect, they have the advantage. The first is driverless technology. “Everybody is behind Waymo and Cruise,” a senior Chinese AV executive admitted. American AVs have spent much more time on the road: Waymo’s have logged more miles than all Chinese AVs combined. The U.S. companies have also out-financed the Chinese. Research firm CB Insights reckons that $11.9 billion has been invested in American AV firms since 2014, versus $4.4 billion in China.

China might lack driverless technology that adapts to unpredictable city streets – but as an authoritarian country with a government keen on leading the autonomous driving charge, it has carte blanche to make the cities and their inhabitants adapt to AVs. This includes creating laws for how people move around, designing or redesigning urban spaces to accommodate driverless infrastructure, and limiting AV companies’ legal liability. “There’s a lot of fuel coming from the government planning,” said an executive of one Chinese firm.

Laying the groundwork for autonomous vehicles is enabling Chinese companies to profit from the shift to autonomous driving long before its actualization. This includes non-AV makers, such as mobile network operators and telecoms equipment manufacturers, which are developing technology to help AVs operate smoothly. Cowa Robot has sold street-sweeping robots to authorities in Changsha, the capital of Hunan province. Huawei wants its 5G mobile antennas to handle most of the processing needed to run the cars.

According to state media, the Chinese government will spend up to $220 billion on 5G by 2025 to build infrastructure, promote new technology and rewrite policy in support of the AV industry. It plans to install driverless infrastructure throughout the 2020s, including telecoms networks and cloud computing capacity to capture and process data, as well as map services to guide the cars.

Of course, the road to autonomy is not without obstacles. The loss of access to American technology resulting from the trade war is a blow to Chinese carmakers with AV aspirations. China’s automotive industry relies heavily on imported electronics. Home-grown innovations have been slow to bear fruit. Like AV companies in the U.S., Chinese AV developers, including Pony.ai, WeRide and others, are loss-making. Investors on both sides of the world are losing patience. In China, relatively cheap labour will make it even harder for AVs to become competitive. Finally, as The Economist points out, “The desire of motorists to own self-driving cars has yet to be tested.”

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