CNBC’s The China Connection newsletter: Navigating a tech-heavy world

That “needs to be corrected,” he said, urging policymakers not to “pick and choose sectors” to support, but to allow capital to work according to market forces.

It’s a tough ask as China has doubled down on technological development, while struggling to transition away from real estate, which once accounted for more than one-fifth of the economy.

Local businesses have tried to fill the gaps where they can.

In Shenzhen, a local partner for Kickstarter, called INNO100, is making about 5 million yuan ($750,000) a month at its retail store, said Baron Wang, founder of the parent entity Longham Group.

That’s thanks to a combination of retail sales, 3D printing service fees and events, he said. The store showcases new tech products, similar to its Beverly Hills-based cousin. Wang plans to open about 10 more stores in China, and five overseas, saying he sees the chance to get customers especially from the U.S.

“It’s really hard for us to control the relationship between China and the U.S.,” he said. “But I think the technology should not be too politic[al],” he said, especially in consumer electronics.

International investment is always an option.

Yuan Minglun, co-founder and CTO of Kunwei Technology, said the company already supplies major Chinese humanoid robot companies with sensors, and is planning to set up a factory in the U.S. in coming months so that it can more easily sell to American humanoid startups.

It reflects a persistent gap between U.S. and Chinese supply chains.

Cyril Nader, founder and CEO of outer space-focused startup Phenix, has aimed to use a non-China supply chain. But he pointed out that the lead time for non-China-made parts such as gear boxes can be 56 weeks.

“56 weeks from now, I don’t know what I will be doing,” he said. “We’ll be way ahead. We’ll be on [the] third phase.”