This chapter analyzes the dynamics of technological competition between the United States and China in two types of innovation: incremental, characterized by a linear R&D investment race where the leader (US) holds the advantage and traps the chaser (China) in a vicious cycle of low market share and reduced R&D; and disruptive, characterized by technological leapfrogging where the chaser, unburdened by legacy investments, can overtake the leader, who faces a high opportunity cost in abandoning established technology. The former equilibrium is labeled the “chaser's trap,” while the latter is termed the “leader's dilemma.” Using historical examples like Kodak and Japan's semiconductor industry, the chapter illustrates these equilibria. It concludes that while China holds a comparative advantage in disruptive sectors like new energy vehicles, it must actively use industrial policy, such as a proposed “International Technology Anti-Trust Policy,” to secure domestic market share and avoid the “chaser's trap” in incremental technologies like semiconductors, thereby fostering a virtuous innovation-market cycle essential for long-term growth.