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Present-day popular narratives about geopolitics fixate on the notion that rising great powers present an existential threat to the U.S.-led world order. The economic rise of the People’s Republic of China has exacerbated the United States’ anxiety regarding relative power decline, especially in the wake of the recent global financial crisis, wherein China’s model of authoritarian capitalism seems to have weathered the economic storm far better than the United States. Contrary to popular conceptions, advantage of leading states—reflected in their ability to generate innovation via technological progress—tilts towards the United States, even if it faces many near-term problems. This paper makes this case by exploring the political economy of innovation policies in both the People’s Republic of China and the United States with regards to “green” technology, rigorously investigating the microinstitutional, macroeconomic, and cultural determinants of innovation.