Last month, China hosted its first International Advanced Air Mobility Expo, showcasing its ambitions to dominate what Beijing calls the “low-altitude economy,” a fast-growing sector in the airspace below 3,000 meters (about 9,840 feet) that includes drone deliveries, electric air taxis, and other uncrewed aerial services. The event featured cutting-edge technologies such as the world’s first seven-seat, three-ton electric vertical takeoff-and-landing aircraft; hydrogen-powered drones; and large fixed-wing cargo drones.
The takeaway is clear: While the United States is playing catch-up with the first drone revolution, China is racing ahead to lead the next one.
This time, the revolution is in delivery drones. Unlike the first generation of consumer drones designed for photography or recreational use, these aircraft are built to carry hundreds or even thousands of pounds over long distances, flying at low altitudes and, increasingly, autonomously.
And the country that dominates delivery drone technology will not only shape the future of global commerce, but also secure a decisive military advantage.
At the turn of the century, the United States led the world in drone innovation. U.S. defense firms pioneered the technology, pushing boundaries in flight control, sensor fusion, and autonomy. This early innovation granted the United States a tactical advantage during the global war on terrorism and sparked broader interest in drone applications, from agriculture to disaster response. U.S. companies, such as 3D Robotics, built on this foundation and moved into the consumer market in the early 2010s, developing models aimed at commercial users and hobbyists.
But China’s Da-Jiang Innovations (DJI)—today the world’s largest commercial drone company—scaled faster. Starting in the mid-2010s, it integrated hardware and software seamlessly into simple, easy-to-use platforms, cut costs through state backing and manufacturing scale, and turned quadcopters into a global consumer product.
Today, DJI holds more than 70 percent of the global commercial drone market, while U.S. companies capture only a small fraction and remain heavily focused on defense applications.
Simply put, the United States built the prototype, but China built the factories—and the market.
Now, this history is repeating itself. In recent years, U.S. firms have innovated, developing larger drones to fill critical gaps in last-mile delivery, humanitarian relief, and battlefield resupply, targeting locations that are inaccessible to ground vehicles or large aircraft.
Beijing, however, is moving quickly to dominate the industry. This top-down effort provides government funding, subsidies, and tax breaks to drone companies, a commitment that’s expected to deepen further in China’s upcoming five-year plan.
Coordinated state support has enabled Chinese firms to make rapid progress in delivery drone development, fielding models that increasingly rival—and, in some categories, even surpass—U.S. models in payload, range, and endurance. New drone models can handle heavy freight that once required transport by trucks, ships, or large cargo aircraft. Among these, Air White Whale’s W5000—billed as the world’s largest cargo drone—is slated for first delivery by 2026 and can carry 5.5 tons across 1,600 miles.
These drones also offer economic benefits, avoiding labor costs and fatigue limits, flying longer and more often, dispensing with heavy life-support gear, and taking on riskier missions—all of which makes them cheaper to build and operate than crewed aircraft.
Chinese drones no longer just carry cameras; they now deliver food, medicine, and e-commerce orders. SF Express, often described as China’s FedEx, now uses drones to make deliveries to remote islands. Similarly, ZTO Express has built a nationwide delivery network, connecting more than 100 logistical hubs in 40 cities through a fleet of autonomous drones. Such investments in logistics infrastructure are reducing transit times, expanding rural market access, and creating more efficient supply networks.
Unlike the United States, China recognizes the transformative potential that delivery drones hold for the future of commerce and defense. It is rapidly building a complete ecosystem for aerial logistics operating at low altitude, with uncrewed cargo aircraft, battery swap stations, and electric air taxis—all of which improves delivery efficiency and reliability while lowering operational costs. China is also addressing the challenge of managing crowded low-altitude airspace by working to establish dedicated pilot zones, digital traffic systems, and new regulatory frameworks.
In short, China isn’t just making drones—it’s building a global logistics network in the sky and a market for it to serve. This obviously has huge commercial implications. By the early 2030s, market consulting firm Allied Market Research estimates that the global drone logistics market could exceed $53 billion, transforming industries ranging from retail and health care to urban transportation. China’s early lead positions it to capture a significant share of this market, generating economic returns and reinforcing its influence over global supply networks.
But for the United States, the risk goes beyond Chinese market capture.
Whichever country leads in setting drone logistics standards—much like standardized sea and air cargo—will shape how commerce, aid, and even international travel evolve in the low-altitude airspace. If Chinese mass production again sets the de facto standards for aerial cargo platforms and networks, then U.S. companies will face an uphill battle trying to compete both at home and abroad.
For example, the International Civil Aviation Organization has long been a forum where countries vie to shape aviation norms in ways that favor their domestic aviation industries and interests. China actively participates in the organization’s Unmanned Aircraft Systems (UAS) and UAS Traffic Management working groups, regularly submitting working papers, technical expertise, and guidance materials to influence the future of international drone standards and safety protocols. By shaping these standards, Chinese firms stand to gain a significant advantage, as a regulatory environment designed around their technologies would effectively lock them in as dominant global suppliers and service providers.
But perhaps more urgently, China’s mastery of cargo drones offers it a significant military advantage.
In future conflicts, autonomous delivery could be the difference between sustaining forces under attack or seeing them cut off, running out of ammunition, and ultimately facing defeat. China demonstrated this during the 2020 border standoff with India, when the Chinese military used cargo drones to resupply front-line troops in high-altitude regions that were inaccessible to trucks or helicopters.
Similarly, in a future Taiwan conflict, getting Chinese troops to the shore would be the easy part; staying supplied under attack is the real challenge. Without continuous resupply, any Chinese forces landing on the island risk running out of ammunition and other critical goods, leaving them isolated and vulnerable. China’s autonomous delivery fleet could solve this daunting logistical obstacle. Drones that can be mass-produced, fly autonomously, and operate with limited infrastructure could prove decisive in resupplying beachheads under fire, though other operational barriers to a successful invasion would remain.
Supply drones may not capture headlines like stealth fighters or hypersonic missiles, but wars are won and lost on logistics, and China’s investment in autonomous delivery has the potential to be as consequential as certain advanced weapon systems.
The U.S. military is acutely aware of its gap with China in this space. The Trump administration recently released an executive order pledging to have the Defense Department “unleash drone dominance” by reforming acquisition processes and reducing certain regulations. While this initiative is a vital step toward catching up with China on small, tactical drones, it doesn’t address the strategically significant—and equally urgent—gap in cargo drones, which is critical for maintaining U.S. military supply lines in contested environments.
U.S. cargo drone innovation is happening, but it’s failing to scale. The Defense Department has funded promising projects, such as the Marine Corps’ Tactical Resupply Unmanned Aircraft System and the Air Force’s logistics drone trials. But these remain small, siloed programs—not engines of commercial growth.
The commercial aspect matters greatly, because military programs alone cannot build or sustain this industry. As China’s DJI demonstrates, success depends on mass-market scale. Plus, logistics is inherently a dual-use domain. Trucks are trucks, and cargo planes are cargo planes, whether they deliver to a grocery store or are modified for the battlefield. Military delivery drones will share the same DNA as those used for the civilian economy, meaning that progress in one domain directly benefits the other.
The United States needs but lacks a civilian-led industrial base for large-scale cargo drone production. U.S. companies are developing promising technologies with potential for both commercial and military applications. But Federal Aviation Administration (FAA) regulatory barriers have kept most of these efforts stuck in the pilot or prototype phase.
Even if new models move beyond prototype to limited production, a lack of infrastructure—including dedicated air corridors, digital air traffic control, and battery swap stations—will impede large-scale production, deployment, and adoption.
If the United States hopes to catch up to China, it needs to update its approach. Whereas China is growing its drone industry through centralized control, the United States can move faster by embracing decentralization and reducing regulatory burdens—clearing the path for private-sector innovation to flourish.
Fortunately, many of the most consequential regulatory changes are also the simplest. For instance, the FAA still requires pilots to confirm that their seat belts are fastened before taxiing—an outdated practice when the pilot may be operating remotely from an office hundreds of miles away or replaced entirely by an onboard computer.
Similarly, current rules mandate that pilots operate in a “see and avoid” mode at all times, requiring human vision as the final line of defense to prevent avoid collisions, even though sensors now match or outperform the human eye. A more fitting standard would be “detect and avoid,” adapting to a future where aircraft will rely on diverse arrays of advanced sensors.
As the government reduces regulations, it must also use its purchasing power to create steady demand. To avoid another DJI moment, the Pentagon should expand its initiative beyond small tactical drones—what it classifies as Group 1 and Group 2—to include larger delivery drones, known as Group 5 vehicles.
Moreover, the Pentagon should update the way that it thinks about larger drones. Instead of treating them like small, crewed aircraft and subjecting them to extended development and testing processes, the Defense Department should recognize them as the utility vehicles they are—the pickup trucks and semitrucks of the air. By contracting for their use as it does with long-haul trucking and general-purpose vehicles, or by issuing a defense secretary memo directing “off the shelf” procurement as it has with utility vehicles, the military would provide the clear market signal that industry needs to invest and scale quickly.
All of this should serve as a wake-up call. Without rapid, coordinated efforts, the United States risks ceding not only a multitrillion-dollar industry but also global influence and the military logistics capabilities that will shape future conflicts.
Either U.S. industry leads, or China delivers the future—one drone at a time.