By Chao Deng

The U.S. is home to the world's biggest and best-known pharmaceutical companies. But China is giving the U.S. a run for its money in the race to develop a vaccine for Covid-19--a feat that would instantly change the dynamics of the fight against the deadly virus, and the geopolitical competition between the U.S. and China.

Beijing's government, including its military and several state-backed firms, has committed hundreds of millions of dollars and cleared regulatory barriers to accelerate research and development. Even before a front-runner is clear, domestic drug manufacturers have begun ramping up production capacity as leader Xi Jinping vows to share a Chinese-backed vaccine with the world.

China's government and Chinese companies are now behind five of the 10 vaccine candidates being tested on people world-wide, according to the World Health Organization.

Two belong to state-run China National Biotec Group Co., or CNBG, which has poured more than 5 billion yuan ($703 million) into research on a new vaccine. Another effort, tied to China's military, has set up efficacy trials abroad after winning approval last month to run a phase-three clinical trial in Canada.

Discovering a viable vaccine for Covid-19 has drawn comparisons to space-race feats like putting a man on the moon. Being first would make a powerful statement about China's ambitions and technological capabilities, while helping deflect criticism of the Communist Party's suppression of news of the virus after it first emerged in the city of Wuhan late last year.

Being able to deliver the world's first vaccine would add to Beijing's standing, following its high-profile donations of face masks and medical equipment to other countries stricken by the pandemic.

More practically, a vaccine breakthrough would allow China to further rebuild domestic public confidence and revive its economy while the rest of the global economy struggles. All that could deepen the fissure between Beijing and Washington, where some U.S. officials would view a Chinese achievement as an example of its growing competitive threat.

"The sooner you have a vaccine, the sooner you have an economic recovery, " says Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations in New York. "It is a potential game-changer that affects the geopolitical balance."

President Xi told the WHO last month in a closely watched speech that if Beijing succeeds, it would share the vaccine with the world.

He didn't offer specifics, but industry experts expect all countries, including China, to prioritize vaccination of their own citizens. Dr. Anthony Fauci, the leading U.S. infectious-disease expert, says he expects Beijing to use its vaccine "predominantly for the very large populace of China." He declined to comment in an interview last week on whether the U.S. would use a Chinese-backed vaccine and said it was still too early to tell who would be first to develop a viable vaccine.

President Trump said last month that the U.S. would have access to a Chinese vaccine, without elaborating.

Both countries say they aim to develop a vaccine before the end of the year. Chinese Premier Li Keqiang said Thursday that China's government and private institutions are expected to invest more than 10 billion yuan ($1.4 billion) in vaccines, therapy and tests aimed at Covid, up from 4 billion yuan so far.

In a sign of how close the race is, Chinese researchers collaborating with Tianjin-based CanSino Biologics Inc. and with the Chinese military were the first to publish detailed peer-reviewed results from a phase-one clinical trial in an established medical journal--The Lancet. U.S. drugmaker Moderna Inc. had reported promising results from its phase-one trial a few days earlier, but in a press release that wasn't peer-reviewed.

CanSino's swift progress has been underpinned by strong backing from Beijing's government, which has turned the company's advances into a domestic propaganda coup. The lead scientist is a 54-year-old major general with the People's Liberation Army named Chen Wei, who was among the first to take the experimental vaccine--along with several of her team members--according to the official Xinhua News Agency.

Earlier, a photo briefly circulated on Chinese social media of a woman in army attire taking an injection in front of the Chinese Communist Party flag.

China has yet to test state-of-the art vaccine-making technologies on people, unlike the U.S., whose lead candidate in human trials is based on messenger RNA. Instead, four of the Chinese candidates now in human clinical trials were produced by an older vaccine-making technique that uses inactivated viruses--growing them in petri dishes and then weakening them for use on humans. Such vaccines have long been used to protect humans against the common flu, hepatitis A, polio and rabies, but are regarded as more cumbersome and expensive.

Two such vaccine candidates developed by CNBG have been tested on more than 2,000 people as part of the first two phases of clinical trials in China. The firm hasn't yet said where it will conduct phase three. The first two phases of a standard clinical trial test mostly for safety; the third, for efficacy.

Many more Chinese companies are exploring vaccine candidates, including private Sinovac Biotech Ltd., though it also has yet to reach phase three. In conjunction with several government institutions, Sinovac has been running phase-one and phase-two trials in the eastern province of Jiangsu.

Experts say it is possible that China will develop a Covid-19 vaccine before the U.S. and other countries, but fail to gain traction abroad. An Ebola vaccine developed by the Chinese military was approved by Beijing's regulators in 2017, but never made it to the global market. A vaccine manufactured by Merck & Co. later won approvals from regulators in the U.S. and Europe, plus recognition by WHO.

China also faces concerns about the quality and safety of its vaccines, after instances of fraud and regulatory failure in recent years. Scandals have plagued some of the companies pursuing a coronavirus vaccine, including an arm of Sinopharm, parent company of CNBG. It sparked public outrage in 2018 when some of its vaccines for infants were found to be substandard.

Whether or not China is first to develop an effective vaccine, the country's considerable manufacturing capabilities mean that its companies could play a major role in producing enough doses of any vaccine for the world.

China is one of the world's largest producers of vaccines, turning out hundreds of millions of doses annually. It reached a milestone in 2009, becoming the first country to mass-produce a vaccine for the H1N1 influenza when Sinovac's vaccine gained domestic regulatory approval. In 2013, CNBG successfully created a vaccine for Japanese encephalitis. It won WHO's stamp of approval for the global distribution--a first for a China-developed vaccine.

CNBG has built what China is calling the world's largest vaccine-manufacturing facility, with capacity to produce 100 million doses a year, in Beijing. Once a second plant is completed in Wuhan this month, the company says it will be able to produce 200 million vaccine doses within a year.

Sinovac's chairman, Yin Weidong, told state-owned Beijing News last month that his company will likely run "trial productions" by July at a government biomedical park, where it has been allotted production space equivalent to 10 football fields.

Beijing's official China Daily estimated in a report last month that two-thirds of the world population, or roughly five billion people, will need to be vaccinated. Being able to develop one or more vaccine options, it said, "will help elevate China's biotechnology sector to world-class."

Raffaele Huang and Lekai Liu contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com