LAGUNA BEACH, Calif.—Americans underestimate the Chinese tech sector at their own peril, said venture investors Kai-Fu Lee and Jim Breyer at The Wall Street Journal’s global technology conference on Wednesday.

“A lot of people in the U.S. just don’t realize how strong the Chinese entrepreneurial, engineering, product, research capabilities are,” said Mr. Lee, chairman and chief executive of the early stage venture firm Sinovation Ventures, which invests in Chinese companies.

He...