The AI Race: How China & the US Are Competing for AI Supremacy

 Broad applications of AI that can generate text, images, and videos continue to evolve, raising concerns about its impact on employment.

AI Marathon: China vs. the US

The US currently leads in AI, but China is catching up. The US has imposed semiconductor export restrictions to slow China’s advancements, but perfecting AI solutions takes years. While China excels in some areas, it struggles with high-end semiconductor manufacturing, a key factor in AI development.

• Silicon Valley’s Role in AI Leadership

Silicon Valley is a critical advantage for the US, fostering innovation through a culture of research and long-term investment. Companies like Google and Microsoft invest heavily in AI, exemplified by Microsoft's $1 billion funding of OpenAI. In contrast, Chinese companies often refine existing technologies rather than pioneering breakthroughs.

• China’s Competitive Edge

The vast population of China can provide an extensive dataset for training, facilitated by platforms like WeChat, which integrates messaging, payments, and other services. To enhance AI development, China’s lenient privacy regulations enable massive data collection. However, In certain areas government control raises concerns about censorship, limiting AI’s adaptability.

Challenges & State-Sponsored AI Research

China’s AI growth is largely state-driven, with government-backed research labs leading the charge. These efforts are crucial for overcoming US-imposed semiconductor restrictions. The question remains whether China will consolidate these labs into a national AI system or transform them into state-owned enterprises as AI advances.

• Impact on the Global Order

State-sponsored AI research in China could shift the geopolitical landscape. China’s strong internal market and supply chain make it resilient to deglobalization. The US, having outsourced much of its manufacturing, faces potential vulnerabilities. AI is expected to become a defining factor of economic and military power, influencing the global balance.

• Semiconductor Struggles

Semiconductors are essential for AI development and the US leads in chip design, holding 85%of the global market.  However, the US and China rely on Taiwan’s TSMC and South Korea’s Samsung for advanced fabrication. The US has imposed restrictions on China's access to semiconductor technology, but China is developing its chips, such as Baidu’s Kunlun and Huawei’s Kirin 9000s.

China's leading semiconductor company, SMIC, is trying to offset its reliance on foreign suppliers, even if it cannot get next-generation lithography technologies from ASML. By 2025, amidst great difficulties, China targets 70% self-sufficiency in semiconductors and is increasingly active in packaging the chips, where it commands a 38% share of the global market. 

• China’s AI Research Dominance

While the US maintains AI product development, China leads AI research. According to a report, in 2021, Chinese researchers accounted for 40% of the world's AI publications against only 10% for the US. Nine out of the ten strongest institutions for AI research are Chinese, whereas massive systems are being built by international corporations like OpenAI for Microsoft's GPT-4.

• Investment and Public Perception

In 2022, US private investors poured $47.4 billion into AI, 3.5 times more than for China. However, Chinese companies like Tencent, Alibaba, and Huawei are gaining ground. There are also diverging public perceptions,  78% of Chinese citizens have a positive view of AI, whereas only 35% of Americans do.

Future of AI Supremacy

China has continued to make advances in AI and build up its chip stocks despite restrictions from the US. While today the US has an advantage, analysts say China's rapid advancement might soon catch up. China's state-backed projects, an ocean of data resources, and desire for technological self-sufficiency provide an irresistible challenge to US hegemony. 

Ultimately, the battle over AI supremacy will shape not only the future of technology but also the geopolitics landscape of the coming years.