China is winning one AI race, the US another – but either might pull ahead

China is winning one AI race, the US another – but either might pull ahead

In the latter half of the 20th century, the development of nuclear arms dominated the strategic focus of the United States and the Soviet Union. Today, the battleground has shifted, with the US competing against a different rival: China. The goal remains the same—technological supremacy—but the arena has evolved, encompassing research labs, university research, and the innovation hubs of emerging startups. This competition is closely monitored by leaders of global tech giants and government officials, with financial stakes reaching into the trillions. While both nations boast distinct advantages, their positions in the race may be up for grabs as the landscape continues to change.

Nick Wright, a cognitive neuroscience researcher at University College London, highlights the divergence in strengths between the two powers. The US excels in AI “brains,” such as chatbots and large language models (LLMs), while China leads in AI “bodies,” particularly humanoid robots that mimic human appearance and function. However, this balance could shift if either side intensifies its efforts to outpace the other. The recent launch of OpenAI’s ChatGPT on 30 November 2022 marked a turning point, sparking widespread fascination in the tech community.

“You could go on any sort of social network and there was just this flood of posts from people talking about all the different ways that they were using this new little text box that had appeared on the internet,” says Bloomberg columnist Parmy Olson, author of *Supremacy: AI, ChatGPT, and the race that will change the world*.

ChatGPT, which interacts in a conversational manner, became the first mainstream large language model to gain global attention. These models analyze vast amounts of text and data to identify patterns in how ideas are expressed, offering transformative potential for white-collar professions. American firms like Anthropic, Google, and Perplexity have since invested heavily in rival LLMs, recognizing the economic and strategic value of AI dominance.

Yet, Washington’s focus extends beyond algorithmic innovation. A senior US official tells the BBC that the key to America’s strategic edge lies in its control over high-end microchips, which power the computing infrastructure behind AI systems. Most of these advanced chips are designed in California, with Nvidia emerging as a central player. In October 2022, the company surpassed a valuation of $5 trillion, potentially making it the most valuable in history, according to Stephen Witt, author of *The Thinking Machine*.

Export controls are a critical tool in maintaining this advantage. While the US does not manufacture these chips domestically, it leverages its influence to restrict their flow to China. The “foreign direct product rule” enforces alignment with US policies on goods containing American technology, even when produced abroad. This rule plays a pivotal role in limiting China’s access to essential components, despite the proximity of Taiwan’s semiconductor plants to mainland China.

The island of Taiwan, where many high-end chips are manufactured, is nearly visible from the Chinese coast. This geographical closeness makes it a strategic target for Beijing. However, establishing self-sufficiency in chip production remains challenging. The process requires not only sophisticated design but also cutting-edge fabrication, areas where China has yet to match the global leaders. As the AI race heats up, the question remains: will these dynamics hold, or will the balance tip in favor of one nation over the other?