America has no peer competitor in artificial intelligence outside of China. Several years ago, when the trajectory of AI model development was uncertain enough to allow middle powers like the United Kingdom and France to nurse hopes of remaining competitive, this may have sounded like an overconfident pronouncement. Today, it is well-earned conventional wisdom. Competing at the frontier of AI requires coordinating talent, data, energy, and compute infrastructure at unprecedented scales—scales that only the United States and China are realistically capable of delivering on, although each in their own distinctive ways. Understanding China’s approach to developing and diffusing AI is thus of existential importance to understanding America’s relative position in the world to come.
America has been surprised by China’s AI prowess before. In January 2025, the release of DeepSeek was widely described as a Sputnik moment by policymakers and business commentators. While DeepSeek’s technical advances were overstated, the media’s reaction revealed the extent to which many in the United States had become complacent about China’s lag in AI capabilities.1 Against available evidence, too many American observers believed that China was incapable of discovering AI breakthroughs on its own, whether because of constraints on their access to advanced semiconductors, or the persistent myth that Chinese companies can only copy but not innovate. Even now, many still seem to believe that Chinese AI models will remain behind American models in perpetuity, offering lesser capabilities but at a fraction of the price. Yet offering a good enough product at ultra-low prices and thereby cornering the market on less exquisite technologies and manufacturing inputs is exactly how China became a peer competitor to the United States in the first place. In AI, we are thus primed to be surprised once again.
The pervasive indifference that characterizes America’s overconfident view of its place in the AI race stems from grading the Sino-American AI race against our own preferred rubric: frontier model benchmarks, the scale of the data center buildout, and timelines to artificial general intelligence (AGI). Rarely do we measure American performance against the categories that the Chinese themselves choose to emphasize. The party-state and various Chinese companies are clearly trying to unleash AI capabilities, and Beijing’s desire for international AI leadership is beyond dispute. But their methods and benchmarks of success are different from ours, evincing a fundamentally distinct understanding of the nature of the competition.
