US strategy to Curb China’s AI advancements will intensify further

Between 2023 and mid-2024, US-China exchanges at various government levels revealed a willingness from the US to collaborate with China on establishing a global AI regulatory framework, writes  Zhou Chao, Research Fellow for Geopolitical Strategy programme at ANBOUND.

A notable instance was the US government's invitation for a Chinese delegation to attend and speak at the first Global AI Summit in November 2023 in Britain. Given the close relationship between the US and Britain, it would have been unlikely for the Chinese delegation to participate without US approval. Later, high-level AI dialogues were held between US and Chinese officials in Switzerland, signaling a momentary opening for China’s re-engagement on the global AI stage.

Yet, the US-China "tech Cold War" will persist and deepen, with no significant shift, especially in the AI sector.

The significance of AI technology makes it inevitable for the US to take strong measures against China’s AI advancements. Since the dawn of modern technology, a central challenge has been efficiently harnessing technology to support both production and daily life. Despite breakthroughs in the first three industrial revolutions, and the ongoing fourth, technology has yet to fully relieve humans from monotonous labor to focus on creativity. However, AI, especially generative AI, is now making this long-sought goal a tangible reality. AI’s potential to automate mundane tasks allows people to focus on more complex and creative endeavors. It can optimize production processes, enhance supply chains, and foster innovation in design, potentially boosting productivity across industries.

Beyond productivity, AI’s role in scientific discovery and technological progress is critical. It helps analyze large datasets, accelerates breakthroughs, and aids in the development of new materials, pharmaceuticals, and solutions to scientific challenges. In military applications, AI enhances efficiency and combat capabilities. The transformative potential of AI makes it clear that the country dominating this technology will hold substantial influence in both political and economic spheres. Given China’s rising stature as a systemic competitor, the US cannot afford to let China’s AI sector flourish and will continue to work to suppress its progress.

China’s rapid advancement in AI over recent years highlights the need for the U.S. to intensify its countermeasures. 2024 data from MacroPolo, a think tank of the Paulson Institute, shows that while the US remains the leader in AI talent, China has made remarkable strides in talent cultivation and development.

The shifts in talent flow are largely driven by the rapid growth of China’s AI industry, with increasing demand for talent and emphasis on AI research and development. Despite the U.S. maintaining its top position in AI research strength and global appeal, China’s growing influence means the US must ramp up efforts to contain China’s development in the sector, while simultaneously bolstering its own research capacity and global appeal.

In hardware, Huawei’s 7-nm chip phone launch in 2024 underscores China’s progress despite sanctions, with breakthroughs achieved even under heavy restrictions. This demonstrates that the U.S. must intensify its efforts to curb China’s technological advancements in AI, particularly in semiconductor manufacturing, a crucial component of AI technologies.

The resistance from the US business community to further sanctions on China has also waned over time, reducing opposition to such measures. Traditionally, American companies have lobbied against sanctions due to significant investments in China. Similarly, China’s push for greater use of domestic chips is eroding foreign companies' confidence in the Chinese market, further undermining the economic stakes of American firms in China.

The broader US business community is also scaling back its investment in China. In 2023, over $100 billion in profits were withdrawn from the Chinese market, signaling a shift in the financial relationship between the two countries. This change reduces the political and economic pressure on the U.S. government to avoid deepening sanctions on China.

According to a 2024 New York Times report, over 100 tech leaders from Silicon Valley, including Palantir CEO Alex Karp and Sequoia Capital’s Douglas Leone, lobbied US lawmakers to impose stricter limitations on China’s AI sector. Their efforts seek not only to curb China’s AI progress but also to shape the future of AI regulations, secure increased R&D funding, and address immigration policy to attract more AI talent to the US This lobbying effort underscores the focus on stifling China’s technological growth and encouraging the migration of AI talent away from China.

With China’s restrictive environment, combined with deepening US sanctions, particularly targeting China’s semiconductor industry, China’s AI sector is likely to face greater challenges in the future. The Biden administration, after facing potential setbacks in the 2024 elections, began to ramp up sanctions in the latter half of 2024, targeting even mature chip manufacturing technologies — a clear indication that the US is tightening its grip on China’s technological future.

In the context of the US-China technological rivalry, some have characterized the U.S. strategy as a "small yard, high fence". While the yard may not necessarily shrink, the fence is bound to grow taller.

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