China’s Expanding AI Ambitions Signal a New Era in the Global Tech Race

• China’s rapid AI progress is challenging long-held assumptions of U.S. tech dominance.

• Beijing is investing heavily, including an $8.69 billion national AI fund and broad “AI+” integration strategy.

• Huawei and domestic chip production are narrowing the gap with U.S. leaders like Nvidia.

• A potential “China tech sphere” could expand across developing economies.

• Massive U.S. AI spending raises ROI and market sustainability concerns.

  
  

China’s accelerating progress in artificial intelligence is beginning to challenge long-standing assumptions about U.S. leadership in advanced technology, with analysts cautioning that the shift could mark the start of a profound transformation in the global tech landscape.

Rory Green, chief China economist and head of Asia research at TS Lombard, said in an interview with CNBC’s Squawk Box Europe that the widely held belief in America’s dominance over cutting-edge technology and AI is beginning to erode. According to Green, China’s rise in high-value industries extends well beyond headline-grabbing developments in artificial intelligence or electric vehicles. Instead, it reflects a broader and rapid climb up the technological value chain.

Green described the moment as historically significant, noting that it is rare for an emerging market economy to position itself at the forefront of scientific and technological innovation. He argued that China is combining sophisticated technological capabilities with cost structures more commonly associated with developing economies. Supported by an expansive and deeply integrated supply chain, the country’s model creates a powerful competitive advantage.

He also pointed to Beijing’s strategic commitment to the sector. Under President Xi Jinping’s leadership, significant financial resources have been directed toward advanced industries. Last year, China established a national AI investment fund totaling 60.06 billion yuan (approximately $8.69 billion), and it has rolled out an “AI+” strategy aimed at embedding artificial intelligence across industries, public services, and everyday life.

In the intensifying AI rivalry with the United States, China is making notable gains. Domestic firms are producing increasingly sophisticated AI models, many powered by chips designed and manufactured within the country. Huawei, in particular, has scaled up chip clusters to offset U.S. export restrictions, leveraging large volumes of hardware and relatively inexpensive energy to expand computing capacity.

While Nvidia remains widely regarded as the benchmark for high-performance AI semiconductors, analysts suggest Huawei is narrowing the performance gap by focusing on scale and cost efficiency. This approach, combined with China’s industrial depth, is helping to close the distance between the two tech powers.

Green also raised the possibility of a distinct “China tech sphere” emerging. Given that China is already a primary trading partner for much of the developing world, he suggested that its technological ecosystem could gain similar traction. For many emerging and frontier economies, the decision may hinge on affordability and access rather than geopolitics.

Countries without significant national security concerns regarding China may find its offerings compelling: competitively priced 5G infrastructure, renewable energy components, AI platforms, battery technologies, and even financing denominated in renminbi. By contrast, Western alternatives often come with higher costs. If this trend continues, Green argued, large portions of the global population could be operating on Chinese-developed technology platforms within the next decade.

Even leaders within the U.S. technology sector acknowledge China’s progress. Demis Hassabis, CEO of Google DeepMind, said in January that Chinese AI systems may trail Western counterparts by only a matter of months—closer than many observers believed just a year or two ago.

At the same time, massive investment by American technology giants underscores the intensity of the competition. Amazon, Microsoft, Meta, and Alphabet have collectively outlined plans to spend as much as $700 billion on AI-related capital expenditures this year. The scale of that spending has unsettled some investors, contributing to volatility in technology stocks and briefly erasing roughly $1 trillion in market value from major firms before partial recoveries followed.

Karim Moussalem, chief investment officer at Selwood Asset Management, noted that concerns are mounting about whether such extraordinary spending will translate into sustainable returns. Speaking on Squawk Box Europe, he observed growing unease around the narrative of U.S. exceptionalism, particularly after a recent sell-off in American software stocks.

According to Moussalem, the hyperscalers’ aggressive capital expenditures reflect an escalating race, with ever larger sums being deployed in pursuit of AI leadership. However, as investment levels exceed expectations set just months ago, questions about return on investment are intensifying. For markets, the debate is no longer just about technological capability—it is increasingly about financial sustainability and which country will ultimately secure the upper hand.

As both nations double down on AI, the global technology order appears to be entering a period of rebalancing. Whether China’s rapid ascent translates into lasting dominance remains uncertain, but analysts agree on one point: the competitive dynamics of the AI era are shifting, and the implications could be far-reaching.