China is rapidly closing the gap with the United States in the artificial intelligence race, driven by advancements in infrastructure, AI models, and energy production. Chinese firms are leveraging open-source models to fuel this growth, with some even outperforming Western rivals in key tests. Lighter regulation in China has further accelerated AI adoption, with the country aiming for 70% AI penetration by 2027.
China's advantage in energy production is a critical factor, generating more than twice the electricity of the US, essential for powering energy-intensive AI operations. Despite facing challenges such as US export controls on advanced chips, China is fostering homegrown chip development, with companies like Huawei increasing production of advanced AI chips. This push for self-sufficiency ensures that China is not overly reliant on Western suppliers for critical technologies.
The focus is shifting towards the application and diffusion of AI, where China's cost innovation and state-backed strategy are proving effective. While the US remains a dominant market for AI investment, China's tech giants are firmly in the running, demonstrating that the AI race is no longer a one-sided story.
