The Daily Planet #101: The China Shock, Part 2

The metaphor of a “race” between the United States and China in artificial intelligence is misleading, as it suggests a clear finish line and defined boundaries, which do not exist in this complex and evolving competition. Instead, the relationship resembles two ships navigating uncharted waters toward an uncertain destination. Both countries are engaged in a multifaceted technological, scientific, and economic contest without a clear endpoint, driven by different strategies that reflect their unique strengths.

The United States has placed a significant bet on deep learning, embracing the “bitter lesson” that compute power is the key driver of AI progress. This approach, championed by leading AI companies and supported by government policy, focuses on advancing AI through massive computational resources and sophisticated software systems. The U.S. excels in software development, cloud infrastructure, and financial engineering, positioning itself as a leader in creating advanced AI models and platforms.

China, by contrast, pursues a strategy centered on embodied AI—integrating AI with robotics, sensors, and manufacturing—and fast-following open-source AI models to circumvent export controls and accelerate adoption. China’s strength lies in its manufacturing capabilities, enabling it to produce robust, flexible hardware and rapidly implement AI technologies in industries and factories. This complementary approach leverages China’s industrial base and trade networks, allowing it to excel in areas where the U.S. is weaker, such as hardware production and large-scale adoption.

While both nations have much to learn from each other, their competition is increasingly shaped by structural geopolitical tensions, making cooperation difficult. The U.S. remains bullish on its deep learning strategy but recognizes the need to rebuild manufacturing prowess to maintain its edge.

TLDR; this ongoing, multidimensional competition lacks a clear finish line and carries significant risks, shaping a future where technological leadership is both uncertain and critical.

The Bitter Lessons