QIYUAN XU and YAQIANG WANG
BEIJING/SINGAPORE – Their tariff war maybe stalemated, but the competition for technological supremacy between the United States and China is shifting into high gear. As the two countries battle for dominance in AI – and the productivity and geopolitical gains that will come with it – one question looms large. Will China’s AI capabilities catch up with – and even surpass – those of the US?
Driving this trend is a series of policies introduced by US President Donald Trump’s administration. Trump’s presidency marks a dramatic break from the commitment to openness that has underpinned America’s technological leadership for decades. Measures intended to bring innovation back to the US may boomerang and end up paving the way for Chinese dominance.
The evolution of the digital economy may provide some insight into how today’s AI race will play out in the wake of Trump’s policies. In the 1990s, the US led the internet revolution, dominating the pivotal “zero to one” phase by quickly moving innovations from lab to market. This fueled what many at the time lauded as the “new economy,” characterized by rapid growth, strong productivity gains, and low inflation. China, initially a follower, later injected remarkable dynamism into the digital economy by scaling its own innovative technologies.
China’s digital development unfolded in three stages. The first was copy-and-follow: from the mid-1990s to the early 2000s, Chinese firms mirrored US models, launching web portals and online services that drove explosive user growth.
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