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11 January 2026

Overcapacity Is China’s Biggest AI Advantage

ANGELA HUYUE ZHANG

The global AI race will be won not by the power of models and chips, but by how effectively systems can be deployed and improved across the economy. China’s chronic excess capacity, long seen as its greatest weakness, has reduced costs and accelerated adoption, providing the country's AI sector with a decisive edge.

LOS ANGELES – While debates over the AI race between the United States and China tend to fixate on which country has the most powerful frontier models and the most advanced semiconductors, that framing is becoming outdated. As AI moves from our screens into the physical world, the question is no longer whose models hit technical benchmarks, but who can build and sustain an ecosystem that embeds AI into everyday products and services.

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