Can the US win the AI cold war with China?

US attempts to slow down Chinese progress on AI through economic restrictions could backfire. The success of China’s cheap AI technology has clearly worried American AI companies. Industry leaders have openly called on the US government to take action on competition from the Chinese AI industry. Washington has already imposed various restrictions on the sale of chips to China. Last year, it launched the Pax Silica initiative, aimed at securing supply chains for AI technology that exclude Beijing; 23 states have since joined, along with the European Union. There is now pressure from the US AI industry to ban or restrict Chinese AI models. It increasingly appears that the two great powers are on the verge of an AI cold war, each building its own camp and bidding to set the rules of the AI era.

The question now is: Having declared this war, can the US win it? At present, the US and its allies hold the upper hand in several key areas of AI development. China’s frontier AI models remain heavily dependent on imports, chief among them chips, chip-designing software, and chipmaking equipment. As a result, US export controls hinder China’s ability to keep pace with the latest AI technologies; they drive up costs and undermine investor confidence. They will, however, not hold China’s AI development back forever.