U.S. and China Are Headed for an AI Collision

By Oren Etzioni

Trump and Xi Are Talking — But the U.S. and China Are Headed for an AI Collision

President Trump spoke by phone to his Chinese counterpart, Xi Jinping, on Monday November 24 and later posted on Truth Social, “Our relationship with China is extremely strong!” The warm feelings from Washington came on the heels of the two leaders holding a productive meeting in Korea recently and scheduling several more get-confabs for the year ahead.

But bubbling beneath the surface is a rivalry between the two countries over the most vital technology of the 21^st century: artificial intelligence.

To understand the rivalry, consider a recent announcement by the U.S. Justice Department: on November 20, it charged two Americans, and two Chinese nationals, with a conspiracy to illegally export about 400 high-performance graphics processing units (GPUs) to China. Federal law requires that a license be secured for export of these technologies, which can be used to develop and strengthen AI.

The co-conspirators didn’t have a license – and never even applied for one. In fact, they lied about the destination of the GPUs when shipping them. And for their services, they received a cool $3.89 million in wire transfers from China.

The backdrop to this smuggling scheme is Beijing having set a goal for China to be the world’s leader in AI by 2030. And it’s made considerable headway. “China is the global leader in AI research publications and is neck and neck with the United States on generative AI,” points out the Information Technology and Innovation Foundation. It adds that China is “advancing rapidly in AI research and application, challenging the United States’ dominance in this critical field.”   

This progress stems from massive investments by the Chinese government in the 21^st century. From 2000 to 2023, venture capital funds connected to the Chinese government made $184 billion in investments in China-based companies in the AI sector, according to study published last year and conducted by professors at Harvard, MIT, and Oxford.       

In an amusing coincidence of timing, one day after the smuggling indictment, Huawei – a leading Chinese technology company – announced a tool called Flex:ai that it said, “improves the utilization of artificial intelligence-based chipsets.” The announcement also made the obligatory nod to corporate citizenship, saying that the technology will “speed up the democratization of AI.” But the company buried the lede, as they say in journalism, saving the most important detail – which is curiously attributed to “sources” – for the final sentence: “the new software tool will help China create an analogue AI chip 1000 times faster than Nvidia’s chips.”   

Huawei is not just any company. It is the world’s largest manufacturer of telecommunications equipment. And it’s also been engaged in the kind of skullduggery that resulted in the recent indictment. In 2020, the U.S. Justice Department indicted  the company and four of its subsidiaries. The charges mostly revolved attempts to steal trade secrets from U.S. companies.

The company used an array of tactics, but perhaps most brazen of all, it paid its employees bonuses if they procured confidential information from rival companies. And when U.S. law enforcement was investigating Huawei, the company told its employees not to comply.

Suffice to say, there’s good reason not to trust the Chinese government and its proxy companies like Huawei.

The Trump administration recognizes the threat. In late June, it wisely approved a merger among two American companies that compete with Huawei: Hewlett Packard Enterprises and Juniper Networks. A senior U.S. national security official told Axios: “In light of significant national security concerns, a settlement . . . serves the interests of the United States by strengthening domestic capabilities and is critical to countering Huawei and China.” The official said blocking the deal would have “hindered American companies and empowered” Chinese competitors.

Given the economic importance of AI to countries throughout the world, the competition between the United States and China is regrettable. But it’s probably also inevitable. China is not abiding by the rules that are supposed to govern the global economy. And it’s using AI, says the Justice Department, to bolster its military, to test weapons of mass destruction, and to heighten surveillance.

Sometime next year, President Trump is scheduled to make a state visit to Beijing and Xi is scheduled to come to Washington. They’re destined to focus on the cooperative parts of the relationship, but you don’t need to ask ChatGPT to see that the two countries are on a collision course over AI. Buckle up.

Oren Etzioni is Professor Emeritus of Computer Science at the University of Washington. He is the Founding CEO of the Allen Institute for Artificial Intelligence (AI2), a 501(c)(3) non-profit scientific research institute founded by late Microsoft co-founder and philanthropist Paul Allen. 

This article was originally published by RealClearDefense and made available via RealClearWire.