As nations increasingly embrace the 97% cost advantage of Chinese AI, the USA has this brief opportunity to seize back the initiative.
America’s ‘biggest risk’ on AI is China getting ahead, Bessent says
Monday, 29 Jun 2026 | 5:38 PM MYT
US Treasury Secretary Scott Bessent on Tuesday said China surpassing the United States on artificial intelligence was the “biggest risk” of the technology – outweighing concerns over safety or job losses.
“The biggest risk to AI is China getting ahead of us,” Bessent said at the Economic Club of New York, adding that China’s willingness to discuss AI underscored America’s technological lead.
“I am one of the point people on our AI policy. I am the point person in terms of the economic relationship with China,” he said.
“I could tell you that the reason the Chinese are willing to have a discussion on AI is because we are ahead, so we have to stay ahead.”
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Read more: https://www.thestar.com.my/aseanplus/aseanplus-news/2026/06/29/americas-biggest-risk-on-ai-is-china-getting-ahead-bessent-says#goog_rewarded
Bessant isn’t the only significant figure concerned about Chinese AI competition. Many pundits suggest China is already ahead;
People around the world see a winner on AI — and it’s not the US
Respondents in key U.S.-allied countries increasingly see China as the world’s AI leader, while American optimism about the technology continues to erode.
06/15/2026 05:00 AM EDT
China is eclipsing the United States as the perceived artificial intelligence superpower in much of the world, according to a new global poll that underscores how Silicon Valley’s lead in the defining technology race is no longer taken for granted.
The survey also calls into question whether the United States will continue advancing the AI frontier fast enough to stay ahead of China, finding that Americans are increasingly worried about the technology’s consumption of resources, its ability to automate jobs and its potential to sow misinformation online.
The poll, conducted by U.K.-based research firm Public First surveying over 18,000 people across 15 countries, shows that just over half of American respondents — as well as majorities of people responding in Japan, India and Vietnam — still see the U.S. as the dominant AI superpower.
But those in the 11 other countries, including close U.S. allies such as France, Canada and the United Kingdom, see China as the leader. In Germany, only 23 percent of people saw the U.S. as dominant.
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Read more: https://www.politico.com/news/2026/06/15/people-around-the-world-see-a-winner-on-ai-and-its-not-the-us-00960930
Why, despite not having the latest chip technology, is China mounting such a challenge to a technology the Trump administration sees as a national priority?
Vice President JD Vance highlighted one critical advantage China has;
Vance: China is ahead of the US in AI development thanks to the construction of energy facilities
China is ahead of the United States in artificial intelligence thanks to the rapid development of the energy infrastructure needed to operate data centers, said US Vice President J.D. Vance in an interview with journalist Michael Knowles, APA reports.“I believe the Chinese are ahead of us in the field of artificial intelligence in only one way: they’re not afraid to build new energy capacity, while we are. This is where the environmental movement in the US will collide with reality. If AI companies don’t understand this, the first victims of this confrontation between the construction of new energy capacity and the environmental movement will be American AI data centers,” Vance said.
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Read more: https://en.apa.az/america/vance-china-is-ahead-of-the-us-in-ai-development-thanks-to-the-construction-of-energy-facilities-513900
The US effort to compete with China is being sabotaged by opponents of cheap and abundant fossil fuel energy. Make no mistake, if China needs a new coal plant, they build a new coal plant – no handwringing or giant polar bear puppets, just put in the power plant where it is needed.
In addition China, cut off from the very latest US technology, has learned how to do more with less. Just as the Indian nuclear programme defeated supercomputer export bans by developing novel ways to network hundreds of computers into a DIY supercomputer, so China has been forced to explore ways to achieve results comparable to US AI models by using their energy and bulk low end chip advantages.
China’s AI models compete on cost efficiency for training and inference
Chinese developers are slashing compute costs by up to 97% through architectural innovation, reshaping the global AI pricing landscape under the pressure of US export controls.
DeepSeek trained its V3 model for roughly $5.58 million. For context, US competitors routinely spend tens to hundreds of millions on frontier-level models.
In May 2026, DeepSeek permanently slashed prices on its V4-Pro model by 75%. Cached input costs dropped to as low as RMB 0.025 per million tokens.
DeepSeek isn’t alone in this race to the bottom. Chinese firm 01.ai reportedly offers inference at approximately 14 cents per million tokens, positioning Chinese API pricing as the lowest in the world.
Chinese AI models on OpenRouter have achieved 5x growth in volume, driven almost entirely by their cost advantages over US alternatives.
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Read more: https://cryptobriefing.com/china-ai-models-cost-efficiency/
This could have serious consequences for the USA if China wins a decisive advantage.
AI is real and it works.
A few weeks ago I demonstrated vibe coding a simple game – achieving an 800% increase in productivity over the time it would have taken me if I had coded the game without AI assistance.
It’s not just software – vibe products are very rapidly becoming a thing, where new product development is something you do in your coffee break, with orders shipping within hours of finalising your design. While this use of AI technology to develop real products is currently experimental, its not going to take long for Chinese manufacturers to realise how much money they could make by combining their low cost AI advantages with their large scale low cost manufacturing advantages.
It’s not just 3D printing – similar modelling techniques can be used for laser cutting, automated welding, and other rapid development manufacturing technologies. It’s only a matter of time until some genius assembles all this into a system which combines the advantages of mass production and bespoke engineering.
The USA has this one brief opportunity to wake up and sweep away the energy cost and regulatory roadblocks to competition with China.
Regardless of how you feel about AI, AI cannot be suppressed, the genie cannot be put back in its bottle. Any impediment to AI development in the USA can only hurt the USA, as other players embrace the new AI industrial revolution and crush nations and industries which are left behind, just as completely as other less advanced economies were crushed by the original industrial revolution in the late 1700s, until others figured out how to catch up.
That’s in addition to aluminum, steel, silicon ingot, smelting, refining, and much of the power intensive automated assembly lines. But you can’t expect lawyers, diplomats, politicians, and greens to understand that. Not connecting any dots can do great harm.
Well, there once was a time when lawyers, diplomats, politicians fully understood this.
But then came the greens and lawyers, diplomats and politicians stopped to understand, or more correctly, started to pretend that they suddenly do not understand.
Let’s not forget that Sun Tzu set the philosophy for the Chinese people in ~ 450 BC that it’s the long game that wins out in the end.
And as things stand, with the West hobbling itself in development in so many ways, China will own the world by the end of this century.
Without firing a shot?
Mr.
If we keep allowing them to steal everything – like they’ve been doing since the 1990’s or before – Yes!
Next up is AI, followed by quantum computing.
For more on China’s government sponsored thefts read the book: The Great Heist (2025)
I am not sanguine about China’s potential to gain an advantage in AI, but I don’t give a damn about the opinions of the Canadians, the Brits, or the Europeans. They have shown themselves incapable or unwilling to work on it themselves and their poll likely reflects sour grapes and wishful thinking.
I also quoted Bessant and Vance saying China currently has the advantage.
We can provide CCGT power just as cheaply as China can produce coal-fired power. Step 1 is to stop manufacturing essentially worthless wind turbines and dedicate that manufacturing capacity to CCGT production. If incentives are required, provide them. Trump’s efforts to redirect offshore New England wind waste to land based natural gas investment is part of the process. We need to make that permanent, not just “delayed/downsized.”
Problem is. Trump has just two years left. Fast track CCGT builds are ~24-30 months. Whoever follows need to build a team that includes visionaries and alphas that can get things done because Bessent leaves before but not after Trump. Thermals also need water for cooling and a myriad of other things that NIMBYs can cripple — the propaganda has hit levels so high that people truly believe that they can go full Neo-Luddite and the paychecks and pension checks keep on flowing and the markets keep going up.
Very few people understand on wealth is created, so I am pessimistic on the US taking AI. Far too many people are either not engaged or just simply are against because they don’t understand it.
On the bright side, as American education and social environments fails to produce sufficient population with a work ethic, any degree of honesty, or marketable skills, AI is the magic ingredient that superpowers high functioning people. With extremely fast iteration, the ability to perform analysis and the ability to run swarms of agents, highly creative and bright people can fill the vacuum as fewer and fewer carbon-based forms deliberately fail to keep up and contribute to perpetuating First World prosperity and standards.
And if US companies can’t provide cheap AI services, China gladly will. Many businesses now are looking at invoices from domestic AI providers and are either building in-house or subscribing to China’s quickly maturing product.
Maybe the US just isn’t Great enough to be a leader in AI because We The People, for whatever reasons, real or imagined, don’t want it. The US wasn’t great because of Magic Dirt, but because of innovation, quality craftsmanship and a commitment to being great.
They’re pretty big boots to fill, for sure.
Yeah, but the alarmists will tell us that this loss in AI leadership will be a small price to pay as long as we keep our coal consumption down.
It’s completely bizarre. California won’t drill for their own oil, but they’re happy to import it from totalitarian regimes, along with importing carbon intensive goods from foreign countries which California no longer manufactures. Perhaps the same principle applies to Chinese AI in their minds, it’s climate friendly if someone else burns the fossil fuel.
Which is also why it’s so hypocritical for Australia’s Labor / Greens party to demonize high-quality coal that China buys as much as they can source from all around the world, mostly Australia.
Without the $billions in income from China, Oz would be a financial basket-case.
Australia might be about to face the music on this hypocrisy 🙂
https://wattsupwiththat.com/2026/06/23/new-icj-climate-case-demands-australia-restrict-or-cease-fossil-fuel-exports/
I don’t think our (US) problem is our reluctance to build power stations or the resources they will use or even China. Our problem is the ease that small outfits who view the US as the devil have interfering with us moving forward with AI or new power stations or anything that makes our life what it is. All they need is a couple billionaires and the ability to shop for the right judge. In the end it is the courts who are throwing everything out of whack. One more part of crappy government.
According to coal statistics, gas statistics and oil statistics the following are the yearly fossil fuel energy use figures per capita for the US and China
China Coal, 3076.75 cubic feet per capita
US Coal, 2220.89 cubic feet per capita
So the US uses 76% of the coal China uses on a per capita basis
China Oil, 176.8 gallons per capita
US Oil, 908.2 gallons per capita
So China uses only 19% of the oil the US uses on a per capita basis
China Gas, 5.97 cubic feet per capita
US Gas, 81.61 cubic feet per capita
So China uses only 7% of the gas the US uses on a per capita basis
Its not obvious to me from the data that fossil fuel energy use has anything to do with China’s success especially given the average Chinese lifestyle has massively improved in recent decades.
Per capita is a misleading metric with China. While Western nations feel some need to help underdeveloped regions to prevent an electoral backlash, backwards regions in China are treated as a dumping ground for the corrupt and incompetent, perpetuating a cycle of failure and poverty, and creating a multi-speed economy.
I’m sorry, I missed your actual argument as to why China’s “cheap fossil fuels” were helping them win the race to AI when the data shows the US uses more.
Much of China lives at subsistence level. Their needs skew your numbers.
Much of China? One could equally argue that too many of the US citizens use too much energy unproductively.
One could also argue that China’s technology ecosystem is larger than the USA’s.
The USA still has a chance. China for all its strengths has a big problem with power distance- you can’t tell the boss they made a mistake. This can lead to massive resource misallocation and undermines innovation.
I was once flown halfway around the world to explain to the boss he had under resourced the project in a way which avoided anyone losing face. The team had been killing themselves working 100 hours per week trying to hit the target. They were most impressed at my solution and offered me a job on the spot, but I had commitments elsewhere.
Are you suggesting that banning RV leisure travel in the US would have no impact on the input-output sector matrix of the economy?
Are RVs powered by gas, as opposed to oil? I’m not suggesting anything. I’ve made the counter argument to Eric’s argument that China uses its energy to progress AI despite its people’s needs. And I did it on principle.
The fact remains that Vance’s statement is a political argument rather than an argument based on numbers. Even today, AI datacentres represent a tiny fraction of total energy use.
It’s not just energy issues. The Trump administration is acting like an interventionist Democrat in controlling access to the newest AI models. It’s idiotic “industrial policy”, i.e. centralized control by politicians and bureaucrats. Ironically, China seems to be allowing more freedom in this area.
Unfortunately Republicans are late to the AI game, Silicon Valley is democrat leaning, so some mistakes are to be expected. Hopefully the Trump admin will get their heads right before the damage becomes too great.
Antony, the post after the Einstein post also has me logged in for Comments. Einstein is still a broken login.