Will China win the AI race?
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Most of the world’s population could be running on a Chinese tech stack in five to 10 years, one analyst told CNBC’s “Squawk Box Europe” earlier this week.
The U.S.’ “perceived monopoly” on tech and AI has been broken by China, said Rory Green, TS Lombard’s chief China economist, adding that the country’s rapid advancement is threatening to shake up American dominance in the market.
Green’s comments come as China races against the U.S. to develop artificial general intelligence (AGI) — where AI matches human capabilities — and roll out the technology across society. Big moves are being made to scale homegrown makers of AI chips to rival Nvidia and local AI companies are making waves on stock exchanges.
But could China really win the AI race?
Faisal Bashir | Lightrocket | Getty Images
Frontier AI
2025 was the year that many in the West really began to pay attention to Chinese frontier AI companies, with DeepSeek causing a market frenzy and local tech giants releasing a slew of their own models since.
Despite progress putting many model makers in China “close to” leading AI labs such as OpenAI, Anthropic and Google, they still lag behind, Paul Triolo, partner at advisory firm DGA-Albright Stonebridge Group, told CNBC.
Compute is the big problem. Export controls limiting access to advanced Nvidia GPUs create a “real ceiling on the compute side of scaling,” Nick Patience, AI lead at research firm The Futurum Group, told CNBC.
These are shortcomings Chinese AI companies are all too aware of.
DeepSeek acknowledged in a December research paper it faced “certain limitations when compared to frontier closed-source models” such as Gemini 3, including compute resources. A technical lead of Alibaba’s Qwen team said at a conference in Beijing in January that there was less than 20% chance that a Chinese firm would surpass U.S. tech giants on AI in the next three-to-five years, the South China Morning Post reported.
China’s advantages
But the country’s AI companies do have some advantages over U.S. counterparts.
The clearest area where China is outcompeting the U.S. is efficiency-driven model development — achieving strong performance at lower compute cost, said Patience.
“Whether driven by necessity (chip constraints) or strategy, Chinese labs have made notable advances in inference efficiency and quantization techniques that the broader industry must take seriously,” he said.
There’s also power. China is undergoing an energy boom and has added more power capacity in the past four years than the U.S. has in total, Bloomberg reported last month.
“This will help with the diffusion of AI in China, because energy will be more available to run data centers and other AI related infrastructure,” said Triolo.
By releasing competitive open-source or open-weight models, Chinese labs are “eroding the commercial moat that U.S. closed model vendors have relied on,”…
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