China is gaining ground in AI. The U.S. still has a major advantage

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Earlier this week, Clément Delangue, the CEO of startup Hugging Face — which was recently on the receiving end of a rogue cyber attack by OpenAI’s models — made the somewhat controversial claim that China was winning the AI race.

“[China is] clearly dominating on open models right now, and I wouldn’t be surprised if they start dominating at the frontier either by the end of this year or next year at the rate of progress,” the Hugging Face CEO told CNBC earlier this week.

Despite being hamstrung by access to cutting edge AI compute — an area in which the U.S. dominates and has looked to block China from getting access to — Chinese AI models are increasingly closing the performance gap with U.S. frontier systems. 

Beijing-based Moonshot’s Kimi K3, released in July, edged ever closer to top models from Anthropic and OpenAI in benchmarking, even surpassing them in some areas. There’s been growing adoption of Chinese AI models among Western companies as capability has shot up. 

And there are other areas in AI which China is also considered to be leading in. The world’s most capable open models – which can be downloaded, modified and self-hosted – are all Chinese, and many experts consider the country to be ahead in robotics.

So is the U.S. losing the AI arms race?

While lagging behind the frontier, China’s models have emerged as cheaper and highly capable alternatives to U.S. options. With most AI use not requiring frontier model capabilities, adoption has risen on American shores and reportedly in developing economies in Africa. 

“Based on current trends it seems more likely than not that Chinese AI will become the default for developing countries,” Daniel Remler, senior fellow, technology and national security program at think tank the Center for a New American Security (CNAS), told CNBC.

That could have far-reaching consequences. 

“If Chinese AI technology becomes the default for developing countries, those countries may be more likely to align themselves politically with Beijing and Chinese AI companies get a beachhead in their markets,” Remler said.

China has “significant advantages” across many areas where AI will be deployed, including robotics, autonomous vehicles and state operations, Keegan McBride, director of science and technology policy at the Tony Blair Institute for Global Change, told me.

Long term, if “manufacturing, robotics, automated scientific infrastructure and AI-enabled state operations become the defining metric for extracting value from AI, China is well positioned,” he added.