“The U.S. Lead Over China in AI Is All But Gone.”
asserted
Lead → go → AI
“China Is AI-Maxxing.”
asserted
China → maxxe → ?
“China Just Erased America’s AI Lead.”
asserted
China → erase → Lead
Those assessments of the artificial intelligence rivalry appeared in US publications recently, and Xi Jinping will be pleased to have them in the air as he arrives in Washington this week for a state visit.
asserted
he → appear → visit
Under Xi’s leadership, China has made huge strides in developing the most consequential technology of our times.
asserted
China → make → times
What will be less discussed is that he is also the leader of an economy in its worst shape in decades.
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he → discuss → decades
The two facts are related.
asserted
facts → relate → ?
Economists in China – even those closest to the state – have openly warned that the government is pouring too many resources into a technology that creates relatively few jobs, while doing too little to save the broader economy.
And it’s an economy in crisis: The country’s youth unemployment rate, excluding students, reached 18.9 per cent in August.
asserted
rate → warn → August
Consumers are not spending.
asserted
Consumers → spend → ?
During the first half of the year, domestic car sales fell markedly 20 per cent from a year earlier, and housing sales fell another 14 per cent, adding to years of decline.
asserted
sales → fall → decline
This summer, the economists’ warnings became a chorus.
asserted
warnings → become → ?
Li Daokui, a former adviser to the country’s central bank and a professor at Tsinghua University, said in July that China’s economy was “running too cold.”
asserted
economy → say → July
Its booming high-tech sectors, he said, could not lift the larger base.
uncertain
he → boom → base
At a forum in June, Liu Shijin, another former adviser to the central bank, proposed raising basic pension payouts from $US30 to $US150 per month for rural residents to shore up consumer demand.
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residents → propose → demand
At the same forum, Huang Haizhou, an adviser to the central bank, said Beijing must foster mild inflation and corporate profitability before sustained technological advancement could occur.
uncertain
advancement → say → inflation
“A country mired in deflation cannot achieve technological innovation,” he said.
asserted
he → mire → innovation
The economists’ comments were earlier reported by Bloomberg and Chinese media.
asserted
comments → report → Bloomberg
The exact amount of government support for artificial intelligence is difficult to know.
asserted
amount → know → intelligence
Stanford’s AI Index Report noted that state-initiated investment funds deployed an estimated $US184 billion ($258 billion) into AI firms from 2000 to 2023.
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funds → note → 2023
Last year, Xi instructed the government to use every tool at its disposal, including tax breaks, government contracts, financing and access to infrastructure, to advance AI.
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Xi → instruct → AI
And, according to Bloomberg, China is preparing to spend around $US295 billion over the next five years to build data centres across the country, which will be operated by state-owned firms.
uncertain
which → accord → firms
The Chinese economists’ bluntness was revealing, as was the timing, just before the regular midyear meeting of China’s ruling Politburo.
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timing → reveal → Politburo
They have been warned against sounding too pessimistic, and some have been censored or silenced for doing so.
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some → warn → ?
That these establishment figures were speaking so starkly – right before the leadership was about to calibrate economic policy – suggested how alarmed they had become.
uncertain
they → speak → policy
Taken together, their message was clear: the Chinese economy was in trouble, and an AI-centred allocation of resources could prove costly to ordinary people’s livelihoods and the country’s economic future.
uncertain
allocation → take → livelihoods
The leadership gave their warnings little heed.
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leadership → give → heed
When the Politburo meeting ended July 30, the party acknowledged the need for “proactive” measures to boost the economy, but stuck with incremental stimulus policies and vowed to develop “an intelligent new economy.”
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party → end → economy
State media reports broke with previous practice and did not announce a target for domestic growth.
Fixed-asset investment, including infrastructure, real estate and equipment, fell 4.1 per cent in the first five months of the year. Li, the former central bank adviser, said a similar contraction happened only twice in the history of the People’s Republic: in 1961, at the height of the Great Famine, and in 1967, at the height of the Cultural Revolution.
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contraction → break → Revolution
It also fell in 1989 following the Tiananmen Square massacre, but it probably wouldn’t be wise to mention that at a meeting in Beijing.)
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it → fall → Beijing
Xi has offered a revealing explanation of how he measures economic progress.
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he → offer → progress
“We cannot look only at GDP growth,” he said, referring to gross domestic product, in a speech in March.
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he → look → March
What mattered, he argued, was China’s growing “hard power” and its development of advanced industries.
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he → matter → industries
In Xi’s view, slower growth does not necessarily signify failure if technological advancement proceeds “upward step by step”.
asserted
advancement → signify → step
Rather than boosting household disposable income with cash or shopping vouchers or expanding the social safety net, as many economists have suggested, Xi believes that state-led technological rollouts will modernise traditional industries and unlock future economic value.
uncertain
rollouts → boost → value
But those gains could take years to materialise.
uncertain
gains → take → years
China cannot afford to sit out the AI race.
asserted
China → afford → race
And in the first half of 2026, investment in information services, a sector the National Bureau of Statistics said was being propelled by AI, jumped 19.2 per cent.
asserted
Bureau → say → AI
The technology could transform its economy and strengthen its position in its competition against the United States.
uncertain
technology → transform → States
China is preparing to spend around $US295 billion over the next five years to build data centres across the country, which will be operated by state-owned firms.
asserted
which → prepare → firms
Xu Chenggang, a Chinese economist at Stanford University, put plainly what his peers in Beijing could only imply.
uncertain
peers → put → Beijing
…and 20 more, not listed.
The Aporia
