China’s accelerating progress in artificial intelligence is beginning to erode the United States’ long-held dominance in advanced technology, with analysts warning that a global “China tech shock” is only just unfolding.
Speaking on CNBC on Monday, Rory Green, chief China economist at TS Lombard, said America’s perceived monopoly over AI and cutting-edge technology has been decisively challenged.
Green argued that China is moving rapidly up the value chain, pairing advanced technologies with emerging-market production costs and a powerful domestic supply chain. “It’s the first time in history that an emerging market economy is operating at the frontier of science and technology,” he said, adding that this shift extends beyond AI to electric vehicles, semiconductors and clean energy.
Beijing has backed this push with substantial state support. Under President Xi Jinping, China has channelled funding into strategic sectors, including a national AI fund worth about US$8.7 billion, alongside an “AI+” strategy aimed at embedding artificial intelligence across industry, government and society.
China has also narrowed the gap with the U.S. in AI computing power by developing advanced models on domestically produced chips. Tech giant Huawei has built large-scale chip clusters and leveraged lower energy costs to scale computing capacity. While U.S. chipmaker Nvidia remains the global benchmark for AI training hardware, analysts say Chinese alternatives are closing in through scale and cost advantages.
Green warned that these dynamics could give rise to a distinct “China tech sphere,” particularly in developing economies. With China already a major trading partner for much of the world, its lower-cost technology stack spanning telecoms, AI, renewable energy and digital infrastructure may prove more attractive than higher-priced Western alternatives.
“In countries without national security constraints around China, the choice could become very simple,” Green said, suggesting that within five to ten years, much of the global population could be operating on Chinese technology platforms.
Similar concerns have been echoed within the Western tech industry itself. Demis Hassabis, chief executive of Google DeepMind, said earlier this year that Chinese AI models may be only months behind their U.S. and European counterparts — far closer than previously assumed.
Meanwhile, the competitive pressure is intensifying investment on the U.S. side. Hyperscalers including Amazon, Microsoft, Meta and Alphabet have announced plans to spend up to US$700 billion on AI-related capital expenditure this year alone. The scale of that spending has unsettled markets, fuelling concerns about whether such investments will deliver sufficient returns.
Analysts say growing uncertainty over returns on U.S. AI spending, combined with China’s rapid technological catch-up, is driving broader questions about American tech exceptionalism — and whether the global balance of power in artificial intelligence is beginning to tilt.
As China continues to blend state backing, industrial scale and technological ambition, many investors and policymakers now see the AI race not as a settled contest, but as one entering a far more competitive and unpredictable phase.
