The global race for technological supremacy will shape the balance of power in the international system in the next era. Worldwide expenditure on research and development has steadily increased from around 2% of GDP in 2010 to over 2.5% today.
In China, expenditure on research and experimental development rose by nearly 50% in 4 years, reaching RMB 3.6 trillion (about US$500 billion) in 2024. R&D investment intensity reached 2.68%, placing the country among the top in the world.
Artificial intelligence has surged to the forefront of global discourse. With the release of ChatGPT in late November 2022, it became the fastest-growing consumer application in history, significantly intensifying the global AI race. So, who is leading the race? While the United States may dominate in certain areas, China is highly competitive and is rapidly closing the gap.
The success of China’s homegrown tech startup DeepSeek demonstrated breakthroughs in AI large language models. In the first World Humanoid Robot Games held in August, Unitree Robotics and X-Humanoid emerged as the biggest winners by medal count, underscoring the rapid growth of China’s robotic capabilities.
China’s AI Path
China is striving to establish itself as a global AI superpower. In July 2017, it unveiled the "New Generation Artificial Intelligence Development Plan", aiming to become the world's primary AI innovation centre by 2030. The “AI Plus” Initiative, first introduced in the Chinese Government Work Report in 2024, clearly demonstrated the government’s commitment to AI development, envisioning AI as a crucial engine for accelerating the development of new quality productive forces.
In August this year, the State Council published its “Opinion on In-Depth Implementation of the Artificial Intelligence + Initiative.” The government has identified six key areas for the extensive and in-depth integration of AI: science and technology, industry, consumption upgrading, people’s wellbeing, governance and global cooperation. By 2027, the penetration rate of applications such as the new generation of intelligent terminals and intelligent agents is expected to exceed 70%. By 2030, this rate should reach 90%, and by 2035, AI is anticipated to provide strong support for the basic realization of socialist modernization.
China's top-down, nationally coordinated strategy has fuelled the growth of its AI sector and accelerated AI adoption across industries. Over the past five years, the number of Chinese AI companies has surged from about 1,400 in 2020 to more than 5,000. In terms of AI-related patents, China has emerged as the global leader, holding 60% of the world’s total, according to the World Intellectual Property Organisation.
Looking ahead, AI investment is poised to explode. The International Data Corporation (IDC) estimated that global IT investment in AI reached US$315.8 billion in 2024 and is projected to rise to US$815.9 billion by 2028. China is experiencing rapid growth in its AI sector, accounting for over half of the Asia-Pacific region's total AI spending. By 2028, China’s AI investment is expected to exceed US$100 billion, with a five-year compound annual growth rate of 35.2%, and the share of generative AI is anticipated to grow from 18.9% in 2024 to 30.6%.
The New Frontline
AI has officially become the new front line in great power competition. The US and China both rolled out their action plans for winning the AI race just one month apart. Back in July, the Trump Administration released America’s AI Action Plan, focusing on three pillars: innovation, infrastructure, and international diplomacy and security.
While the two economies may pursue different strategies, their ultimate goal is the same: leveraging their unique strengths to achieve dominance in the sector. The US currently leads in cutting-edge AI technologies, such as advanced computing chips and large language models. In contrast, China is widely renowned for its rapid and large-scale adoption of technology. For example, China has emerged as a global leader in electric vehicle adoption and has maintained its position as the largest industrial robotics market for twelve consecutive years.
The AI value chain covers everything from hardware and data infrastructure to AI applications. This race is complex and multifaceted, with no single winner likely to emerge. While technological breakthroughs are essential, widespread adoption of advanced technologies in the real economy is equally important, providing tangible benefits to governments, businesses and society through increased productivity, better efficiency and lower costs. However, while many focus on who will win the AI race, the real victory lies in working together for shared success.
Doris Fung, dfung@chamber.org.hk