The National Security Commission on AI lays out the following challenge: to compete with China and others, American AI models must have wide predictive powers, for which they need large data-sets, which can only be harnessed through large user-bases. It would therefore seem that getting people to use AI services is a desirable policy outcome.
This might explain why OpenAI software will now be integrated into US national labs, and why ChatGPT Gov is set to be adopted by municipal and state government workers throughout the nation.
China: State Vision, Private Vigour
The Chinese market is expected to surpass $61 billion by 2025. China now accounts for 52% of global industrial robot installations, eclipsing the US. Its dominance extends to service robots in logistics, healthcare, and consumer markets. Programs like AI Champion City have cultivated 20 major AI hubs, while Chinese firms secure international contracts in surveillance, smart cities, and automation.
Over the past decade, Chinese government Venture Capital invested US$912 billion into strategic industries like artificial intelligence (AI)—a sum comparable to America’s entire annual industrial policy budget. A staggering 1.4 million AI-related firms have received a slice of this investment. Strategic initiatives such as Made in China 2025 and the national AI development plan have positioned the country as a global leader in robotics and AI.
Venture capitalists have poured $120 billion into the sector, particularly in autonomous vehicles, robot sensors, and IT hardware. National government, local government, and private-sector Venture Capital all assign roughly 20% of their investment to AI, with national government VCs being the lowest, at 15.7%.
Crucially, government investment plays a signalling role: in 71% of cases where AI firms secured both public and private funding, government money arrived first, acting as a sign for private investors to follow.
In addition, government-backed funds are spread far and wide, propping up firms in less-developed regions, as regulations require local government VC funds to invest close to home, substituting for absent private capital.
Europe: The Eternal Follower
If China’s AI strategy is defined by a strong investment from the state into a slew of SMEs and America’s by the building-up of national champions from existing Big Tech, Europe’s is shaped by regulation. The EU has assigned €250 billion ($263 billion) to AI, with France alone pledging $114 billion. Yet between 2017 and 2018, European AI startups raised just $2.8 billion—far below the U.S. ($16.9 billion) and China ($13.5 billion). The continent’s fragmented capital markets and bureaucratic hurdles have slowed progress.
At the heart of Europe’s AI vision is the AI Act, a sweeping regulatory framework set to take effect in 2024. Designed to govern “high-risk” AI systems, it mandates compliance costs of around €400,000 ($423,000) per company—potentially reducing AI investment. But Europe is not entirely without ambition.
Its Horizon Europe program allocated €2.6 billion to AI in 2021-2022, adding €112 million in April 2024, including €50 million for large AI models and €15 million for AI transparency. Meanwhile, the Digital Europe Programme has invested over €1 billion in AI since 2021 and plans to inject another €4 billion by 2027. However, the bloc cannot be considered to be in the AI race.
AI is a Weapon
The irony is that China, a nominally communist country, is no more “statist” in its development of AI than the US. It may actually be harnessing market competition to a greater degree than the US, whose Tech giants foreclose SME market entry to a degree.
China’s AI model has had its “Sputnik moment” with Deep Seek and seems to be innovating beyond what US firms have produced. We now must wait to see whether Project Stargate offers an effective, competitive model for investment and innovation.
One thing is clear: AI is no longer just about innovation. It is about economic power and hegemony. In fact, it may be the principal arena in which US unipolarity is now being contested, and in which those powers set to dominate a future multipolar world are being ranked.
Statement
The global AI race is helping shape economic and geopolitical power. The US leads in private AI investment, with $290 billion fueling tech giants and national security initiatives like Project Stargate. China, backed by $912 billion in government VC, strategically directs AI growth, now leading in robotics and surveillance tech. Europe, by contrast, prioritizes regulation over innovation, potentially stifling its competitiveness. As China’s AI prowess rises and the US seeks to maintain dominance, AI is no longer just about technology—it’s the battleground for economic supremacy in an increasingly multipolar world.
