How China Is Girding for an AI Battle With the U.S.

China's biggest AI challenge is overcoming its difficulty in sourcing the world's most-advanced chips

- Raffaele Huang & Liza Lin

China is ramping up efforts to build a domestic artificial-intelligence ecosystem that can function without Western technology, as it steels itself for a protracted tech contest with the U.S. Washington has been trying to slow China's AI progress through export controls and other restrictions that limit Chinese access to U.S. capital, talent, and advanced U.S. technologies. To an extent, those restrictions have worked. But China is fighting back with expanding efforts to become more self-sufficient in AI—a push that could ultimately make it less vulnerable to U.S. pressure if it succeeds.

Many of the initiatives were on display at an AI conference that ended this week in Shanghai, which Chinese authorities used as a showcase for products free of U.S. technologies. One startup, Shanghai-based StepFun, touted a new AI model that it said required less computing power and memory than other systems, making it more compatible with Chinese-made semiconductors. Although Chinese chips are less capable than American products, Huawei Technologies and other companies have been narrowing the gap by clustering more chips together, boosting their performance.

China also released an AI global governance plan at the event, the World Artificial Intelligence Conference, which called for establishing an international open-source community through which AI models can be freely deployed and improved by users. Industry participants say it showed China's ambition to set global standards for AI and could undermine the U.S., whose leading models aren't open-source.

The conference followed a series of announcements and investments in China aimed at turbocharging its AI capabilities, including rapid expansions in power generation and skills training. The whole-nation effort, led by Beijing, includes billions of dollars in spending by state-owned enterprises, private companies, and local governments.