America and China's Race to the Top Has a Jobs Problem

China's AI push may worsen youth unemployment, while the US struggles to bring back manufacturing jobs.

- Lin Suling

Between the US and China, who will win the race for superiority? That trillion-dollar question influences some of the biggest decisions for Asia, including where to make long-term business bets and how much of national sails should be hitched to those armadas.

Can countries expand telecommunications infrastructure with Huawei without jeopardizing security ties with the US? Should US partners continue to buy US weaponry or diversify in the face of a rising China?

For a while, the US appeared to be pulling ahead, with Mr Donald Trump's historic return to the White House, accompanied by shock-and-awe moves to spur investments and lower taxes. Temasek's US$30 billion (S$40 billion) investment over the next five years was a show of confidence in the US' leading position in innovation and technological advancement.

Developments of late, however, suggest the contest is far from decided, as the volatile policy environment in the US is seeding doubt over its reliability as an attractive investment destination. The US stock market has seen gains since November 2024 wiped out. The US Federal Reserve has even slashed US growth projections from 2.4 per cent in 2025 to a mere 1.7 per cent.

China's recent push into artificial intelligence (AI) is also resetting calculations. DeepSeek's incredible debut has seen investors rush for equities in Chinese chipmakers, software designers and data centres, with the Hang Seng Tech Index up by 40 per cent since.

The country has made impressive strides in advanced applied technologies, as home-grown champions unveiled a slew of platforms ready to be rolled out on the assembly line soon—from Xpeng's first flying car to a fifth-generation J35 military fighter jet.

The Chinese authorities have closed ranks with Chinese Big Tech, which was evident in President Xi Jinping's highly publicized rapprochement with tech industry captains in February.