China’s industrial policy, including its “Delete America” initiative and major state investments, has secured dominance in legacy chips and reduced reliance on U.S. technology. While still dependent on American AI chips, Chinese firms like Huawei are quickly developing competitive alternatives, threatening U.S. chipmakers.

While no one has waved an official checkered flag in the Sino-American race for AI supremacy, the markets are betting that the United States will prevail. The chipmaker Nvidia recently became the world’s first $4 trillion company (and its CEO, Jensen Huang, has acquired global rock-star status). Microsoft, the biggest investor in OpenAI’s for-profit entity, is not far behind, with a valuation of $3.7 trillion.

China-U.S. competition in the realm of artificial intelligence boils down to development ability. The advantages of the United States are no longer secure. What matters is who will lead sustainably in the future.

The U.S. president is coercing its allies to coordinate the policies related to critical minerals to weaken China’s influence in the global market and create a more “safe and reliable” supply chain for the United States.

The rapidly growing AI industry was rocked last month with the launch of DeepSeek, an open-source, Chinese-developed competitor to OpenAI’s products. The introduction of a valid competitor to American dominance in AI will lead to many questions in 2025 on how the U.S. will respond.

The incoming administration in the United States is expected to intensify export controls on China and strengthen measures to block overseas markets for Chinese technology products. However, Donald Trump’s new team, steered by his pragmatic approach, may ease the pressure in some sectors.

To a large degree, the new agglomeration is the result of Washington’s “great power competition” strategy. While it looks a bit like the military-industrial complex of the Cold War era, it is truly a different entity, but it’s one whose long-term impact on China-U.S. ties must be understood.

Trump 2.0 is expected to be more mature than it was in Round 1. He will likely place greater emphasis on leadership and earning respect from other countries. If both sides commit to communication, managing differences and deepening cooperation, relations can find a new balance in a complex international environment.

China-US Focus editor KJ Kerr sat down with Dr. Michael D. Swaine, a prominent American scholar of Chinese security studies, to explore his thoughts on the state of U.S.-China relations. Swaine, currently with the Quincy Institute for Responsible Statecraft, points to a need for greater frankness and openness between the rival powers and suggests that they can do things — both individually and together — to reduce tensions and forestall conflict.

"Reagan asked Gorbachev: If Martians attacked the United States, would you come to our defense? And Gorbachev said yes, and then asked Reagan: If Martians attacked the USSR, would you come to our defense? And President Reagan said yes."