In an interview with the Economist’s Editor in Chief Zanny Minton Beddoes, Elon Musk said that China may become the world leader in AI. The only thing now preventing it is China’s lower computing power. But that could change.
China already has the big advantage in electricity capacity versus the U.S., a 3 to 1 advantage:
China could develop its chips and increase its compute, as the Wall Street Journal just reported on China’s ambitions. If it does, that’s when China may surpass the U.S., in Musk’s view.
On top of that, China has 50% of the world’s top AI researchers:
What will happen to the U.S. economy if China is the world leader in high tech? AI spending and investments are driving the U.S. GDP, contributing anywhere from 37% to more than 92% to US GDP. Just imagine that Chinese open-weight AI models are the best in the world and US businesses all use them instead of OpenAI and Anthropic models. In that world, OpenAI and Anthropic could become the Ask Jeeves of the AI Era.
And the U.S. economy could falter if China becomes the world’s economic superpower driven by high tech.
What U.S. 100% tariffs on Chinese EVs tell us about AI
Musk was also against the U.S. banning China open-weight models. That could only apply to the United States and others around the world could still use China AI models.
Of course, one comparison to make is with EVs: China EVs are basically shut out of the U.S. market. Nonetheless, the U.S. government continues to impose a market-shutting 100% tariff on all Chinese EVs. That benefits Musk’s Tesla the most in the United States. Other people in the world can still buy Chinese EVs. China is now the global leader in EVs, accounting for 75% of global production. As Honda CEO Toshihiro Mibe recently put it, “We have no chance against [China’s EV capability]. From parts procurement to logistics management, everything at the facility was automated, and there were no humans on the production floor.”
Some critics may interpret this EV example as cutting against the U.S. trying to do something similar with AI models. While shutting out Chinese EVs from the U.S. market helps Tesla, it hurts American consumers who would be able to buy the cheaper and more advanced Chinese EVs.
Yesterday’s chorus of coordinated statements from prominent US AI CEOs seemed to agree with that fear: “With the right choices, open weight AI can expand opportunity, strengthen competition, extend American technological leadership, mitigate risk, and ensure that the benefits of this extraordinary technology are shared broadly across our economy. That future is worth building, and the United States should lead in building it.”
On the other hand, imagine a world in which China is the leader in AI, robotics, EVs, and potentially other high tech. What will happen to the U.S. economy if China is the world leader in high tech? AI spending and investments are driving the U.S. GDP, contributing anywhere from 37% to more than 92% to US GDP. Just imagine that Chinese open-weight AI models are the best in the world and US businesses all use them instead of OpenAI and Anthropic models. In that world, OpenAI and Anthropic could become the Ask Jeeves of the AI Era. And the U.S. economy could falter if China becomes the world’s economic superpower driven by high tech.
So, the question of how the U.S. government should respond to China’s rapid advancement in AI defies easy answers that pundits typically give. Any choice ranging from restricting China’s models to allowing U.S. companies to freely use them, potentially undercutting demand for U.S. models, is fraught with serious ramifications — the full extent of which are too difficult to predict.
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