Countering China’s AI Threat
Udumbara
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The Chinese Communist Party (CCP) seeks to turbocharge its quest for domestic and global hegemony by achieving dominance in and broad incorporation of artificial intelligence (AI) technology into Beijing’s governance, economy, and military, and then exporting it to dominate other societies.
For its part, the Trump administration has also set goals for the United States to dominate AI technologies for both economic and military benefit. Just as the United States has worked to counter ongoing Chinese cyber threats, it should also pursue a comprehensive strategy to check the CCP’s quest for AI dominance.
As it has done for unmanned systems, electronic vehicles, and reusable space launch vehicles, China has created a contained market competition model of corporate champions and select new entrants to help achieve AI dominance.
China’s top AI companies are already well-established digital enterprise giants, such as Huawei (AI chips and software), Tencent (AI social media and gaming), Alibaba (AI cloud services), Baidu (AI autonomous driving), and many more AI startups.
Highly ambitious Chinese AI goals were outlined in an Aug. 26 China State Council memo to ministries and provincial governments titled, “Opinions of the State Council on Deepening the Implementation of the ‘Artificial Intelligence+’ Action.”
“By 2030, China’s AI will comprehensively empower high-quality development, the adoption rate of next-generation smart terminal devices and intelligent agents will exceed 90 percent, and the intelligent economy will have become a major growth pole in China’s economic development, promoting technological inclusion and the sharing of achievements,” the memo reads, according to a translation of the original text.
The “Hoku,” or household registration system, is one of the most fundamental organs of direct CCP popular control, and Cai Fang’s article indicates that the application of AI is about greater CCP control over Chinese citizens, not about enhancing their freedom.
The China State Council memo further states that, “by 2035, China will have fully entered a new stage of development of an intelligent economy and society, providing strong support for the basic realization of socialist modernization.”
So in five years, Beijing expects that AI applications will affect 90 percent of the Chinese economy and that by 2035, AI will have enabled a “new stage” of AI-enabled CCP totalitarianism, perhaps transitioning from its current pervasive digital “surveillance state” to direct AI-enabled constant monitoring and tailored control of individual citizens.
As the CCP uses its massive Belt and Road Initiative of subsidies and bribes to export its digital “smart cities” surveillance state apparatus, it can be expected to help its allied authoritarian client states to further suppress their people and counter resistance by exporting AI platforms that enable more invasive popular control.
As Chinese actors such as Huawei have proven, countries that deploy their digital products, augmented by enhanced AI capabilities, will also expand the CCP’s ability to conduct espionage, broad surveillance, and then better manipulate their politics and society.
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Furthermore, as the CCP directs its AI efforts to strengthen political-economic controls—endeavoring to displace the immense decision-making power of the market—it will be determined to ensure that the People’s Liberation Army (PLA) does its share to develop AI platforms, which enable more rapid military decision-making and give ever greater autonomy to future unmanned joint force formations.
Since the CCP’s 10th Five-Year Plan (2001–2005), China has been investing in air, naval, and ground unmanned combat platforms in an attempt to ensure unmanned dominance, which now includes combat-capable corvette-sized ships, large combat-capable unmanned submarines, large unmanned intercontinental bombers, and 35 Chinese companies developing humanoid robots for future unmanned armies.
In addition, the Chinese company Comospace is now leading the development of space-based AI data centers that Chinese sources envision could become an interplanetary “umbilical,” extending the CCP’s ability to control specific, autonomous functions on the moon and Mars, and into the solar system.
Without a doubt, the Trump administration takes this threat seriously. The July 2025 White House statement, “Winning the Race, America’s AI Action Plan,” begins by saying: “The United States is in a race to achieve global dominance in artificial intelligence (AI). Whoever has the largest AI ecosystem will set global AI standards and reap broad economic and military benefits. Just like we won the space race, it is imperative that the United States and its allies win this race.”
This plan further states, “The United States must also drive adoption of American AI systems, computing hardware, and standards throughout the world … It is imperative that the United States leverage this advantage into an enduring global alliance, while preventing our adversaries from free-riding on our innovation and investment.”
The most serious Chinese AI competitor is Huawei—founded in 1987 by former PLA officer Ren Zhengfei—which today controls about 30 percent of the global market for telecommunications technology, and is China’s leading maker of AI computer chips.
In 2001, Huawei fiber-optic cables were connecting Iraqi air defenses targeting U.S. aircraft enforcing no-fly zones, while in 2018, Huawei computers at the new African Union headquarters were accused of reporting to servers in China.
Since 2019, the United States has banned Huawei from U.S. government and critical computer infrastructure, while at least 13 other U.S. allies and partners restrict Huawei 5G communications and computer technology.
While the United States now has extensive experience blocking Huawei—which should also help counter Huawei’s and other Chinese tech companies’ access to AI—the Trump administration has concluded that American companies need help competing with Huawei.
A Trump administration reversal of the U.S. Justice Department’s opposition allowed a July merger between Hewlett Packard Enterprise and AI innovator Juniper Networks, creating a company better equipped to compete with Huawei in AI.
In addition, the administration decided to aid Nvidia by approving an August decision that allowed the controlled sale of the leading U.S. AI company’s downgraded H20 AI processor chip to China. This would help Nvidia by increasing revenues to develop better chips, absorb competing Chinese research and development funding, and help keep its chips in China’s supply chain.
The same logic applies to an early December decision by the administration to review whether to allow the controlled sale to China of Nvidia’s more advanced H200 AI chip, which is more capable than chips produced by China.
Nvidia benefits inasmuch as China accounts for $50 billion in annual sales, or 20 percent of its Data Center chip revenue, generating profits that can be invested in AI capabilities, which maintain its technology leadership.
To be sure, there has also been broad criticism of the Trump administration for selling such technology to China, and this will remain a dynamic policy challenge for the administration in terms of the requirement to win the technology race while strengthening protections against China’s digital and emerging AI behemoth.
Staying ahead of China will clearly require continued vigilance to block Chinese AI technology penetration, to control the sale of advanced AI chips to China, and to manage the risks that could yield benefits for American AI companies by aiding their ability to sustain technology dominance.
