Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: China’s AI surge could challenge US tech dominance, analysts warn of a tech shock in Simple Termsand what it means for users..
On Monday, February 16, Rory Green, chief China economist and head of Asia research at TS Lombard, told CNBC on Squawk Box Europe that China has already broken America’s “perceived monopoly” in technology and AI.
In a conversation with CNBC’s Steve Sedgewick and Ben Boulos, Green said, “I think the China tech shock is just getting started. It’s not just AI, DeepSeek, and electric vehicles. China is moving up the value chain very rapidly… It’s the first time in history that an emerging market economy is at the forefront of science and technology.”
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According to Green, China is combining advanced, globally competitive technology with emerging-market production costs, supported by its vast supply chain. Additionally, with Xi Jinping acting like a “tech bro” and pouring money into these sectors, the mix is significantly accelerating China’s technology push, he added.
Last year, Beijing launched a 60.06 billion yuan ($8.69 billion) national AI fund and is advancing its “AI+” initiative, aimed at integrating AI across industries and society.
China is also narrowing the gap with the US in AI hardware. While Nvidia remains the benchmark for AI training chips, China is deploying large-scale clusters of domestically produced chips, particularly from Huawei, supported by relatively lower energy costs.
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Green said a separate “China tech sphere” could emerge, especially across developing markets. “China is a top trade partner for most of the world, particularly in emerging and frontier economies. What happens if that repeats on tech?” he questioned.
Developing economies, he added, may face a choice between “low-cost China tech, Huawei, 5G batteries, solar panels, AI, probably some cheap RMB financing,” or “high-cost American and European alternative.”
Green explained, “For these economies, I think the choice is fairly simple, and you could see easily a world where maybe most of the world’s population is running on a Chinese tech stack in five to 10 years time.”
Separately, Demis Hassabis, chief executive of Google DeepMind, had told CNBC in January that China’s AI models are closer to US capabilities than “maybe we thought one or two years ago.” They could only be “a matter of months” behind Western rivals, he said.
The debate follows recent announcements from US hyperscalers, including Amazon, Microsoft, Meta Platforms and Alphabet, that plan to spend up to $700 billion on AI this year, raising concerns about returns on investment.
Karim Moussalem, chief investment officer at Selwood Asset Management, told CNBC there is growing “nervousness around US exceptionalism,” particularly after the recent sell-off in US software stocks.
Moussalem said, “When I think of the hyperscalers’ capex, we’re seeing a race that’s on and a lot of money being spent, and more and more question marks around whether you know all that investment, all that capex, is going to result in meaningful return on investments.”
He added, “I think that’s really what’s driving this big question mark about the US versus China, and whether the US will be the winner in that race. But for the time being, there’s a lot of capital being spent, actually a lot more than even what was expected a few months ago, with more and more question marks about the ROI.”