Great‑power competition over AI models, chips, and industrial capacity

US–China AI Race and Industrial Strategy

Great-Power Competition Over AI Models, Chips, and Industrial Capacity: New Developments and Strategic Dimensions

The geopolitical contest for technological supremacy between the United States and China has intensified dramatically, encompassing military innovation, semiconductor dominance, resource diplomacy, and regulatory frameworks. This multifaceted rivalry is shaping the future global order, with recent developments highlighting an increasingly direct and complex struggle that carries profound implications for international stability, security, and economic resilience.

Escalating US–China Technological Rivalry

Military AI and Autonomous Systems: Pushing Strategic Boundaries

One of the most sensitive fronts in this competition involves military AI, particularly the development and deployment of autonomous weapon systems. Both superpowers are racing to create AI-powered drones, robotic ground platforms, and potentially autonomous nuclear decision-making systems—a frontier that raises critical concerns about strategic stability and the risk of uncontrolled escalation.

China has aggressively advanced its autonomous weapons capabilities, emphasizing drone swarms and robotic platforms to enhance regional deterrence and expand influence across Asia-Pacific. These systems are designed to project power and counter US military presence, especially in contested zones.
The United States has intensified efforts to integrate AI into its defense systems. Notably, the Pentagon has engaged in direct negotiations with commercial AI firms to secure military access, exemplified by recent high-profile actions involving Anthropic, a leading AI developer. On February 24, 2026, Defense Secretary Pete Hegseth issued a deadline for Anthropic to comply with security and interoperability standards, signaling a strategic move toward closer defense-industry collaboration and conditional military access.

Recent multimedia coverage, including explainer videos and analyses from Bloomberg and defense think tanks, highlight the Pentagon–Anthropic tension, emphasizing concerns over AI arms race dynamics. These developments have fueled fears that lack of binding international norms governing autonomous weapons could destabilize strategic deterrence and escalate conflicts unintentionally.

"The rapid development of autonomous military systems by both China and the US underscores the urgent need for international agreements to prevent an uncontrollable escalation," — Dr. Emily Chen, security analyst.

Broader Geopolitical Context

The military AI race is deeply interconnected with cybersecurity threats, regional security tensions, and disinformation campaigns. Recent warnings from global security agencies highlight AI-accelerated cyber threats such as identity fragility, attack surface expansion, and disinformation proliferation, complicating efforts to maintain stability.

Furthermore, regional regulatory efforts are emerging. For example, Taiwan’s AI Basic Act, passed in December 2025, seeks to standardize AI development and regulate deployment within the region. This legislation could serve as a model for other Asian nations, fostering regional standards that influence the broader geopolitical AI landscape.

Semiconductor Supply Chains, Export Controls, and Resource Diplomacy

Reshaping Industrial Capacity and Global Supply Chains

Semiconductors remain a key strategic resource in this competition. The US and China are deploying a mix of export controls, domestic investments, and resource diplomacy to secure their technological futures.

The US has tightened restrictions on exporting advanced semiconductor manufacturing equipment and chips, aiming to limit China’s military and AI advancements. Measures include new export licensing requirements and investment bans targeting Chinese firms, designed to curtail China’s access to cutting-edge technology.
In response, China is investing massively in domestic chip production, pursuing self-sufficiency in critical areas. Additionally, China is leveraging resource diplomacy to secure supply chains—notably in Greenland and Africa—where vast rare earth minerals crucial for chip fabrication are abundant.

Strategic Resource Competition: Greenland and Beyond

Greenland has emerged as a strategic focal point due to its rich deposits of rare earth elements. Chinese firms are making heavy investments in Greenland’s mining and infrastructure sectors to control supply chains and expand regional influence. The importance of Greenland’s mineral wealth has grown significantly, as its rare earth deposits are now recognized as vital to global supply security.

Similarly, Africa remains a key battleground for resource access, with China and the US vying for influence through mining agreements and infrastructure projects. These resource-driven efforts are essential for powering the AI and semiconductor ecosystems.

Diverging Regulatory Frameworks & International Standards

Fragmented Governance and Norm Setting

The regulatory environment for AI is highly fragmented:

The EU’s AI Act aims to set comprehensive standards for safety, ethics, and transparency, potentially setting global benchmarks.
The US maintains a fragmented approach, with federal and state policies often clashing. Recent warnings from Attorney General Mike Hilgers emphasize the risks of regulatory incoherence, which could weaken US leadership in setting international AI standards.
Taiwan’s AI Basic Act promotes ethical development, regulatory standards, and public oversight, potentially influencing regional and global norms.

Diplomatic Efforts and Data Sovereignty

US diplomats are actively urging to oppose data sovereignty laws that restrict cross-border AI data flows, fearing they could hamper technological innovation and international cooperation. Recent reports, such as from The Journal Record, reveal that US diplomats have been instructed to lobby against these laws, emphasizing economic and strategic interests in maintaining global data access.

Liability regimes governing AI developers and deployers are also evolving, impacting innovation, risk management, and international cooperation. The US’s diplomatic stance reflects an effort to preserve American influence and prevent fragmentation of the digital ecosystem.

Current Status and Future Outlook

Despite some relaxation of certain export controls, both the US and China are doubling down on domestic capabilities and resource security. The environment remains volatile, with India and European nations playing increasingly strategic roles.

The US has initiated international alliances like “Tech Corps”, aimed at promoting AI exports and strengthening diplomatic engagement with allies to counterbalance China.
China continues investing heavily in military robotics, overseas resource projects, and technological expansion, particularly in Greenland and Africa to secure supply chains and expand influence.
Private Chinese firms such as ByteDance are accelerating AI capabilities abroad, raising concerns about technological influence, espionage, and regulatory scrutiny.

Monitoring and Strategic Indicators

Tools like the AI-GPR Index, which measures geopolitical risks associated with AI proliferation, are becoming vital for anticipating escalation risks. Policymakers are increasingly relying on such analytical frameworks to guide strategic responses.

Implications for the Future

The trajectory of this competition suggests a bifurcating global AI ecosystem characterized by:

Standards divergence, leading to technological incompatibilities and security dilemmas.
A military AI arms race with destabilizing potential absent effective arms-control frameworks.
Supply chain realignments and resource control efforts reshaping manufacturing hubs and regional influence.
Fragmented regulatory regimes, complicating international cooperation on AI safety, ethics, and security.

Final Thoughts

The race for AI, semiconductors, and industrial sovereignty has become a high-stakes geopolitical contest with far-reaching consequences. The decisions of the US, China, and their allies—whether through diplomacy, regulation, or military development—will determine whether AI becomes a tool for global cooperation or a frontier for escalating rivalry.

Recent developments, including the Pentagon’s engagement with Anthropic, the US diplomatic push against data sovereignty laws, and Greenland’s mineral significance, underscore the urgent need for coordinated international governance. Without robust arms control and norm-setting mechanisms, the risk of destabilization and technological bifurcation remains high.

As we move forward, strategic foresight tools like the AI-GPR Index will be critical in monitoring risks and guiding policy. The next decade will be pivotal in shaping whether AI advances serve as a foundation for global cooperation or become a catalyst for intensified rivalry—a challenge that demands balanced, multilateral action to harness AI’s potential for the collective good.

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