Insights from the AI + EXPO: Navigating the US-China Technology Competition
China has undergone a significant transformation over the past decade, moving beyond manufacturing to become a leading innovator on the global stage. Its innovation ecosystem is now directly competing with, and in certain areas, pulling ahead of the West. The question is, are they ‘winning’? And how do we measure ‘winning’ in an innovation environment where speed, quality, control, and objectives are all in contention?
We recently explored these questions at the AI + EXPO from SCSP event. The panel, moderated by Ana Swanson, Correspondent for The New York Times, featured our CEO, Jaap van Etten, alongside Trivium partner Kendra Schaefer and Rhodium Group partner Daniel Rosen. Together, these experts discussed the evolving dynamics of the US-China innovation rivalry.
Their message was clear: China may be moving fast, but it’s not operating without constraints. For the West to truly compete, it must invest not only in technology, but also in the intelligence, coordination, and resolve needed to understand (and ultimately outperform) a fundamentally different system.
A Clash of Innovation Models
At the core of the US-China tech rivalry lies a strategic paradox. China is advancing rapidly through central coordination, long-term planning, and a ‘whole-of-nation’ approach that aligns government, academia, industry, and even military actors toward shared innovation goals. The West, by contrast, relies on market incentives, distributed research, and entrepreneurial freedom. Strengths that foster creativity, but struggle to match China’s scale and cohesion.
“China doesn’t have to navigate an election cycle every four years,” said Schaefer. “They can hand off a strategy across administrations for 10 or even 20 years.” This consistency gives China a powerful edge in fields like Artificial Intelligence (AI) and quantum computing, where progress depends on deep, sustained investment.
China’s AI-Driven Future: Doing More with Less
AI is at the center of China’s innovation strategy, not just as a technology, but as a solution to systemic pressures. With a shrinking population and slowing GDP growth, China is betting on AI to help it do more with less: fewer workers, less capital, greater output. Government agencies, hospitals, and even the military are rapidly adopting domestic large language models (LLMs) like DeepSeek, not just for experimentation, but deployment.
“This AI push is enabled by a massive, coordinated effort to make domestic data economically useful. While the West focuses on preventing data theft, China is building regulatory infrastructure that encourages data sharing, monetization, and reuse across sectors. They are not just thinking about data as a risk, they are thinking about it as a national asset,” Schaefer explained.
But the Model Is Under Strain
Despite its rapid pace, China’s innovation system faces growing pressure. The debt-fueled expansion of the last decade has reached its limits, with debt ratios skyrocketing from 100% of GDP a decade ago to 300-350% today. Foreign venture capital has dried up, leaving the government to fill the funding gap, a role that is proving to be both costly and inefficient. Plus, China’s historical advantages of scale are also reaching limits; its population is now shrinking, and domestic demand remains overly contingent on debt and exports to a world less willing to absorb them all.
As van Etten noted, “It’s one thing for the state to co-invest alongside the private sector. It’s another to become the investor of last resort in thousands of high-risk ventures. Running a VC ecosystem from inside the government is a fundamentally different challenge.”
Furthermore, much of China’s progress to date relied on scaling existing ideas, not inventing entirely new ones. As that model reaches its peak, China must now venture into frontier research. This area demands open-ended exploration, academic freedom, and a tolerance for failure. Qualities that aren’t typically China’s strengths.
Decoupling Is No Longer a Future Scenario
As trust deteriorates and strategic vulnerabilities multiply, the risk of technological decoupling between China and the West is accelerating. Not just in trade and supply chains, but in codebases, development cultures, and entire ecosystems.
What started with export controls in sensitive sectors has evolved into what Rosen described as, “supply chain warfare”. China is now building its own operating systems, social networks, and AI infrastructure, which are increasingly incompatible with Western standards. Schaefer warned, “We’re heading for a world of techno-blocs,” referring to separate platforms, rules, and innovation norms on either side of a geopolitical divide.
This divergence is already reshaping the labor market. Western companies can no longer easily hire Chinese developers because they are building in a fundamentally different way. What was once a global talent pool is now fracturing, with implications that extend far beyond just coding.
Why Better Intelligence Is the West’s Competitive Advantage
One of the panel’s most urgent takeaways was that the West cannot compete with China’s innovation machine unless it understands how it operates in real time, at scale, and in detail.
That requires something the West has not yet built: a shared intelligence infrastructure for tracking innovation, investment, and technology flows across borders. Datenna’s work, analyzing millions of Chinese companies and mapping their links to the military, academia, and foreign investments, shows what is possible. But van Etten stressed that it is not enough.
“We need a ‘whole-of-nation’ monitoring effort to match China’s ‘whole-of-nation’ innovation strategy,” he argued. That means not just better tools, but more collaboration between companies, governments, and research institutions. It also requires a willingness to pool data, set standards, and act on shared insights.
The West’s Strength Is Still in Openness
Despite all of China’s strategic direction and investment, it still lacks the openness and diversity that have long fueled Western innovation. The ability to fund research without immediate outcomes, to trust universities to explore, and to empower individuals to shape new industries. These remain core advantages that China has not replicated.
But those strengths are not immune to neglect. “We can not defund the very systems that give us our edge,” Schaefer cautioned, pointing to threats to science funding and international collaboration. And as geopolitical tensions rise, preserving the free exchange of talent and ideas, while managing real security risks, will be a delicate balancing act.
But those strengths aren’t immune to neglect. “We can’t defund the very systems that give us our edge,” Schaefer cautioned, pointing to threats like reduced science funding and strained international collaboration. This extends to the delicate balance of talent exchange: preserving the free flow of ideas and people, which has historically powered US innovation, often with contributions from Chinese citizens and immigrants. Naturally, this must be managed while addressing real security risks. Rather than broad restrictions on individuals, van Etten suggested a focus on the technology itself. Determine if specific collaborations with Chinese universities involve technology that could benefit the Chinese military. “If you prevent that,” he noted, “then I think you’ve already covered 90% of the problem.”
From Competition to Confidence
The message from the panel was not one of panic, but of clarity. China’s innovation ecosystem is real, strategic, and powerful, but it is not invincible. Its strengths are matched by constraints, its speed by fragility, and its unity by opacity.
For the West, the path forward is not to copy China’s model, but to better understand it. We must invest in the fundamental systems that make democratic innovation competitive: trust, talent, transparency, and long-term vision. As Van Etten concluded, “China has customers. The West has allies. That’s our strength, and our opportunity.”