Editor’s note: In February, The National Interest organized a symposium on the U.S.-China technology race amidst the emergence of DeepSeek and ongoing legal battles over TikTok. We asked a variety of experts the following question: “What are the three most important technology policies that the U.S. should pursue or avoid to compete adequately with China?“ The following article is one of their responses.

The world is shifting from great power competition to global strategic advantage, and artificial intelligence can be America’s great strategic advantage. Like every other significant innovation in the last century, AI was created in the U.S. Both allies and adversaries are racing to surpass our economic and security capabilities. America must accelerate in the race to mobilize AI for great strategic advantage.

President Trump has made the point about American dominance in AI emphatically. Among the flurry of initial executive orders is an EO focused specifically on “Removing Barriers to American Leadership in Artificial Intelligence.” It directs the development of an AI Action Plan to “act decisively to retain global leadership in artificial intelligence.” The unwritten part being that the most sinister challenge emanates from the People’s Republic of China (PRC).

As if on cue, a few days after the Trump EO, PRC AI startup DeepSeek took everyone by surprise as it single handedly tanked not just technology stocks, but markets overall last month. The immediate focus was the jolting commercial aspect of this new capability, and the claim that it was developed for a fraction of the cost of other AI applications. There are concerns that its finance and timing may have benefitted from theft of intellectual property. Especially hard hit on DeepSeek Monday was AI dominant Nvidia, which lost $593 billion in value, a record one day loss. In spite of a recent strong earnings report, its stock has yet to recover. Meanwhile, interest in DeepSeek is growing. This market analysis is cause for concern as it signals that the momentum may indeed be shifting towards PRC developed AI technology.

The significance of such a swing should generate concern for military use of AI. The Pentagon has warned that the PRC is matching its spending and research. PRC companies such as DeepSeek are no doubt directed to work with the Chinese military on advancing its capabilities, creating a direct national security threat. In addition to measures such as the recent Trump EO promoting American AI, the U.S. government has previously restricted money from going to the development of certain technologies: quantum, semiconductors and AI to “countries of concern” through an EO issued in 2023. This EO invoked the International Emergency Economic Powers Act (IEEPA) and there were findings that “advancement by countries of concern in sensitive technologies…constitutes an unusual and extraordinary threat to the national security of the United States.” Inbound investment is routinely screened through the Committee on Foreign Investments in the U.S. (CFIUS) process. The 2023 EO is a novel step in screening outbound investment, especially because the single “country of concern” identified was the PRC. Last month, the Treasury Department issued regulations to implement the outbound investment EO specifying that money from U.S. sources provides not only financial help, but implicit credibility as well.

At present, the most intense AI competition is predicted to be between the world’s two largest economies, the U.S. and the PRC. AI startups in the European Union have been hamstrung by the regulatory social governance of EU member states. Its draconian EU Artificial Intelligence Act, a cumbersome 400 pages, achieves the opposite of the recent Trump EO which removes barriers to AI. The EU AI Act creates a further bureaucratic structure to govern tech development and requires complicated compliance, in effect creating hurdles for scaling innovation. U.S. government regulations going forward will likely facilitate the responsible development of AI. The PRC may claim to have regulations, but the reality is that it will grow and scale technology at any literal or figurative cost.

As a fundamental aspect of great strategic advantage, American AI can be dominant through a newly defined form of public-private partnership. The great innovators, from the Wright Brothers to Henry Ford to Silicon Valley, have benefitted from the “light touch” regulatory approach. This involves a basic understanding of innovation on the part of government officials as well as voluntary commitments to public safety by the creators. Such combination has led to inventions which have benefited the public from both an economic and security perspective. The present cutting-edge tech advancements have the potential to become an existential challenge to American national security. The AI face off is between the land of the free and the Chinese communist party. America cannot afford to lose.

About the Author: Manisha Singh

Manisha Singh is Founder and Principal of Sunstone Strategy Group and a Former Assistant Secretary for Economic and Business Affairs at the U.S. Department of State.

Image: Shutterstock

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