China is using the wrong tactics to try to dominate in AI.

It is true that China now hosts some of the largest AI companies in the world. It is also true that it is throwing huge amounts of money at AI research in its five-year plan to dominate that space. And it has had some successes. But its cutting-edge research still trails that of America. Moreover, state funding is typically a double-edged sword in any area. It is commonly a good way of misallocating capital as bureaucrats wind up making the wrong decisions. These problems are exacerbated by China’s continuing lack of appeal to world-class AI researchers and its continuing reliance on US chip design. This game is going to take a lot longer than five years to play out.

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