RESHAPING THE GLOBAL AI RACE

Samantha Amerasinghe assesses the value placed on artificial intelligence

A new tech cold war is underway with the rivalry between the US and China over AI; and it has entered a new and potentially more dangerous phase in recent months. This resurgent rivalry has been triggered by a series of events.

First, a US senate hearing during which lawmakers raised concerns that China is catching up with America in the AI race. This was followed by a sweeping ban on Huawei’s AI chips and President Donald Trump’s subsequent visit to the Middle East to sign AI chip deals with key regional allies.

These events signal a shift in the AI race with the United States’ lead over China narrowing substantially.

The artificial intelligence market is set to grow at a compound annual rate of 36.6 percent from 2024 to 2030 with Statista Market Insights suggesting it could reach a value in excess of US$ 243 billion. The US leads Stanford University’s Global Vibrancy Ranking with the most advanced AI ecosystem followed by China.

America leads in many aspects including producing high quality AI research and developing prominent machine learning models. But China has excelled in attracting more private investment related to artificial intelligence in recent years to generate a higher number of notable machine learning models and lead in AI patenting.

India ranks fourth in the index and the UAE occupies fifth place. The top 10 rankings also feature Asian countries such as South Korea, Japan and Singapore.

According to Stanford University’s 2025 AI Index Report, AI investment in 2024 in the United States grew to nearly 471 billion dollars – nearly four times China’s 119 billion dollars – while the UK’s investment in AI lags far behind at slightly over US$ 28 billion.

Artificial intelligence has emerged as a crucial indicator of influence and power, and altered the nature of global rivalry. At the heart of this transformation lies the rivalry between the US and China, which is not simply reshaping bilateral relations but redefining the global balance of power as well.

As the world’s two leading powers herald a new chapter in global power dynamics, the ripple effects of their rivalry are reaching other nations too. They’re also aspiring to lead in the field by devising strategies to close the gap in global AI rankings.

Earlier this year, China’s DeepSeek model shocked the world as it was developed on a modest budget but was competitive with the advanced AI models developed by US companies. While the United States continues to lead in breakthrough innovation, its ability to scale is lagging due to the fragmented nature of its AI ecosystem.

In contrast, China’s centralised state driven coordination has enabled faster deployment of artificial intelligence infrastructure.

America seems to be lacking a cohesive national technology strategy while China’s government is able to direct resources toward national priorities in a way that the United States can’t.

However, while Beijing’s centralised approach enables coordinated national effort, this may limit certain types of innovation. On the flipside, the private sector brilliance in the US has led to significant breakthroughs but fragmentation and local talent shortages threaten its edge.

Trump’s Middle East deal making or latest ‘chip diplomacy’ could be even more of a game changer in reshaping the global AI race. The US has changed its policy stance on chip transfers to the UAE and is now allowing AI chips to flow into the region. In fact, Nvidia will be allowed to sell 500,000 AI chips annually in the Middle East.

Previously, the US government permitted only limited chip sales to the region citing three concerns.

Firstly, the potential use of AI by autocrats to violate human rights and secondly, concerns about computing capacity being diverted to China given that it viewed Saudi Arabia and the UAE as AI rivals, and friends of China. And thirdly, concerns that subsidised data centres in the Middle East would crowd out investment in America’s own AI infrastructure. Eighty percent of the chips deployed in the UAE will be in data centres operated by American companies.

This policy reversal in favour of bilateral dealmaking will have benefits for the US, and certainly benefit semicon­ductor businesses such as Nvidia and cloud computing companies, which will receive capital, land and power to build AI clusters across the region.

According to the White House, the UAE, Qatar and Saudi Arabia will invest 1.4 trillion, 1.2 trillion and 600 billion dollars respectively across sectors including technology.

Even a fraction of these large sums of money would be transformative. But it remains to be seen whether Middle Eastern money will flow into America’s AI sector.

Much will depend on whether these Gulf countries will actually invest billions on AI infrastructure in the US or whether they will focus their spending on building their own data centres and tech companies instead.

Perhaps the most crucial issue today is who is laying the foundations for tomorrow’s artificial intelligence landscape.