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Ben Jiang

China’s government-led push into artificial intelligence (AI) contrasts with the US’ private sector-led approach, with the world’s two largest economies advancing along divergent paths, according to China International Capital Corp (CICC).
Chinese investments in AI had focused on underlying technologies, including advanced semiconductors, to address a shortage of computing resources resulting from the country’s restricted access to advanced chips, the state-backed investment management firm said in a research note on Tuesday.
Meanwhile, the US has prioritised building data centres and energy infrastructure to meet the electricity demand needed to power them.
The divergent investment focus of the two countries, which had locked horns in a heated global AI arms race, stemmed from differences in funding sources, among other factors, including gaps in chip and AI infrastructure, according to CICC.
Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period, while Big Tech spending in the US was six times that of Chinese tech giants, according to the CICC note, citing data compiled by investment consultancies Pitchbook and FactSet.
Overall, China’s private and state-funded AI outlays totalled US$165 billion in recent years, lagging the US$563 billion from US companies and government.

State and private capital had different expectations for returns, investment horizons and target sectors, CICC analysts said.
These “differences in [AI] funding sources and investment directions will help understand their divergent growth path”, they added.
CICC analysts also noted widespread industry concern over a possible AI bubble after three years of frenzied investment in the sector’s growth stage, but they added that tech bubbles in the past eventually contributed to industry growth, echoing a view shared by some industry insiders.
At the FII Priority Asia forum in Tokyo last month, SoftBank Group founder and CEO Masayoshi Son dismissed AI bubble fears.
The 68-year-old Japanese entrepreneur and investor argued that if AI was able to generate 10 per cent of global gross domestic product over the long term, that would more than make up for trillions of dollars' worth of AI spending, according to a CNBC report.
“Where is the bubble?” Son asked in his speech.
Other experts believed that while there was some frothiness in the market, it was a “rational bubble”, according to Michael Spence, a Nobel Economics laureate.
In his view, massive AI investments were justified given the competitive landscape among companies and countries.
“The cost of becoming third place in the competition is far greater than the losses caused by overinvestment or inefficiency,” Spence said during a live-streamed talk at the Taihu World Cultural Forum’s Qiantang Dialogue session in November.
However, some are more sceptical. Renowned investor Michael Burry, whose prediction of the 2008 financial crisis was dramatised in the 2015 film The Big Short, has expressed concerns about the AI spending boom kicked off by OpenAI’s ChatGPT.
“Will AI grow productivity enough? That is debatable,” he wrote in a recent debate with Anthropic co-founder Jack Clark and podcaster Dwarkesh Patel. “The capital expenditure spending cycle is faith-based and [fear of missing out] Fomo-based.”


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Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period


Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period.


China wants chips, US needs power: divergent AI growth paths emerge amid bubble concerns

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period

Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period