US, China in battle over who will win AI innovation
Kurt 'CyberGuy' Knutsson on President-elect Trump's plan to deregulate cryptocurrency and A.I. in his second administration.
Technology matters. For a century, Britain led the world based on innovations in coal and steam power. For a second century, America led the world based on electrification, materials science and mass production.
And now, with AI promising to both boost the economy and bolster national security, America has a chance to lead in the century ahead. However, with China ramping up its investment in AI, pouring billions into data centers and integrating AI across its economy, we cannot take the outcome for granted.
And China’s investments in the technology sector as a whole are clearly paying off. A recent expert report reveals that America has lost its lead in most key technologies to its rival. From 2003-2007, China led in just three of 64 technologies, but now leads in 57. And while the U.S. led in 60 of 64 technologies, we now lead in just 7.
Former President Trump arrives at an election night watch party, Nov. 6, 2024, in West Palm Beach, Florida. (Evan Vucci/AP)
With China now scaling up everything from solar panels to electric cars, and graduating four times more computer scientists than America does, it’s on track to become an innovation superpower by 2030.
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Meanwhile, America’s leadership in AI, while narrow, has the potential to right the scales and capitalize on an enormous opportunity: McKinsey estimates that AI could add up to $22.1 trillion annually to the global economy—almost as much as the entire U.S. economy today.
What’s needed is an American pro-innovation AI agenda that promotes scientific leadership and turns breakthrough innovations in AI and quantum computing into practical tools with widespread benefit.
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The good news in an era of tight budgets is that AI is largely being funded and developed by America’s private sector, which invests hundreds of billions in research and development annually. Led by tech, the top 25 American companies invested more than $328 billion in America in 2023.
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That commitment to investing in our future is only going to ramp up, but we need constructive government policies to complement private-sector development of cutting-edge algorithms, world-leading computation (chips and data centers, and the energy to power them), digital infrastructure, and undersea cables.
The Trump administration has an opportunity to accelerate progress by setting an agenda that’s aligned, balanced and competitive.
Aligned
We need to avoid a patchwork of inconsistent laws—whether among U.S. states or between democratic allies—that will slow progress on AI innovation.
Comparing America and Europe shows the toll taken by over-regulation. A recent report from Mario Draghi, former Italian prime minister and EU Central Bank head, blames Europe’s complex regulatory environment for slowing down tech progress and creating "a vicious circle of low investment and low innovation."
By contrast, American lawmakers set us on a path for success in the 1990s by striking down statutes that would have chilled speech or stymied the growth of the internet, enacting policies like the Internet Tax Freedom Act that helped nurture American startups, and encouraging an innovative and dynamic private sector.
That approach is one reason why on a per-person basis, American economic output is now about 40% higher than in Western Europe and Canada, and 60% higher than in Japan.
In short, streamlining and aligning rules delivers results.
Balanced
AI has risks of abuse, but it also has tremendous potential. The new administration’s approach can promote not just innovation, but deployment of these remarkable technologies.
Ideas are easy; execution is hard. Which is why we need to do more than just invest in the world’s best AI; we need to put it to work.
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Streamlined federal procurement can make the government a leader, encouraging enterprises and institutions to adopt AI. Using AI in our cyber defenses can give us a security edge, predicting future attacks, patching holes before adversaries can exploit them, and making America’s world-leading tech stack a global standard.
Competitive
Competitiveness requires not only promoting our innovation, but also not shooting ourselves in the foot with measures that would force the disclosure of American data and intellectual property to foreign actors or chill investment in cutting-edge AI technologies.
Sometimes the biggest challenges require the biggest efforts to overcome. With so much at stake, we should be doubling down on today’s versions of Bell Labs or Xerox PARC as key strategic assets.
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As President Trump has recognized, we have to be at the forefront of AI to make America safer and stronger. We have a once-in-a-generation chance to reignite American scientific leadership, shape global standards and renew America’s position as the global leader in innovation.
American ingenuity has given us a golden opportunity. The question now is whether we’re ready to do what it takes to realize the potential of a new era of American innovation.