By Doug Kelly
China’s playbook to overtake the United States in technology, especially artificial intelligence (AI), is not being written in secret. Beijing is executing it in plain sight for the world to see. Here are five recent stories that reveal the strategy China is pursuing and why U.S. policymakers should pay attention.
Story #1: China is making innovation a national mission.
China’s top leaders are meeting at the National People’s Congress to formalize the country’s 15th Five‑Year Plan, which places AI, semiconductors, robotics, and advanced manufacturing at the center of China’s economic strategy. By aligning national policy, research funding, and industrial priorities around breakthroughs in these core technologies, Beijing is signaling that technological leadership is not just an economic goal but a national strategic mission.
Story #2: China is embedding AI across its entire economy.
Beijing’s national “AI‑Plus” campaign is designed to integrate AI into manufacturing, logistics networks, and other parts of the economy while pushing research and development spending above 3.2 percent of GDP in an effort to overcome Western technology restrictions. The strategy is clear: China isn’t just trying to invent AI – it is deploying it across its industrial base so that productivity gains and global competitiveness compound across the entire economy.
Story #3: China is racing ahead in “physical AI.”
While much of the American conversation focuses on chatbots and software models, Chinese companies are rapidly integrating AI into robots, drones, and factory systems. Because China dominates global manufacturing, its factories generate enormous volumes of real-world operational data, giving Chinese firms a powerful advantage as AI increasingly moves from digital models into machines and industrial systems. In practical terms, that means China may be able to scale AI across key industries faster than the United States, gaining market share and entrenching its AI deeply into the globe’s digital and manufacturing infrastructure.
Story #4: Chinese companies are closing the AI model gap.
Numerous Chinese companies have released increasingly capable AI systems, demonstrating that China’s AI ecosystem continues advancing despite U.S. restrictions on advanced semiconductor exports. The broader implication is clear: China is building a full-stack AI ecosystem, backed by massive investments in compute, energy, and data centers, that can compete on the global stage.
Story #5: China is stealing American technology to accelerate its ambitions.
In February, an American AI company accused Chinese AI labs of using more than 24,000 fake accounts to extract millions of conversations from its model in an attempt to replicate its capabilities through “distillation” attacks. At the same time, U.S. authorities dismantled a smuggling ring that attempted to ship $160 million worth of Nvidia AI chips to China by disguising them as generic electronic adapters and routing them through Canada. Together these cases highlight how strong China’s demand for American AI capabilities remains – and how some actors are willing to bypass rules entirely to obtain them.
How U.S. Policymakers Should Respond
Tech dominance by China would mean the world’s digital infrastructure is built on authoritarian values of censorship, control, and surveillance; not the values embedded in American technology: freedom, opportunity, and expression.
To counter China’s efforts, Congress should pass and fund America’s AI Action Plan to ensure the United States maintains its technological edge.
State lawmakers also have an important role to play. Rather than trying to dictate how AI models should work, they should focus on strengthening America’s competitiveness in the areas that matter most in the race with China, including expanding electricity generation, building new transmission capacity, developing a skilled workforce, especially in the trades, and accelerating the adoption of AI across industries and government.
When President Trump meets President Xi on March 31, China will arrive with a clear strategy for technological leadership. America should arrive with one too. We must act with the urgency, determination, and unity of a space race, because it matters greatly which country builds the future.