AI WARS: China vs. United States

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America is in the midst of a fierce contest with China for AI supremacy.

China is getting closer in terms of AI model quality. The latest models from DeepSeek, Alibaba, and Moonshot are competitive with the best OpenAI, Anthropic, and Google have to offer.

American firms are still putting out the best models in the world, but the code quality competition is heating up.

The good news is that the U.S. still maintains a substantial lead on AI hardware. That’s primarily high-end NVIDIA GPUs. These high-tech marvels remain the undisputed champions of AI infrastructure.

But China has made substantial progress in this area, as well. For the past few years, China has been cut off from the highest-end NVIDIA GPUs, so they’ve been forced to work on their own domestic options (while smuggling in illicit chips).

But the leading Chinese AI hardware firm, Huawei, is still at least a few years behind NVIDIA. And they’re unlikely to surpass U.S. tech any time in the next decade.

So despite the challenges, I believe the U.S. can maintain its lead in AI software and hardware.

However, there’s still something missing from this equation…

Electricity: The Missing Element

Artificial intelligence requires vast amounts of energy.

The GPUs which power these new programs draw incredible quantities of electricity. Facilities also need to be cooled to prevent overheating.

This is America’s weakness. We are falling behind when it comes to generating enough electricity to meet our growing needs.

Study the chart below, which shows how much faster China is increasing its energy generation than the US and EU.

It pains me every time I look at this chart. The speed at which China is increasing its power generation is absolutely staggering.

China currently has 27 nuclear reactors under construction, and is adding about 10 more per year.

Now, it’s not quite as bad as it looks. China’s population is about 4x larger than the United States. The chart below, which shows electricity generation per person, provides a more nuanced perspective.

So America is still in the lead in per-capita terms. But the rate at which China is catching up is wild. Additionally, here in the U.S. much of our power is spent on things like air conditioning and other creature comforts. In China, it’s largely going to industry, and now data centers.

Elon Musk says that in 3-4 years, China’s solar production could exceed ALL U.S. power generation.

Source: X

Meanwhile, here in America our production has practically flatlined for the past 25 years. Red tape and overregulation have crippled the industry.

Even more concerning, America was set to shut down dependable around-the-clock power plants like coal and nuclear in favor of unreliable green energy like wind and solar.

We need a bold and balanced approach, and it looks like we finally may get it.

A Manhattan Project for Power

America’s big tech firms are desperate for power. They’re building gigantic new data centers, and are looking to build small modular nuclear reactors on-site. They also want to restart older plants like Three-Mile Island.

Elon Musk’s xAI has built its own cluster of natural gas turbines to power its massive new data center.

We could even see a resurgence in coal power. And yes, I do believe it can be done cleanly and properly. With the right filtration tech, coal can be surprisingly clean.

If America is to maintain our lead in AI, extreme measures will be required. And as we re-shore more industrial capacity, the need for increased energy capacity will only grow.

Stay tuned for more on this critically important story.

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