Xi’s ‘AI Communism’ Heralds a New Era for ‘Made in China’

July 27, Kathmandu — Nearly four years ago, the global tech competition was heavily tilted in favor of the United States over China. By the end of 2022, OpenAI released ChatGPT, a groundbreaking AI model. At the same time, Washington was tightening export restrictions on chips to China, rendering the latter seemingly vulnerable.

Since then, China accelerated its pace, swiftly closing the gap with the US. Early in 2025, Chinese tech firm DeepSeek launched its open-source AI model R1, showcasing progress from Chinese companies approaching the Silicon Valley level.

Though less powerful than the top US models, R1 surprised investors and triggered a significant drop in stock markets, heightening fears that Chinese firms might surpass American tech giants.

These concerns have reemerged. Last month, China’s Zhet Dot AI unveiled GLM 5.2, a model close in capability to the US model Claude Opus 4.8. Just last week, Moonsat’s Kimi K3 narrowed this gap further, offering its model at half the cost of the American counterpart.

“America’s lead in advanced AI software might be weaker than expected. Chinese AI labs are capable of developing high-level models,” says Ryan Fedasiuk of the US Enterprise Institute.

However, this debate extends beyond which country produces the best AI models to encompass issues of future prosperity and civilization. The economic future and global influence of each depend precisely on this technology.

“How people use AI is becoming increasingly important, defining the way lives are shaped,” Fedasiuk adds. “Thus, the competition between the US and China is about creating computing frameworks and global AI standards — essentially, the operating system determining how people live, work, and follow rules.”

This technological rivalry between the two superpowers will force difficult decisions on the world. The UK and Europe face the dilemma of choosing between trusted American partners and cheaper but riskier Chinese alternatives.

‘AI Communism’ versus American Control

The competition between the US and China is not just about scale or price, but about the fundamental nature of AI models. DeepSeek’s R1, GLM 5.2, and Kimi K3 are open-source models anyone with sufficient computing power can download and use. Conversely, ChatGPT and Anthropic’s Mythos and Claude are proprietary, controlled by their creators.

ChatGPT executive Dean Ball has described open-source models as ‘AI Communism.’ Both open and proprietary approaches have strengths and weaknesses.

Open-source AI models are easier to use and more affordable, fueling increased demand. However, the business models for their creators remain unclear.

These models are especially attractive to Western consumers because platforms like Kimi operate on their own servers, fully independent of Chinese control.

Brian Chesky, CEO of Airbnb, stated, “We do not share data with Chinese companies; they have no access to our data… It doesn’t work that way.” He warned this in reference to Alibaba’s selection of the Kaivan model.

Chinese President Xi Jinping views open-source AI as a means to foster global friendship and cooperation. Last week, he established the World Artificial Intelligence Cooperation Organization headquartered in Shanghai, with 30 participating countries.

While US closed models are easier to regulate, they pose risks to users. Last month, former President Donald Trump barred Anthropic from distributing its powerful models internationally, highlighting the global threat such restrictions entail.

China has been enduring US sanctions for years. Washington has obstructed Taiwanese chip supplies and halted Dutch firm ASML’s machinery shipments to China.

Though it does not exercise complete control, Washington exerts pressure, forcing Beijing to strengthen its domestic capabilities.

The Chinese Communist Party aims to integrate AI not only in technology but throughout all industries and business sectors, intending to maintain control over global supply chains by fully internalizing this capability.

China’s New Economic Revival

Self-reliance in AI is vital not only for security but also to propel China’s sluggish economy. Government subsidies to industries are declining, consumer spending is weakening, and export channels face obstacles.

“China is betting on this latest technology for new economic growth,” says C.L. Cui of consulting firm Rhodium Group.

However, the challenge is formidable. According to Winston Mok of the South China Morning Post, China’s objective is to compete not only with the US but with the combined technological prowess of the Western world.

Beijing’s traditional development model involves imitating Western ideas and technologies before setting goals and directing investments.

This approach aims to address China’s biggest challenge: significant lag behind the US in computing and chip production that constrains AI firms from meeting market demand.

Over the next three to four years, the government plans a state-directed investment of two trillion Chinese yuan in this sector, expanding AI applications from manufacturing to healthcare.

This strategy appears effective. AI commercial and consumer applications in China surged last year, and semiconductor exports doubled compared to the previous year.

Electronics, technology, and telecommunications have contributed significantly to economic growth over the past three months.

“AI’s rise has become the new engine of China’s economic growth, potentially serving as a primary source of economic stability through 2027,” says Julian Evans-Pritchard of Capital Economics.

He cautions, “If the global AI investment boom falters, it could jeopardize the country’s progress.”

Despite ongoing development, Xi faces distinct challenges from former President Trump. AI competition hinges on profit and innovation, conditions difficult to replicate within China’s authoritarian environment that limits independent thought.

Beijing has already cracked down on critical tech entrepreneurs and restricted businesses seeking overseas expansion. This week, officials informed tech executives about potential regulations that could block foreign access to leading AI models.

State support benefits companies like DeepSeek and Moonsat, enabling continued operation despite financial weaknesses.

Yet, there is a risk officials may prioritize firms that align with their preferences. Matt Schiavenza of the Carnegie Endowment for International Peace says, “The Communist Party might claim computing resources aren’t sufficient for all, wanting first to achieve Artificial General Intelligence by consolidating companies and resources in a national Manhattan Project.”

Schiavenza believes Beijing is heading in this direction. However, the government is expected to take all necessary steps—the country’s economic future and global superpower status depend on it.

(With contributions from The Telegraph)