The West should act quickly and decisively to tackle the AI crisis it faces

China’s growing AI capabilities were well known. After all, Chinese AI researchers and companies have been remarkably open about their progress, publishing papers, open-sourcing their software and speaking with US researchers and journalists.

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Two factors explain China’s achievement of near parity. 

First, China has an aggressive, coherent national policy to reach self-sufficiency and technical superiority across the entire digital technology stack, from semiconductor capital equipment and AI processors to hardware products and AI models—in both commercial and military applications. 

Second, US (and EU) government policies and industry behaviour have exhibited a depressing combination of complacency, incompetence and greed.

It should be obvious that Chinese President Xi Jinping and Russian President Vladimir Putin are no friends of the West, and that AI will drive enormously consequential economic and military transformations. 

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Given the stakes involved, maintaining AI leadership within democratic advanced economies justifies—and even demands—an enormous public-private strategic mobilization on the scale of the Manhattan Project, Nato, various energy-independence efforts or nuclear-weapons policies.

Yet, the West is doing the opposite. In the US, government and academic research in AI are falling behind both China and the private sector. Owing to inadequate funding, neither government agencies nor universities can compete with the salaries and computing facilities offered by the likes of Google, Meta, OpenAI or their Chinese counterparts. 

Moreover, US immigration policy toward graduate students and researchers is self-defeating and nonsensical because it forces highly talented people to leave the country at the end of their studies.

Then there is the US policy on regulating Chinese access to AI-related technology. Export controls have been slow to appear, wholly inadequate, poorly staffed, easily evaded and under-enforced. Chinese access to US AI technologies through services and licensing agreements has remained nearly unregulated, even when the underlying technologies, such as Nvidia processors, are themselves subject to export controls.

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Finally, US policy ignores the fact that AI R&D must be strongly supported, used and—where necessary—also regulated throughout the private sector, the government, and the military. The US still has no AI or IT equivalent of the Department of Energy, the National Institutes of Health, Nasa or the national laboratories that conduct (and tightly control) US nuclear-weapons R&D.

This situation is partly the result of sclerotic government bureaucracies in both the EU and the US. The EU technology sector is severely overregulated and the US Departments of Defense and Commerce, among other agencies, need reform.

Here, tech companies are somewhat justified in criticizing the governments they’re under. But the industry itself is not blameless. Over time, lobbying efforts and revolving-door personnel appointments have weakened the capabilities of critically important public institutions. Many problems with US policy reflect the industry’s own resistance or neglect.

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The US government must be enlisted to help. Historically, federal and academic R&D compare favourably with private-sector efforts. The internet, after all, was pioneered by the US Advanced Research Projects Agency and the World Wide Web emerged from the European Organization for Nuclear Research. 

Netscape co-founder Marc Andreessen created the first web browser at a federally funded supercomputer centre within a public university. Meanwhile, private industry gave us online services like CompuServe, Prodigy and America Online—centralized, closed and mutually incompatible ‘walled gardens’ that were justly obliterated when the internet was opened to commercial use.

The challenges of AI R&D and China’s rise require a forceful response [from the West]. Where government capacity falls short, it needs to be bolstered, not destroyed. Competitive salaries need to be paid for government and academic work. The US and EU must modernize their tech infrastructure and procedures, create robust R&D capacity within governments (particularly for military applications), strengthen academic research and implement rational policies for immigration, AI R&D funding, safety testing and export controls.

The one truly difficult policy problem is openness, especially open-source licensing. We cannot let everyone have access to major models optimized for hunter-killer drone attacks, for example; nor, however, can we stamp ‘Top Secret’ on every model.

A pragmatic middle ground must be found, perhaps relying on national defence research laboratories and carefully crafted export controls for intermediate cases. Above all, the Western AI industry must realize that if we don’t hang together, we’ll hang separately. ©2025/Project Syndicate

The author is a technology investor and policy analyst, directed the Oscar-winning documentary ‘Inside Job’.