From Harvard Business School's Working Knowledge, September 25:
While the US fixates on a “frontier-first” approach, China seeks to embed the technology throughout its economy. Meg Rithmire explains why understanding their differing strategies is critical.
If AI is the new space race, how will we know when a country has won?
After all, an August article in Asian Economic Policy Review argues that China and the United States are not even racing toward the same planet as they pursue fundamentally different AI strategies. The US is fixated on a “frontier-first” approach, prioritizing increasingly powerful foundation models and infrastructure in hopes of capturing global dominance, while China is focused on embedding the technology deeply throughout its economy.
The distinction matters for businesses and policymakers because the country that gains the most from AI may not develop the most powerful model, but could instead be the one that translates AI most effectively into productive economic activity, explains Harvard Business School Professor Meg Rithmire.
“China’s Diffusion-Forward AI Strategy: The ‘AI Race’ in Political Economic Context,” which Rithmire wrote with Harvard Kennedy School postdoctoral fellow Hao Chen, details how China’s state-directed approach to AI investing aims to improve industrial efficiency by integrating AI into manufacturing and robotics. Drawing on Chinese policy documents and registration data for AI services, as well as an analysis of humanoid robotics firm UBTECH, the researchers document the government’s expanding investment role, with nearly one in four Chinese AI services crediting some degree of state involvement in 2025, up from less than 5% in 2023.
In a conversation edited for length and clarity, Rithmire, the James E. Robison Professor of Business Administration, explores the race between China and the US to develop increasingly capable systems, including artificial general intelligence (AGI), which can outperform the “median human” in economically valuable work, as well as the broader competition over the technology stack that could shape the global economy.
Why is the current tech moment often compared to the space race?
"One interpretation is that whoever reaches AGI first is going to have enormous capabilities vis-a-vis the rest of the world. The dominant thinking right now in Washington and Beijing is about who has better capabilities of escalation dominance—meaning you can hurt me, but I can always hurt you more. I can dominate the escalation of our competition, and I then no longer fear your retaliation."
Why does it matter how advanced AI gets?
"The thinking around AGI is that there are some amazing capabilities that could allow one country to destroy the other. These are allegedly such powerful models that, if some adversary had that technology, they could use it to infiltrate systems, hack passwords, and shut down critical infrastructure. There’s a military defense logic to this thinking: If China gets these capabilities before the US, they’re going to use them to destroy other societies, so we should get them first because we won’t use them to destroy everyone else.
The way US companies and a lot of policymakers in DC have thought about it is: The biggest risk is China getting to AGI before the US does. And that’s the reason we have to focus on the quality of large language models. But what AGI really is, nobody knows. Sometimes I have this interesting debate with technology people, which is—will we even know when we have AGI?"
What else matters besides superintelligence?
"There’s another version of the AI race, which is really about whose technology stack the world is going to rely on for the next several generations. In a world where the US wins the AI race, most of the world is dependent on the US for the hardware stack, the chips, and US LLMs to build the application-layer products that are then sold into the rest of the world.
That's more of an economic power—locking the world into American technology such that American companies benefit, American markets benefit, and the world softly depends on the US for the AI stacks that are changing the way people work, receive services, buy things, and live."....
....MUCH MORE
Also at HBS Working Knowledge, October 2025: "How AI Chatbots Try to Keep You From Walking Away"
