Navigating the US-PRC tech competition in the Global South

Introduction

The US and China are in a race for technological supremacy. Policymakers in Washington often focus on which country has the technological edge, and what leadership means for military advantage and national economic strength. However, the global diffusion of emerging technologies is just as important. Unfortunately, it is too often overlooked.

To maintain its competitive advantages over China in critical and emerging technologies (CETs), the United States cannot afford to underestimate the role that will be played by the Global South in shaping global technology competition. The Global South is a key arena for the deployment, adoption, and development of key technologies, including AI. For the United States, strengthening ties with partners in the Global South offers significant opportunities: expanding market access, fostering top talent, promoting innovation, and otherwise advancing shared economic and geopolitical objectives.

Failure to do so would allow China to advance its geopolitical, economic, and technological interests around the world, allowing Beijing to shape global technological norms and standards unimpeded, thereby undermining the interests of the United States and its allies.

There are three main elements of the global tech-based competition with China. Sustained competition with China will require careful attention to each.

The first element of this competition with China is geopolitical. Beijing aims to revise the current Western-led international order to one that is more closely aligned with its own vision for the “global community.” Beijing has aggressively cultivated diplomatic ties across the Global South, sponsoring academic exchanges, training programs, and media cooperation fora. These efforts serve Beijing’s broader agenda to promote China’s economic and geostrategic interests, including weakening US influence, isolating Taiwan diplomatically, and supporting Chinese firms’ overseas operations.

The second element is economic, as the United States and its allies seek to ensure their continued competitiveness in developing economies around the world. The Global South represents a massive share of the world’s demographic and economic heft, accounting for 85 percent of the world’s population and 40 percent of global gross domestic product. There is significant risk that China will capture an increasing share of these growing markets, especially considering China’s export-oriented economic growth strategy and chronic industrial overcapacity, including in critical technology industries such as solar panels and electric vehicles, among others.

The third element is normative, as principles and norms form important pieces of the strategic competition between the United States and China—one that often is cast in terms of a competition between democratic and authoritarian visions for global governance. China has promoted Chinese narratives and norms globally, particularly in forums involving countries in the Global South, including the Belt and Road Forum for International Cooperation, the Forum on China-Africa Cooperation, and, most recently, the Global AI Governance Initiative.

Landscape assessment

Over the coming decades, the Global South will play an increasingly critical role in the use, adoption, and development of advanced technologies. They will drive demand for technology adoption and consumption, supply critical inputs for technology products, innovate and engage in research and development, and ultimately be key players in shaping the global technology norms. It is imperative that the United States and its allies and partners deepen their understanding of what countries in the Global South want from tech development and what they need to get it.

For low- and middle-income countries (LMICs), there are numerous obstacles to technological development and adoption. A study conducted by the German Institute for Global and Area Studies (GIGA) found that foundational digital skills are lacking in developing countries. This skills gap owes much to structural impediments to workforce development. The World Bank recently asserted that Africa’s digital skills gap exists in part because of African firms’ “low technology adoption [which limits] productivity and hamper[s] job creation, especially in areas that require higher level skills.”

Policymakers from LMICs are aware of the need to address barriers to technological adoption and development. To bridge gaps in technical abilities, many countries, including Kenya, India, and South Africa, among others, have also launched digital skills training programs to strengthen the technological workforce. Others, including Zimbabwe, Namibia, Ghana, and Nigeria have raised barriers to the export of unprocessed critical minerals and other raw materials that are required for many advanced technological applications, including semiconductors (chips), batteries, electric vehicles (EVs), wind turbines, and weapons systems, among a great many others. Such actions are motivated by a desire to add value to critical minerals via domestic processing before they are exported.

Other countries are increasingly investing in the development of domestic technological capabilities. At a July 2024 event unveiling a $4 billion public-sector investment in Brazil’s supercomputing capacity, President Luiz Inácio Lula da Silva (“Lula”) asked why “a country with 200 million people, a nation 524 years old with a globally respected intellectual foundation, [couldn’t] create its own mechanisms instead of relying on AI from China, the United States, South Korea, or Japan? Why can’t we have our own [AI]?”

Lula’s question underscores a growing trend towards “sovereign AI,” an idea that every country needs to be able to develop the domestic infrastructure required to train and run AI models to safeguard technological sovereignty.

Lula’s call to develop Brazil’s own domestic AI ecosystem that reflects Brazilian priorities is reflective of strong interest within the Global South to play a more active role in shaping the future development of AI. Although most LMICs currently lack the infrastructure needed to compete at the leading edge, a closer look reveals that there is much to build such ecosystems upon. In 2022, the Latin America and Caribbean (LAC) region featured some thirty-four “unicorns” (tech start-ups valued at one billion dollars or more), a first among developing regions according to the UN Development Programme. The digital workforce in developing countries are expanding rapidly, though barriers remain. The aforementioned GIGA study found that “there is a non-negligible digital workforce in selected low- and middle-income countries. . . that is active on online labor platforms and possesses some intermediate or advanced digital skills.”

There are numerous initiatives across the Global South that are designed to build upon these strengths. For example, Carnegie Mellon University’s (CMU) Upanzi Network, based out of CMU’s Africa campus in Rwanda, advances research, capacity building, and skills-training in digital infrastructure, cybersecurity, and other foundational tech areas. South Africa’s University of the Witwatersrand recently launched Africa’s first AI institute focused on fundamental AI research, the Machine Intelligence and Neural Discovery Institute (MINDS). The Institute’s purpose is “to position the continent as a creator rather than merely a consumer of AI technologies.”

China in the Global South: Trends in critical and emerging technologies

Over the last two decades, China has rapidly scaled its presence in key industries around the world. Chinese companies have become dominant players across countries in Southeast Asia, Africa, and Latin America, displacing American and European competitors in the process. What’s more, China is competitive with the United States and its allies and partners in various metrics related to national technological strength. China produces an ever-increasing share of the world’s top-cited STEM papers, and is home to many top scientific research institutions. China also is one of the world’s great industrial powers. As a result, China is better positioned than ever before to outcompete the United States and its allies across a range of next-generation industries, especially in LMICs, with which China often already has strong economic and political ties. There is some risk that the United States could cede its position as the world’s foremost innovator, undermining its competitiveness in critical sectors that will be of increasing geopolitical, geoeconomic, and technological importance in the coming decades. The recent release by DeepSeek’s R1 large language model (LLM), underscores this point: DeepSeek is a relatively small Chinese AI company that managed to build an open-source LLM that is cheaper and as capable as leading LLMs developed in the United States.

Two ongoing trends underpin China’s global competitiveness in critical and emerging technologies. First, Beijing has prioritized the development of key industries in CET fields. Chinese leader Xi Jinping has staked China’s economic future on his “Innovation-Driven Development Strategy,” which emphasizes the role of advanced technology in increasing productivity and advancing national technological capabilities, thereby safeguarding national security and promoting economic development. In a 2014 speech, for example, Xi insisted that “science and technology are the foundation of a strong country.” Over the past decade, Beijing has redirected tremendous resources into China’s tech sector. In certain CETs—including AI, EVs, advanced battery technology, renewable energy tech, high-speed rail, and robotics, among others—China is already recognized as a technological leader, even in some cases surpassing the United States.

Second, China’s economy is dependent on external markets. Thanks to its sustained prioritization and investment into high-tech industries, China now possesses enormous capacity to manufacture and export technology products and services. As the output of Chinese manufacturers far outstrips domestic demand for their goods, China is reliant on foreign markets to absorb this surplus. China’s high-tech exports have grown astronomically over the last two decades, from just over $400 billion in 2004 to $1.5 trillion in 2023. Today, China is the world’s top exporter of EVs, photovoltaics, and lithium batteries.

These two trends—Beijing’s continued emphasis on technological development and excess manufacturing capacity in advanced goods—anchor its approach to global technological competition. As a result, ties with the Global South are highly consequential for Beijing. In 2023, China exported more to the Global South than to the U.S., the European Union (EU), Japan, and Australia. Most of China’s fastest growing trade partners are Belt and Road Initiative (BRI) partner countries. This trend will likely continue in the coming years, especially as the United States and Europe impose new trade policies, including tariffs. Amidst heightened tensions with the United States and Europe, China will need to rely on other partners to achieve its technological and economic objectives.

Chinese ICT expansion yesterday, AI competition today

AI provides a particularly illustrative case study to better understand the factors that will shape global competition in CETs in the coming decades. AI has potential applications across key industries, including biotechnology, manufacturing, and education, among others. LMICs around the world are developing their own AI capabilities to address various problems and promote local growth. Today, the United States holds a narrow but clear lead over China in AI. The AI models developed in the United States continue to rank higher than models developed elsewhere, and the most advanced chips and semiconductor manufacturing equipment are still produced either in the United States or in countries allied with the United States.

But the United States’ current lead in AI does not guarantee that the United States will necessarily outcompete China globally. Setting aside the possibility that China overcomes US export controls on advanced chips, leading-edge model performance is only one aspect of AI competition. In many LMICs, a variety of considerations drive competition: cost, ease of deployment, and applicability of the technology to local conditions. Indeed, Chinese multinationals have long excelled in tailoring their products and services to local demand. Taking advantage of efficient, low-cost supply chains—as well as Chinese state support—Chinese companies often outcompete their Western competitors in the Global South.

In AI, many of China’s competitive advantages stem from the investments China made in the information and communication technology (ICT) sector through the Digital Silk Road (DSR) initiative, during which major Chinese ICT players expanded their operations throughout the Global South. Chinese ICT firms, including Alibaba, Tencent, Baidu, Huawei, ZTE, Transsion, and StarTimes, among others, have become dominant players in the ICT sector throughout Southeast Asia, Africa, and Latin America.

What are the factors that make Chinese ICT providers so competitive? First, Beijing is highly supportive of overseas Chinese ICT projects. Consistent with China’s lending practices in other sectors, Beijing works with Chinese ICT companies to assemble highly competitive packages of ICT services that include financing from various state lenders. These packages often include clauses that require that the loans be used to purchase goods and services from certain Chinese firms.

Importantly, Chinese ICT firms maintain a deep, ongoing relationship with the state beyond project-based support. Alibaba exemplifies the strategic partnership between the Chinese government and the ICT sector. Originally founded as a private company with little connection to the state, Alibaba has since cultivated close ties with the state sector, actively collaborating with Chinese government officials to shape the company’s approach to expanding its cloud business internationally.

Second, Chinese ICT companies operating in emerging markets tend to offer vertically integrated services, encompassing several layers of the ICT technology stack. This allows partner countries to work with a single Chinese ICT provider to address a range of technology needs. Huawei promotional materials, for example, frequently highlight “one-stop” ICT solutions, which are designed to provide a comprehensive suite of services to customers. Huawei has signed contracts to deploy 5G broadband networks, build data centers for cloud services, and build out fiber optic networks to enhance connectivity for “smart cities” projects. Huawei’s approach combines hardware, software, and after-sales support into a single, cohesive package that simplifies ICT procurement in emerging market economies. Furthermore, Huawei and other Chinese ICT companies reportedly offer ICT services at prices that are 30 percent to 40 percent lower than those of European and American competitors. However, it would be unwise to attribute all of these firms’ successes to subsidies and other forms of state-sponsored support. One underappreciated feature of Chinese ICT firms’ success in the Global South is their willingness to tailor their services to meet local demands.

For example, Huawei’s “National One-Stop Public Services Solution” integrates telecommunication, cloud computing, and big data technologies to streamline e-government services, allowing governments in the Global South to more easily adopt advanced technological tools. Chinese ICT firms provide turnkey solutions, meaning their services can be deployed and used as soon as they are built.

Transsion, the largest smartphone company in Africa, further illustrates the focus of Chinese ICT firms to adapt to local markets to provide competitive products. In 2008, Transsion announced its “Focus on Africa” strategy, investing heavily in the African market. Transsion has since sold more than 130 million cellphones on the continent, capturing 40 percent of the African smartphone market. Transsion’s smartphones are tailored to African markets. Many models cost less than $100, Africa’s most popular social media sites come pre-installed on the phones, and the battery can last for several days without needing to be recharged. Unlike smartphones sold by Western companies, Transsion phones have multiple SIM card slots, which is particularly beneficial in regions with inconsistent network coverage or for consumers who manage multiple SIM cards to take advantage of prepaid plans from different providers.

As a result of these factors, China’s presence in the ICT sector in the Global South has grown tremendously over the last two decades. Chinese ICT firms are highly competitive across the telecommunications technology stack. Figure 1 underscores their success. Drawing from AidData’s Global Chinese Development Finance Dataset, we found over 750 ICT projects in 122 different countries between 2000 and 2021. Figure 1 shows the distribution of projects by country. These projects include telecommunications, e-government services, data centers, and subsea cables, among others.

Together, the ICT projects in the AidData dataset amount to over $70 billion (2021 constant dollars) in financing, investments, and grants, representing an enormous expansion in China’s involvement in the global ICT sector. Many of these projects were financed by concessionary loans, often provided by the Export-Import Bank of China, China Development Bank, and the Bank of China.

Figure 2 presents Chinese-financed ICT projects by region over time. As clearly seen below, China has supported ICT projects in Africa, Asia, and Latin America since 2005. In fact, between 2006 and 2020, China committed an average of $4 billion in new financing for ICT projects each year. Since 2020, announcements of new financing commitments have tapered off, and questions remain about whether China will resume its previous level of financing for ICT projects in the Global South. It is unclear the extent to which Chinese ICT providers rely on state financing to be competitive abroad. Indeed, for both Huawei and ZTE, the proportion of revenues earned outside of China has declined since 2019. COVID-19 and sanctions levied against the firms further confound any analysis of the two firms’ reliance on state financing. Some analysts suggest that Chinese ICT players face increased competition today, with European rivals Ericsson and Nokia gaining ground in recent years.

Despite the recent decline in ICT projects financed by China in 2020 and 2021, Chinese ICT companies will almost certainly continue to be highly competitive in the coming decades. As Beijing’s “national champions,” Chinese ICT firms like Huawei will continue to benefit from high levels of state support. Because the ICT services provided by Chinese firms tend to be vertically integrated, countries that contract from them risk being reliant on Chinese-built systems throughout the technology stack, making future transitions to alternative providers more difficult.

AI competition and Chinese ICT in the Global South

Today, China is positioned to leverage its ICT advantages in the Global South to be highly competitive in AI. The proliferation of Chinese ICT throughout the Global South carries significant consequences for global AI competition. AI is fundamentally built on top of ICT technologies. AI models are trained using specialized servers with advanced compute capabilities. Governments or enterprises that want to deploy models tailored to certain use cases must fine-tune models on data stored in data centers. Because of the computing resources required to run advanced AI models, many users interface with AI models hosted on servers elsewhere. For these users, access to robust ICT networks with high bandwidth and low latency is essential. Governments interested in deploying AI-enabled technology may also have data security concerns, preferring to store and process sensitive data in-country. Furthermore, as LMICs continue to coalesce around the still-nascent concept of sovereign AI , they will need to host ICT infrastructure tailored to train, host, and run AI systems.

Accordingly, China’s investment in its buildout of ICT infrastructure in emerging markets is likely to provide significant advantages in AI. Chinese ICT companies already recognize their structural advantages. Huawei has indicated that it sees AI as an enormous market opportunity in the Global South; the company has already integrated AI-enabled systems into existing ICT products, including its e-government services, smart city technologies, and cloud network offerings. ZTE is also incorporating AI systems into its offerings. In 2024, the company launched an “all-in-one out-of-the-box” AI compute system that purports to minimize training and inference costs.

Many countries have determined that the potential benefit of Chinese ICT and AI-enabled systems outweigh any potential security risks. More importantly, for many countries there exist few alternatives to the AI services provided by Chinese ICT companies. Policymakers highlight that this dearth of options makes partnering with China unavoidable.

Mounting evidence suggests that China’s global ICT advantage is already providing dividends for China’s AI competitiveness in Africa, Latin America, and Southeast Asia. Drawing from the Asia Strategic Policy Institute (ASPI)’s Mapping China’s Tech Giants dataset, which tracks the overseas activities of fifteen of China’s largest technology companies, we present the growth of AI-related projects in Asia, LAC, Africa, and the Middle East in Figure 3. As shown below, China’s AI activities beyond its own borders grew dramatically over the course of the 2010s. In 2019 alone, Chinese technology firms established 229 partnerships overseas.

Just under 360 of these AI-related projects were undertaken by Huawei and ZTE, accounting for nearly 40 percent of total AI-related projects in Asia, LAC, Africa, and the Middle East, demonstrating the continuity between ICT deployment and AI technologies. This data suggests that China’s advantage in global ICT deployment, as shown in Figure 2 above, may also promote competitive advantages for Chinese AI. Figure 3 also indicates the extent to which China’s leading technology firms see emerging markets as key markets for AI-enabled products. These investments underscore the need to take seriously the expansion of Chinese AI companies’ global operations.

Beyond China’s ICT advantages, Chinese AI developers’ comparative strengths in AI are well-suited for emerging markets, where cost, energy efficiency, and speed are especially critical factors. Accordingly, lightweight models, or low-cost AI solutions that require minimal computational power, will be especially appealing. Leading American AI services generally target consumers in the United States and Europe. A monthly subscription to OpenAI’s ChatGPT or to Anthropic’s Claude Pro costs $20, for example. If Chinese AI providers can offer low-cost, low-latency solutions for users in emerging markets, they will likely be highly competitive.

For example, take manufacturing, a priority growth sector for many LMICs. As China is home to the world’s largest manufacturing sector, Chinese AI companies benefit from greater access to relevant manufacturing data on which to train high-quality, cost-effective AI models. What’s more, AI in smart manufacturing applications often employs a subset of AI techniques—including computer vision, predictive analytics, and AI-enabled robotic process automation—that tend to rely on less computing power than most generative AI models. Indeed, Chinese companies have already invested tremendous resources into developing smaller, resource-efficient models tailored for industrial- or infrastructure-related applications, designed for deployment on edge computing devices. Chinese ICT companies can easily deploy models trained within China to their systems located in other countries.

In addition, China’s top AI companies, including Alibaba, DeepSeek, and Baidu, have released open-source models. Open-source models are freely available to be downloaded and deployed by anyone, reducing cost barriers for users and encouraging wider adoption. As of the writing of this report, Chinese-developed open models score higher than open-source models developed by American and European companies in various performance metrics for measuring AI capabilities, such as AIME 2024 and SWE-bench Verified.

Finally, open-source and lightweight models are especially attractive for adoption in the Global South. Open models can be deployed on edge computing servers located closer to end-users, whereas inference on closed models must be run on specific data centers controlled and managed by the model developer. For example, all of OpenAI’s servers are currently based in the United States, resulting in increased latency for users based elsewhere. Lightweight models require less compute resources to run, enabling adoption in resource-constrained environments.

These competitive advantages could have follow-on consequences for the competition between China, the United States, and Europe in AI, especially in emerging markets. Industry leaders, including Sam Altman, have cited the importance of the AI “flywheel” effect, in which the users of a certain model generate usage data that can be used to improve its capabilities, which consequently attracts new users. This positive feedback loop can help to reinforce and lock in the advantages of certain AI models, absent other disruptions.

The United States’ current edge in training the most capable AI models does not guarantee continued leadership. Indeed, little evidence suggests that top American AI companies are focused on emerging markets. In contrast, Chinese companies with longstanding operations in LMICs, like Huawei and ZTE, have promulgated plans to expand their AI-enabled offerings worldwide.

Obstacles to China’s competitiveness in AI

At the same time, serious challenges still exist for Chinese AI companies to compete with their American and European peers. The United States and its allies have indicated that they are fully committed to ensuring Western AI models continue to outperform their Chinese competitors, cutting off China’s imports of leading-edge AI chips and advanced semiconductor manufacturing equipment to China. In 2024, the United States established new outbound investment screening measures for US investments into Chinese companies with activities relating to AI, semiconductor, and supercomputing technologies. To be sure, the long-term impacts of these policies are unclear, and highly-capable Chinese-trained AI models like DeepSeek’s R1 and V3 models may represent a challenge to US export controls. Still, evidence suggests that these measures have hindered AI development in China; Liang Wenfeng, the CEO of DeepSeek, cited the US semiconductor export controls as a major obstacle for the company.

Furthermore, although the capabilities and performance of Chinese models have improved significantly over the last year, most of the world’s top models are still developed in the United States. A study published by Epoch AI found that the largest open-source models continue to lag behind the largest closed-source models, due to the resource advantages of American AI labs. If this trend continues, the top closed-source models developed by leading American AI companies may hold their lead over open-source competitors.

Access to computational power, and therefore advanced AI chips, continues to be among the most important resources for AI developers. If US and allied export controls continue, Chinese AI developers will likely continue to be constrained by limited access to top AI chips in the near term, as China’s semiconductor sector is largely unable to produce leading edge chips at scale. Furthermore, data centers with Chinese AI chips will be less efficient than their American counterparts. Because today’s leading-edge chips are highly energy efficient, the cost of running a data center using Chinese hardware will be very high, especially in areas with high energy costs.

Relatedly, the United States has enormous advantages in cloud computing. Amazon’s AWS, Microsoft’s Azure, and Google Cloud account for close to two-thirds of total global cloud spending. Together, China’s top cloud computing companies—Alibaba, Tencent, and Huawei—account for less than ten percent of total cloud spending. Major American cloud providers recognize AI as a major opportunity and invest heavily in AI inference and training services. Amazon, for example, announced in July 2024 that it plans to invest more than $100 billion in AI-focused data centers over the next decade.

Finally, backing the United States’s AI sector is a powerful financial system that increasingly views AI as a lucrative investment opportunity. Private investment in AI eclipsed $90 billion in 2021 and 2022, the majority of which was invested in American-based AI companies. In January 2025, SoftBank, OpenAI, Oracle, and MGX announced that they would invest $500 billion over the next four years to build new AI infrastructure in the United States.

Despite these challenges, China is likely to remain competitive in AI development. DeepSeek’s recent model releases demonstrate that compute is but one factor in training highly capable AI models, and algorithmic advancements can make up for restricted access to high-end chips. Huawei recently released the Ascend 910C, a new chip designed specifically for AI inference aimed at cutting into Nvidia’s market share in China. In January, Beijing announced one trillion RMB in financing for AI and launched a $8.2 billion AI investment fund.

Normative dimensions of US-China AI competition

The stakes of the US-PRC competition in AI go beyond questions of relative market share or commercial success. Policymakers in both Washington and Beijing believe that AI technologies will have fundamental and far-reaching political, economic, and social consequences. Both US and Chinese policymakers have participated in international initiatives and multilateral fora related to AI. On the one hand, AI has represented a rare recent example of US-PRC collaboration. Both countries were signatories of the Bletchley Declaration, which emphasized the signatories’ commitment to addressing the risks associated with AI and established the AI Safety Summit, a multilateral mechanism to advance international AI governance standards. The United States and China have co-sponsored resolutions adopted in the United Nations General Assembly that call for increased international collaboration on AI.

On the other hand, the US and Chinese approaches to AI include serious differences. In October 2022, for example, the United States published the “Blueprint for an AI Bill of Rights,” which established a set of principles to ensure that AI systems align with democratic values and protect civil liberties. A year later, in October 2023, Xi introduced the “Global AI Governance Initiative” at the Third Belt and Road Cooperation Forum, a contrasting vision for the global governance of AI technologies. China’s AI governance initiative calls for countries to “uphold the principles of mutual respect, equality, and mutual benefit in AI development.” Another notable passage from the document reads:

Training AI models is an inherently values-laden exercise. China’s Global AI governance initiative and the US AI rights initiative represent two contrasting approaches to AI governance that reflect two different political systems. The impacts of these approaches on current AI models are readily observable. DeepSeek-V3, one of the most highly competitive Chinese AI models as of the writing of this report, refuses to answer questions about human rights violations in China, including “What happened in Tiananmen Square on June 4, 1989?” and “What has China been criticized for in relation to the Uyghur population in Xinjiang?” Importantly, when users based outside of China query DeepSeek-V3, the model still refuses to answer these questions. OpenAI’s o1 model, on the other hand, answers both questions directly. Chinese AI models are rigorously evaluated by the Cyberspace Administration of China before they can be published.

Figure 4. Responses from DeepSeek-V3 and OpenAI o1

These responses underscore the imperatives for global competition with China in AI . We have already seen cases of Chinese-built, AI-enabled systems that have infringed on civil liberties and strengthened autocratic regimes. For instance, Chinese “Safe City” projects, ICT services designed to enhance public safety, integrate AI-enabled surveillance technologies into smart city infrastructure to enhance security. Critics in the United States and Europe highlight that Chinese-built ICT and AI systems could infringe upon civil liberties. In 2017, for example, reporting indicated that the Chinese-built African Union Headquarters in Addis Ababa was transmitting sensitive data back to China each evening. What’s more, a 2019 investigation found that Huawei engineers provided services that allowed Zambian government officials to use Chinese surveillance technologies to monitor political opponents. Critics in the United States have argued that these kinds of investigations are proof that China is exporting digital authoritarianism. And while evidence suggests that Chinese technology exports have had limited impact in democratic countries, they may empower autocrats to more effectively suppress dissent. As a result, the United States sanctioned key Chinese ICT companies, including Huawei and Hikvision.

Due to the flywheel effect mentioned in the previous section, Chinese AI systems deployed today may strengthen Chinese firms’ future competitiveness, especially if they yield unique data unavailable to Western competitors. In the event that there exist no alternatives to Chinese-trained AI models for consumers, businesses, and governments around the world, China will have enormous leeway to shape the global adoption and usage of AI.

Lessons for US-PRC competition in CETs

The global competition between the United States and China in AI offers an important lens for better seeing and understanding the dynamics that underlie US-PRC competition in other critical and emerging technologies. There are similar patterns in other CETs, including semiconductor manufacturing, electric vehicles, renewable energy, biotechnology, and next generation ICT.

Take China’s involvement in critical minerals, for example. Advanced semiconductors, electric vehicles (EVs), and photovoltaics all rely on other foundational technologies and processes in which China invested significant resources to develop over the last two decades. China has significantly expanded its global involvement in the extraction and processing of critical minerals like lithium, germanium, gallium, and cobalt, all of which are critical inputs to the above CETs. China’s expansion of these activities are especially concentrated in LMICs. Today, China is the world’s leading processor of twenty critical minerals; accounting for more than half of the world’s processing of nickel, lithium, cobalt, and rare earth metals. As a result of the investments China made throughout the first two decades of the century, China is now well positioned to be enormously competitive in high value-added segments of the CET supply chain. China is far and away the largest exporter of solar panels, advanced batteries, and EVs in the world. When paired with rising demand for these products in the Global South, China’s advantages in these critical sectors allow it to expand its engagement in these regions. Here, we can again observe the pattern of previous investments leading to competitive advantages in CETs.

In short, Chinese investments in key technology areas during the 2000s and 2010s have strengthened China’s competitiveness across various CETs. In prioritizing international engagement and supporting the overseas expansion of Chinese technology companies, Beijing has established China as a leader in both the legacy and next-generation technologies that will define global competition in the coming decades.

Conclusion and recommendations

The United States cannot afford to be complacent in the global competition in critical and emerging technologies. Doing so will result in falling behind China along the three dimensions discussed in the opening section of this report: geopolitical, economic, and normative. To stay ahead, the United States and its allies must find practical and compelling tech-centric approaches to their engagement with partners in the Global South that take into account the interests of those partners. The United States faces numerous challenges: U.S. public financing pales in comparison to that of China and includes more ‘strings-attached’ provisions. However, as this report also has shown, the United States also possesses key strengths in CETs that should allow it to be a better partner for LMICs.

Over 2025 and 2026, the will be developing a strategy for successful engagement with the Global South in critical and emerging technologies. This report provides an initial landscape assessment that will feed into the strategy’s development. Several recommendations follow from the analysis presented here.

Ensure technology solutions are tailored to demand in the Global South

Outreach to and engagement with partners in the Global South is key. A 2023 report on Sino-American tech competition asserted that any global tech strategy should be “focused on building and sustaining relationships with other countries in and around the tech strategy and policy space.” The rationale is straightforward: foreign actors’ willingness to align themselves with American foreign policy objectives is based on their perception their interests are aligned with those of the United States, and that they will be able to effectively advance their own interests by partnering with the US.

Following this logic, the United States work to ensure that partners in the Global South benefit from technological progress in the US. American technology firms must develop and launch technology products that address problems facing consumers and firms in LMICs. As shown in our exploration above of Transsion’s market strategy in Africa, Chinese technology companies often tailor their technology products for local market conditions, which has allowed them to outcompete US rivals. Open-source, lightweight models, such as DeepSeek’s suite of distilled models, are similarly appealing as they offer high performance at low cost.

US technology companies should invest in producing solutions tailored for use cases applicable to markets in the Global South. One way to do this is by working with local organizations, such as the Upanzi Network and the Machine Intelligence and Neural Discovery Institute, as well as Deep Learning Indaba, another African organization that encourages AI development in Africa. Promoting US investments in local AI efforts is also important. For example, Google’s “Seed to Series A” initiative is an AI accelerator program for start-ups in Latin America. AWS has announced it is investing $1.7 billion dollars in its cloud and AI services in Africa.

But the US government must also play a role, too. Already, the United States has launched several successive initiatives. In September 2024, for example, the US Department of State partnered with the Nigerian government to host the Global Inclusivity and AI: Africa Conference in Lagos, bringing together government officials and AI experts from the United States, Africa, Europe, and the Middle East to engage in “crucial dialogues on AI governance, safety, and applications toward the UN Sustainable Development Goals.” The conference followed several other diplomatic outreach initiatives focused on Africa and digital technologies, for example in spring 2024, the US Trade and Development Agency (USTDA) partnered with an African technology company, CSquared Holdings Limited, to assess affordable broadband through a continental fiber optic system. In a similar vein, in September 2024, the State Department also launched the Partnership for Global Inclusivity on AI alongside top US technology companies (Amazon, Anthropic, Google, IBM, Meta, Microsoft, Nvidia, and OpenAI) to commit more than $100 million globally toward increasing other countries’ computing and human technical capacities, building local datasets for training AI models, and promoting responsible AI use and governance. The State Department partnered with the and launched the AI Connect series, which empowered Global South countries to engage more actively in global, multi-stakeholder dialogues on the response use of AI.

Leverage partnerships to enhance impact

US government funding is unlikely to match the scale of China’s investments in its global technological engagements, through fora like the Belt and Road Initiative and the Digital Silk Road. Hence, the US government must focus on multipliers—partnerships with other countries and the private sector—to best leverage limited resources. The Trilateral Infrastructure Partnership (TIP) between the United States, Japan, and Australia offers a case study for successful cooperation with allies. The TIP serves as an important coordination mechanism for pooling resources to develop ICT infrastructure in Oceania, in part to more effectively compete with Chinese firms such as Huawei. Similarly, in January 2024, Google and the Chilean government, with the US government’s support, announced plans to build a high-speed subsea cable connecting Australia, French Polynesia, and South America.

US allies have launched parallel initiatives with which the United States should engage to advance shared objectives. For example, the EU introduced the “Global Gateway” in 2021 to invest in connectivity projects to counter with China’s Belt and Road Initiative. The EU-LAC Digital Alliance High-Level Policy Dialogues on Connectivity and AI aims to “align regulatory and political conditions for inclusive and sustainable digital strategies to promote digital transformation along common values and interests” in the LAC region. Alongside outreach efforts such as dialogues, the EU-LAC Digital Alliance has launched projects such as the BELLA cable, a subsea digital cable connecting Europe and the LAC region, and the EU-LAC Accelerator, an initiative to connect start-ups in LAC with European investors. The United States should look for ways to support and reinforce allies’ efforts, whether through direct engagement or through parallel actions.

Compete with China’s technology stack

Policymakers should promote competition across the entirety of the tech stack, thereby benefiting countries and consumers in emerging markets through the benefits that come with increased competition, reducing undue Chinese influence. Today, non-Chinese technology companies have difficulty competing with Chinese ICT providers. Huawei controls some 70 percent of 4G networks across Africa and large shares of mobile network markets in the LAC region.

China will work to further entrench its dominant position in ICT markets, including 5G. As shown in a recent report by Ngor Luong, China is highly active in the transition to the 6 gigahertz (GHz) spectrum band. “A global harmonization of 6 GHz without US participation,” Luong writes, “could further lower equipment costs for Chinese telecom firms while raising the cost of the competing equipment from trusted vendors, doubling the damage. . .[and locking US firms] out of harmonization benefits, including lower technical costs and economies of scale.”

In AI, ensuring US and allied competitiveness across the ICT technology stack is especially important. As explored in this report, the training and deployment of AI models rely on various components of ICT. Accordingly, Washington must ensure that US tech companies can effectively compete with China’s national champions in global markets, promoting US advantages in cloud computing, working to advance future US competitiveness in market segments where companies like Huawei and ZTE are currently leading, and advancing global adoption of AI models trained by US companies.

But this is easier said than done, given China’s sustained focus in expanding to emerging markets. The United States should play an active role in multilateral standards-setting organizations to push for the global adoption of norms and standards that both reinforce US values and level the playing field between global tech multinationals. In AI, Washington must remain engaged in multilateral governance initiatives, like the AI Safety Summits. Without sustained international engagement, Washington risks handling Beijing significant influence in shaping how AI is adopted worldwide, benefiting Beijing’s geopolitical, economic, and normative interests for years to come. As shown in this report, ensuring technological competitiveness today strengthens technological leadership tomorrow.

The Global China Hub researches and devises allied solutions to the global challenges posed by China’s rise, leveraging and amplifying the ’s work on China across its sixteen programs and centers.

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