China's challenge to US tech supremacy grows as AI race reshapes rivalry

The New Tech Titans of China: Innovation Under Pressure in the World’s Most Ambitious Economy

by Rebecca A Fannin

Published by Hachette India

209 pages ₹599

 

With the battle for supremacy in artificial intelligence (AI) heating up between the US and China, this book is perfectly timed. Though New Tech Titans of China is not a completely new book, it is a revised and updated version of the author’s book of five years ago — The Tech Titans of China. The revision allows the author to capture how things have changed over the past half-decade —especially in the context of the geopolitical tensions and the AI revolution. 

When Rebecca Fannin wrote The Tech Titans of China, there was considerable cooperation and business dealings between the US and China. Though China had blocked Google and Facebook, this had not affected the relationships at various levels. US venture capital (VC) firms invested heavily in promising Chinese tech startups. Chinese tech giants — Alibaba and Tencent — bought stakes and backed Silicon Valley startups. Tencent had picked up stakes in Activision Blizzard, Epic Games, Snap, Uber, Tesla, Reddit and many other US tech firms between 2013 and 2019. Its investments ranged from hundreds of millions to a couple of billion dollars in different US tech firms. Alibaba too had spent hundreds of millions to pick up stakes in US firms, including Uber’s rival Lyft and also in Snap. 

Things are very different now.  

Geopolitical tensions have ensured that US VC funding of Chinese tech entrepreneurs is down to a trickle. US private equity (PE) and VC investment in Chinese firms fell to $4 billion — the lowest in a decade. Chinese investment in the US, too, has plunged. 

Geopolitical tensions and the US steps to keep China from catching up in AI and in chip technology has created two distinct worlds. Nvidia, the most valuable company in the world currently, thanks to its powerful graphics processing units (GPUs) designed for AI training, has been shut out of the Chinese market largely. This initially happened because the US government (under Joe Biden and now Donald Trump) put barriers to the chip maker selling its most powerful chips to Chinese customers. Later, China actively discouraged Nvidia from selling in the country. 

China, under Xi Jinping, is pouring billions to create its own cutting edge chip ecosystem that can match up to anything the US has. Though it is still behind in the race, Huawei has designed chips for AI training to ensure that Nvidia chips are not needed. Semiconductor Manufacturing International Corporation (SMIC), China’s chip fab leader, is trying its best to catch up with Taiwan Semiconductor Manufacturing Company (TSMC) of Taiwan and Samsung of Korea. Chips is one of the few areas where China still lags the US but it is trying to close the gap. As Ms Fannin points out, China is the biggest spender in chip equipment, outspending the US by a hefty margin even though the latter too is trying to get back into the chip fab game after decades of outsourcing the work to Taiwan and South Korea. 

In AI, the conventional wisdom was that the US — with OpenAI, Google, and Anthropic and so on — had a clear lead. Until China’s DeepSeek shattered that illusion. DeepSeek was not just a powerful AI model capable of going toe to toe with the best that the US had to offer. It used considerably less resources to train. 

The New Tech Titans of China is not strictly about new Chinese tech giants and their founders — a good part of the book is still devoted to the original Big Three — Alibaba, Tencent and Baidu. But Ms Fannin also examines the next wave — including ByteDance and others and some of the latest startups making waves in China. 

She looks at the different areas of tech and methodically segregates them into those where the US leads and those in which China is clearly ahead. China especially leads in many areas such as robotics, electric vehicles, drones and autonomous vehicles among others. In areas such as genomics and biotechnology, it is hard to say who has the lead given that these are not as widely covered as AI or chips. In some areas, such as quantum computing, the race is still wide open. 

Ms Fannin points out that when the US tried to hold back China’s progress in cutting-edge tech, it only made the latter more determined and ambitious. Now China (through Huawei) is developing its own operating system that will be a rival to Android and Apple ecosystems. The race is also for getting other countries — in South Asia — to adopt the Chinese tech ecosystem rather than the US one. 

The book is quite small and the writing style is a bit drab. The author prefers concise summaries rather than elegant narratives. At times, one gets the feeling that this is meant more as a sort of quick overview of the tech battle between China and the US than a detailed study of any area. Also, much of the focus is on AI, chips and the digital ecosystem — and not enough on areas like biotechnology. Ms Fannin points out that China has moved from being a quick copycat to a true innovator, and some of its innovations are being copied by US firms. The most famous of course is the way ByteDance (of TikTok fame) forced US majors like Meta and Google to adopt short videos (Insta Reels and Google shorts). 

Overall, a useful book — though it never goes very deep into any area.

---

The reviewer is former editor of Businessworld and Business Today magazines, and author of Will India Get Rich Before It Turns 100? A Reality Check