China’s AI balancing act — beating the U.S. but keeping the tech from threatening Beijing’s rule
China is looking to challenge the U.S. in artificial intelligence. China’s tech giants have launched their own AI models.
Niphon | Istock | Getty Images
China’s race to develop smarter-than-human artificial intelligence may put it ahead of the U.S., but such ground-breaking technology could also risk lessening the stronghold that the ruling Communist Party has over the world’s second-largest economy.
That’s the view of prominent AI scientist Max Tegmark, who told CNBC artificial general intelligence (AGI) is closer than we think and the narrative of a geopolitical battle between the U.S. and China racing to build the smartest AI is a “suicide race.”
While there is no singular definition of AGI, it is broadly taken to refer to AI that can outsmart humans.
Applications like ChatGPT — that allow users to prompt a chatbot for answers — have exploded in popularity. But many AI companies are racing to develop the next level, with AI that has human-level intelligence.
Sam Altman, the CEO of OpenAI, has said that AGI could be achieved by 2025. While there are other major names in the tech sector who also think AGI is close, many others think true AGI is still very far away.
As well as competition between technology companies, there is also the geopolitical battle taking place between the U.S. and China for dominance in realms from AI to chips. While this is often portrayed as a race to be first to the latest technology, Tegmark said this is not the right framing.
“I think of this battle, this geopolitical battle to build AGI first as a ‘hopium war’,” Tegmark told CNBC in an interview last month. ” I call it the ‘hopium war’ because it’s fueled by … delusional hope that we can control AGI.”
Tegmark is the president of the Future of Life Institute, a thinktank which penned a letter last year calling for AI labs to pause the development of advanced AI systems. The letter was signed by major tech names including Tesla CEO Elon Musk. Tegmark’s concern is that AI is advancing rapidly with very few guardrails in place, and no way to control it should it begin to outsmart humans.
“We are much closer to building AGI than figuring out how to control it. And that means that the AGI race is not an arms race, it’s a suicide race,” Tegmark said.
Is China worried about AGI?
China has little incentive to build AGI, according to Tegmark. The AI scientist recalled a story in which Elon Musk told him about a “high level meeting” the Tesla boss had with Chinese government officials in early 2023. Musk said to the Chinese government that if AGI is built, China “will not be controlled by the Communist Party, but by the super intelligence,” Tegmark said.
“[Musk] got a very strong reaction. Some of them, really hadn’t thought about that, and with less than a month from that, China came out with their first AI regulations,” Tegmark said, referencing new regulation governing generative AI.
China’s ministry of foreign affairs was not immediately available for comment on the anecdote. CNBC also contacted Tesla for a response from Musk.
“The U.S. doesn’t need to convince China to not build AGI. Even if the U.S. didn’t exist, the Chinese government would have an incentive to not build it because they want to be in control,” Tegmark said.
“[The] last thing they want is to lose that control.”
China’s approach to AI
AI is a strategic priority for the Chinese government. The country’s biggest firms such as Alibaba, Huawei and Tencent have been developing their own AI models. The capabilities of those models are also advancing.
China was also among the first countries in the world to bring in regulation around various aspects of AI. The country’s internet is heavily censored and any information that appears to go against Beijing’s ideology is blocked. OpenAI’s ChatGPT is banned and it is well-noted that chatbots in China won’t answer questions related to politics and topics deemed sensitive by the Communist Party.
The country’s approach to AI is therefore an attempt to push innovation while also balancing its own interests. When it comes to AGI, China is likely to pursue a similar approach, according to analysts.
“I would not count on China to limit its own AI capabilities due to fears that such technologies would threaten Party rule. Similar predictions were made about the internet, they all proved to be false,” Kendra Schaefer, a partner at consultancy Trivium China,” told CNBC.
“China will attempt to dominate AGI while creating a techno-regulatory apparatus that limits what AGI is permitted to do domestically.”
U.S.-China AI battle
Despite Tegmark’s view that the the race to build AGI is a “hopium war,” geopoltiics remains front and center between the U.S. and China when it comes to development of the technology.
“Right now, China is viewing AI through a dual-lens: geopolitical power and domestic growth,” said Abishur Prakash, founder and geopolitical strategist at Toronto-based strategy advisory firm, The Geopolitical Business.
“With AI, China hopes to shift the balance of power around the globe, like creating a new export model. And, in parallel, China wants to power its economy in new ways, from government efficiency to business applications,” Prakash told CNBC.
The U.S. has pursued a policy of attempting to restrict China’s access to key technologies, mainly semiconductors like those designed by Nvidia, that are required to train more advanced AI models. China has responded by attempting to build its homegrown chip industry.
Will the U.S. and China partner on AI rules?
Technologists have warned of some of the risks and dangers when AGI does finally arrive. One theory is that without guardrails, AI will be able to improve itself and design new systems independently.
Tegmark believes that any such risks will be realized by both the U.S. and China, which will force both countries’ governments to individually come up with rules around AI safety.
“So my optimistic path forward is the U.S. and China unilaterally impose national safety standards to prevent their own companies from doing harm and building uncontrollable AGI, not to appease the rivals superpowers, but just to protect themselves,” Tegmark said.
“After that happens though, there’s this really interesting stage where the U.S. and China will be like, wait, how can we guarantee that North Korea doesn’t build AGI or someone else? And then the U.S. and China have an incentive now to push the rest of the world to join them into an AGI moratorium.”
Indeed, governments are already trying to work together to figure out how to create regulations and frameworks around AI. Last year, the U.K. hosted an AI safety summit, which the U.S. and China were both in attendance, to discuss potential guardrails around the technology.
But regulation and rules around AI are currently fragmented. This year, the European Union enacted the AI Act, the first major law globally governing the technology. China has its own set of rules, while many other countries have not yet moved to create any regulation.
Tegmark’s hope of co-ordination around AI safety is echoed by others.
“When the dangers of competition are greater than the rewards, nations will ideally be motivated to come together and mutually self-regulate,” Trivium China’s Schaefer said.
“Indeed, some Chinese policymakers have advocated for getting out ahead of that potential issue and establishing an international governance body under the UN – similar to the International Atomic Energy Agency – so there is desire on Beijing’s side to establish a global governance body,” she said.
Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025.
David Paul Morris | Bloomberg | Getty Images
With the AI talent wars heating up between companies like OpenAI, Meta and Anthropic, one way Google has been competing is by aggressively rehiring former employees.
Some 20% of software engineers working on artificial intelligence that Google hired in 2025 were so-called boomerang employees, an increase from prior years, CNBC has learned. A Google spokesperson confirmed the statistic remains accurate as of December, and said the company saw a jump in the number of AI researchers coming from major competitors compared to 2024.
“We’re energized by our momentum, compute, and talent — engineers want to work here to keep building groundbreaking products,” the spokesperson said in a statement.
John Casey, Google’s head of compensation, recently told employees in a meeting about the rehiring. Casey said AI-focused software engineers are drawn to Google’s deep pockets and hefty computational infrastructure that’s needed to perform advanced AI work, according to audio reviewed by CNBC.
Google has a large pool of ex-employees to mine, particularly after its largest ever round of layoffs in early 2023, when parent company Alphabet cut 12,000 jobs, reducing headcount by 6%. That followed a market downturn driven by soaring inflation and rising interest rates. Google has since continued with rolling layoffs and buyouts.
Across the industry, employee boomerangs are up, according to data published earlier this year by ADP Research, with the sector it classifies as information showing the starkest numbers.
Google has been racing to catch up in generative AI after a slow start that followed OpenAI’s release of ChatGPT in late 2022. After fumbling a number of product rollouts, the company has bounced back this year, thanks to hefty investments in AI infrastructure and the success of its Gemini app. Google announced its latest model, Gemini 3, last month.
Alphabet’s stock price is up more than 60% this year, outperforming all of its megacap peers.
As a historical hotbed of engineering and innovation, Google has long been a place where competitors have turned to try and poach talent. That’s still the case.
Earlier this year, Microsoft hired around two dozen employees from Google’s DeepMind AI research lab, CNBC reported in July. OpenAI, meanwhile, has opened its wallets wide, along with Meta. OpenAI CEO Sam Altman told employees in June that Meta had been offering $100 million signing bonuses, and that he was aggressively trying to retain staffers.
Late last year, Google brought back a major figure in AI: Noam Shazeer.
Shazeer and Daniel De Freitas left Google in 2021 to start AI platform Character.AI, reportedly departing after Google rebuffed their attempts to try and get the company to push its internal chatbot forward.
Along with other members of the Character.AI research team, Shazeer and De Freitas rejoined DeepMind in August 2024 under a licensing deal for the startup’s technology.
Over the last year, Google has taken more risks, shipping products more quickly, even if they aren’t viewed as completely ready. Google has also made a companywide effort to remove bureaucracy, enacting widespread employee buyouts and eliminating more than one-third of its managers overseeing small teams, CNBC reported in August.
Google co-founder Sergey Brin, who came out of retirement in 2023, has at times personally reached out to prospective candidates to recruit them, according to people familiar with the matter who asked not to be named because they weren’t authorized to speak to the media. Meta CEO Mark Zuckerberg has also reportedly reached out to researchers on behalf of his company.
WATCH: OpenAI’s Sam Altman says Google is still a huge threat
Dado Ruvic | Reuters
Palo Alto Networks will migrate key internal workloads to Google Cloud as part of a new multibillion-dollar agreement, the companies announced on Friday.
The companies said the deal is an expansion of their existing strategic partnership and will deepen their engineering collaboration.
Palo Alto Networks is now using Google’s Gemini artificial intelligence models to power its copilots, and it is also using Google Cloud’s Vertex AI platform, according to a release.
“Every board is asking how to harness AI’s power without exposing the business to new threats,” BJ Jenkins, president of Palo Alto Networks, said in a statement. “This partnership answers that question.”
Palo Alto Networks, which offers a range of cybersecurity products, already has more than 75 joint integrations with Google Cloud and has completed $2 billion in sales through the Google Cloud Marketplace.
As part of the new phase of the partnership, Palo Alto Networks customers will be able to protect live AI workloads and data on Google Cloud, maintain security policies, accelerate Google Cloud adoption and simplify and unify their security solutions, the companies said.
Shares of Palo Alto Networks were up 1% on Friday. Google shares were mostly flat.
“This latest expansion of our partnership will ensure that our joint customers have access to the right solutions to secure their most critical AI infrastructure and develop new AI agents with security built in from the start,” Google Cloud President Matt Renner said in a statement.
WATCH: Google unveils ‘Gemini 3 Flash’ AI model focused on speed and cost
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