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.
Muhammed Selim Korkutata | Anadolu | Getty Images
For a third time since taking office in January, President Donald Trump plans to extend a deadline that would require China’s ByteDance to divest TikTok’s U.S. business.
“President Trump will sign an additional Executive Order this week to keep TikTok up and running,” White House Press Secretary Karoline Leavitt said in a statement. “As he has said many times, President Trump does not want TikTok to go dark. This extension will last 90 days, which the Administration will spend working to ensure this deal is closed so that the American people can continue to use TikTok with the assurance that their data is safe and secure.”
ByteDance was nearing the deadline of June 19, to sell TikTok’s U.S. operations in order to satisfy a national security law that the Supreme Court upheld just a few days before Trump’s second presidential inauguration. Under the law, app store operators like Apple and Google and internet service providers would be penalized for supporting TikTok.
ByteDance originally faced a Jan. 19 deadline to comply with the national security law, but Trump signed an executive order when he first took office that pushed the deadline to April 5. Trump extended the deadline for the second time a day before that April mark.
Trump told NBC News in May that he would extend the TikTok deadline again if no deal was reached, and he reiterated his plans on Thursday.
Prior to Trump signing the first executive order, TikTok briefly went offline in the U.S. for a day, only to return after the president’s announcement. Apple and Google also removed TikTok from the Apple App Store and Google Play during TikTok’s initial U.S. shut down, but then reinstated the app to their respective app stores in February.
Multiple parties including Oracle, AppLovin, and Billionaire Frank McCourt’s Project Liberty consortium have expressed interest in buying TikTok’s U.S. operations. It’s unclear whether the Chinese government would approve a deal.
— CNBC’s Kevin Breuninger contributed to this report
WATCH: Project Liberty’s bid for TikTok is aligned with U.S. national security priorities.
Amazon Web Services is set to announce an update to its Graviton4 chip that includes 600 gigabytes per second of network bandwidth, what the company calls the highest offering in the public cloud.
Ali Saidi, a distinguished engineer at AWS, likened the speed to a machine reading 100 music CDs a second.
Graviton4, a central processing unit, or CPU, is one of many chip products that come from Amazon’s Annapurna Labs in Austin, Texas. The chip is a win for the company’s custom strategy and putting it up against traditional semiconductor players like Intel and AMD.
But the real battle is with Nvidia in the artificial intelligence infrastructure space.
At AWS’s re:Invent 2024 conference last December, the company announced Project Rainier – an AI supercomputer built for startup Anthropic. AWS has put $8 billion into backing Anthropic.
AWS Senior Director for Customer and Project Engineering Gadi Hutt said Amazon is looking to reduce AI training costs and provide an alternative to Nvidia’s expensive graphics processing units, or GPUs.
Anthropic’s Claude Opus 4 AI model is trained on Trainium2 GPUs, according to AWS, and Project Rainier is powered by over half a million of the chips – an order that would have traditionally gone to Nvidia.
Hutt said that while Nvidia’s Blackwell is a higher-performing chip than Trainium2, the AWS chip offers better cost performance.
“Trainium3 is coming up this year, and it’s doubling the performance of Trainium2, and it’s going to save energy by an additional 50%,” he said.
The demand for these chips is already outpacing supply, according to Rami Sinno, director of engineering at AWS’ Annapurna Labs.
“Our supply is very, very large, but every single service that we build has a customer attached to it,” he said.
With Graviton4’s upgrade on the horizon and Project Rainier’s Trainium chips, Amazon is demonstrating its broader ambition to control the entire AI infrastructure stack, from networking to training to inference.
And as more major AI models like Claude 4 prove they can train successfully on non-Nvidia hardware, the question isn’t whether AWS can compete with the chip giant — it’s how much market share it can take.
The release schedule for the Graviton4 update will be provided by the end of June, according to an AWS spokesperson.
Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., speaks to the Economic Club of New York in Manhattan, New York City, on April 23, 2024.
Mike Segar | Reuters
JPMorgan Chase is taking a step further into the cryptocurrency space with its own stablecoin-like token, called JPMD.
The U.S. banking giant told CNBC on Tuesday that it’s planning to launch a so-called deposit token on Coinbase’s public blockchain Base, which is built on top of the Ethereum network. Each deposit token is meant to serve as a digital representation of a commercial bank deposit.
JPMD will offer clients round-the-clock settlement as well as the ability to pay interest to holders. It is a so-called “permissioned token,” meaning it is only available to JPMorgan’s institutional clients — unlike many stablecoins, which are publicly available.
“We see institutions using JPMD for onchain digital asset settlement solutions as well as for making cross-border business-to-business transactions,” Naveen Mallela, global co-head of Kinexys, J.P. Morgan’s blockchain unit, told CNBC Tuesday.
“Given the fact that deposit tokens would eventually be interest bearing as well, this would provide better fungibility with existing deposit products that institutions currently use,” he added.
Deposit token vs. stablecoin
JPMorgan said the benefit of launching a deposit token over a stablecoin is that it gives institutional clients a way to move money around faster and easier while still having a close connection with traditional banking systems.
A stablecoin is a type of digital token that’s designed to be pegged 1:1 to the value of a fiat currency at all times. The most popular stablecoins are Tether’s USDT and Circle’s USDC. The entire stablecoin market is worth approximately $262 billion, according to data from CoinGecko.
In the U.S., stablecoins remain broadly unregulated — although this is likely to change soon. The Senate is set to vote Tuesday on the GENIUS Act, legislation that would introduce formal regulation for such tokens.
Elsewhere, the European Union regulates stablecoins under its Markets in Crypto-Assets Regulation, or MiCA, while the U.K. has also laid out plans to regulate the crypto industry. Britain’s Financial Conduct Authority is currently consulting on proposals to require stablecoin issuers to ensure their tokens maintain their value against a given asset.
JPMorgan’s digital asset chief told CNBC that the bank chose Coinbase as its blockchain partner since the crypto exchange is already a long-standing client and a leader in the crypto space.
JPMD has had “preliminary interest from large institutional players who want more native onchain cash solutions from pre-eminent and reputed financial institutions,” Mallela added.
Speculation had been building around JPMorgan’s new crypto offering after a trademark application filed by the bank for “JPMD” was made public Monday.
The trademark outlined a broad range of crypto services under the JPMD name, including trading, exchange, transfer and payment services for digital assets.
Various crypto media outlets had speculated whether the bank was about to launch its own stablecoin. However, JPMorgan says that, while its token may share some similarities with a stablecoin, it’s ultimately a different kind of product.
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