Consumers will decide the course of the US-China tech rivalry

Regardless of how trade talks go, the US-China tech rivalry isn’t going away. From each side’s perspective, maintaining a lead in futuristic technologies matters significantly for economic growth and national power. Now, we’re entering round two.

The first round was mostly defined by US export controls aimed at slowing China’s development of advanced technologies. These measures might have delayed Chinese progress, but they didn’t stop it. As China gradually catches up in chips and artificial intelligence (AI), the competition has shifted. It’s no longer just about who can build the most advanced products, but also who can market them more effectively to global users.

While the US holds a clear technological advantage on most fronts, China emphasises cost-effectiveness and a supportive manufacturing supply chain. For leading companies in this battle, the goal is not only commercial success, but also advancing their nation’s long-term ambition for global tech leadership.

Chinese companies can now produce much of what the US has tried to restrict. AI models like those from DeepSeek are improving, chips from companies like Huawei are being commercialised and Semiconductor Manufacturing International Corporation (SMIC) is testing new types of advanced semiconductor equipment. With a growing downstream market in areas such as autonomous driving and intelligent robots, China can offer alternatives to the global market.

The US still leads in quality across nearly every domain. But making the best product doesn’t always guarantee market dominance. China’s strength lies in cost-performance advantages. For example, Chinese AI models deliver comparable results at a fraction of the cost of US offerings. Thanks to the scope and scale of China’s domestic supply chain, companies can repurpose suppliers for electric vehicles (EVs) and industrial robots to adapt to new areas like robotaxis and humanoid robots.

As both sides deliver increasingly advanced tech to the market, capturing share has become central. The US made this explicit in its AI Action Plan: “Whoever builds the largest AI ecosystem will set global AI standards and reap broad economic and military benefits.” Market success now determines not just economic and military power, but also the ability to set global rules for emerging industries.

South China Morning Post