Analysts say China has a rare window to become the dominant AI superpower if Democrats' midterm election win slows US infrastructure development. Economic and technological rivalry between Washington and Beijing has intensified since Donald Trump's second term began. Global markets reacted to election fallout, anticipating potential brakes on the US multitrillion-dollar AI data centre investment boom.
This could dampen demand for Chinese electronics exports, a key growth source amid weak domestic demand. China's benchmark CSI 300 index edged up 0.2 per cent after falling 1.4 per cent on Friday as Asian market concerns spread that Democrats will take a tougher line on AI. However, any US slowdown could give China's sector an opportunity to catch up.
Meng Qingyi of Tsinghua University suggests China accelerate domestic advanced chip production, improve algorithms for powerful models with limited resources, and expand global reach of cheaper open-source models. Meng cautions the window may not stay open long, as Democrats and Republicans differ only on development and regulation, not industry expansion. Gary Ng of Natixis notes China has abundant electricity, a developed industrial ecosystem, and less data centre resistance.
However, a lame duck US presidency alone may not allow overtaking, as US hyperscalers can move investment outside the country. Analysts warn a Democrat-controlled Congress could introduce tougher restrictions on Chinese access to US technology, potentially hindering Chinese giants like ByteDance, Alibaba, and Tencent from expanding overseas data centres. Foreign ministry spokesperson Guo Jiakun advocates for constructive, strategically stable US ties.
The Trump administration is expected to maintain trade agreements, but AI, advanced technology, manufacturing and supply chain security tensions may intensify. Democrats favor tighter China tech restrictions, contrasting with Trump's transactional approach.
Source: Financial Times Companies · Summarized by HeadlinesBriefing