China and America are in a race to dominate AI.

It is quite clear to a lot of people (though we are not 100% convinced) that AI will dominate EVERYTHING. That whichever country pulls ahead in AI and dominates AI will become (or remain) the sole superpower in the world.

That the next 100 to 300 years will be controlled and owned by whichever country (or corporation, in the rare case a corporation beats the countries) wins in AI.

China has a few very big barriers to overcome

1. No one trusts China
   1. While America is destroying its relationships and its reputation
   2. China had no ‘reputation’ to begin with
   3. Almost no one trusts China
2. America is not letting China access the latest Nvidia Chips
   1. Nvidia chips are blocked
   2. While China is using Singapore and Front Companies to access some amount of Nvidia chips
   3. It is certainly not getting enough chips to be on equal footing with the American Frontier AI Labs
3. The American Frontier AI Labs are 1 or 2 generations ahead
   1. If you believe the Chinese AI Labs are just 1 generation behind (6 months), then that’s still an almost unsurmountable gap
   2. If you believe the American Frontier Labs are keeping 1 or 2 generations ‘hidden’, then the Chinese AI Labs are 2 or 3 generations behind
   3. In either case -> China does not have first mover advantage, and might never be able to catch up
4. China does not have as much Financial Capital as America
   1. China is quite far behind America in terms of how much capital it can deploy
5. China does not have access to as much data as America
   1. China does not have Absolutely Massive and World Dominating Technology Companies that can harvest the entire world for Data to feed their AI Models
   2. Apart from Tik Tok, there are hardly any Chinese companies that are popular worldwide
6. China does not have the World’s Reserve Currency
   1. That is an exorbitant privilege that lets America make lots of crazy financial decisions and get away with murder
7. China can not attract world class non Chinese AI researchers to China
   1. Due to a combination of China’s main language being Chinese (and not English), China not being a democracy, and lack of trust in China, it is almost impossible for China to become a global magnet for AI talent
   2. Please do note that China has done a magnificent job of creating a home grown supply of Chinese AI talent. That does not fully mitigate the issue that top AI talent from around the world almost never goes to China
8. China has a reputation of ‘reining in’ its top technology leaders
   1. Remember how Jack Ma just disappeared for a year or two
   2. AI researchers from all over the world, and even some Chinese AI researchers, are wary that they might build a great AI Lab/great AI company in China. Then the Chinese Government just takes over

Given all these factors, China cannot fight an AI war against America using the exact same strategy as America.

Open Source presents some beautiful advantages, and, quite astonishingly, solves and/or circumnavigates a lot of the barriers China faces.

Barriers to Chinese AI Dominance removed and/or significantly reduced by Open Source

1. No One Has to Trust China
   1. As the code and weights are open source
   2. As the ‘AI Engine’ can be built on your own servers
   3. As the Data stays with you (or within your own country)
   4. As the Chinese licensing terms are ridiculously generous
   5. People all over the world can just take the Chinese AI Labs’ work and build on it
      1. This includes companies in America
      2. China is creating enemies for the American Frontier AI Labs everywhere, including in America
2. The Models can be built in countries with Free Access to Nvidia Chips
   1. A Dutch company can take a Chinese Open Source AI Model and build a product/new model/service on it, using Nvidia Chips
   2. China, rather smartly, completely bypasses the Nvidia sales restriction
      1. Not for itself
      2. For the rest of the World
3. The American Frontier AI Labs suddenly have a lot of competitors
   1. AI Labs in Canada, France, England, India, Poland, Brazil, and other countries can build on the Chinese Open Source AI Models and start competing with American Frontier AI Labs
   2. The chances of some non-American Lab catching up the American Frontier AI Labs suddenly increases
      1. You could argue the chance of someone catching up with Anthropic and OpenAI is still small
      2. You cannot argue that the chance has not increased due to China making its AI Models open source
4. Now the Entire World’s Financial Capital comes into play
   1. China cannot match the amount of money the US is investing in AI
   2. What if China does not have to
   3. With Open Source AI Models, China is letting every single country in the world invest into their Open Source AI Models and grow them and improve them and build products on them
5. The Entire World’s Data comes into play
   1. Some regions like EU are already blocking their data from America
   2. China and Russia are mostly blocking their data from America
   3. Countries like India and Canada are waking up to the value of Data
   4. An Open Source AI model, sooner or later, starts having much more access to world wide Data than a closed source American AI model
6. There is, unfortunately, no mitigation for America’s exorbitant privilege of having the world’s reserve currency
   1. Current Wars in the Middle East and Eastern Europe are slowly eroding the US Petrodollar.
   2. At the same time, it might be 20 years to 200 years before the US dollar ends its reign as the world’s reserve currency
7. Now the Entire World’s Top AI Researchers come into play
   1. 2 of the Godfathers of AI, Joshua Bengio and Geoffrey Hinton, are in Canada
      1. Would they ever work in China? Probably not
      2. Would they build on the work of Chinese AI Labs, given that the Chinese AI Models areopen source? Quite likely
   2. You have brought into play tens of thousands of brilliant AI researchers worldwide
      1. Including some of the very, very best AI researchers
   3. People massively underestimate the amount of damage President Trump has done to America’s reputation with Scientists and Researchers
8. Top AI Researchers and Top AI Labs can build in whichever country they like. They don’t have to build in China
   1. Open Source means a bunch of ultra talented Czech AI researchers can go and build in their home country
      1. They don’t have to stay in America
      2. They don’t have to go to China
      3. They can go home, or wherever they feel is home

If you go through and reflect on the above list, it is astonishing how much Open Source mitigates America’s advantages.

Additional Advantages of Open Source for China (and, quite frankly, for the Rest of the World)

1. The Contest changes from
   1. China vs America
   2. To
   3. America vs The Entire World Except America
   4. This is absolutely massive because The World is much larger than America
   5. This is a fight America has a much higher chance of losing
2. The total number of AI companies and AI Labs working with Chinese Open Source models starts becoming significantly higher than the number of closed American AI Labs
   1. Instead of 2 or 3 Frontier AI Labs and 4 or 5 Large American technology companies taking on their Chinese counterparts
   2. These American Labs and Companies now have to take on thousands of AI Labs from all over the world
3. Open Source is very, very appealing to a very high number of AI Researchers
   1. That means that 30% to 50% (perhaps higher) of the very best AI researchers start choosing Open Source Models
   2. The majority of world class research shifts to Open Source
   3. No single company can gather even 25% of the world’s top AI researchers
      1. Nor can any small collection of companies
      2. Open Source can gather 50% or more of the world’s top AI researchers
4. The whole narrative changes
   1. America are masters of Spin and any war against America must be a war fought on the Dual Frontiers of Perception and Reality
   2. Open AI is not Open
      1. Yet it used the perception of ‘openness’ to grow
   3. Open Router is a for profit company that sold itself
      1. Yet it used the perception of ‘openness’ to attract people to its product
   4. Suddenly, we have ACTUAL open-source AI technology and companies that are actually sharing their code and their weights
   5. Most people, and nearly all AI researchers, are smart enough to understand that Open Source should actually be Open Source
      1. They would prefer the Open-Source AI Models from Chinese AI Labs
      2. The closer these models get to proprietary models, the higher their usage will increase
      3. When all things are equal (or close), open-source AI models will blow away the closed source models
5. Large Enterprises in America and Worldwide can build their own AI infrastructure
   1. Instead of the American Frontier AI Labs getting money from all these Enterprises, getting their data, and having control over them
      1. These Enterprises control their own destiny
6. The Open Source AI Models are much cheaper to run
   1. Partly because the Chinese AI Labs were working under very strict restrictions
   2. Partly because there is no Gatekeeper and no rent-seeking Landlord Frontier AI Lab
   3. Open Source AI Models are much, much cheaper to run

I’m sure Open Source advocates can add to this list.

By making most of their AI technology Open Source, China has turned the China vs America race for AI Dominance into ->

‘China & Rest of the World’ Vs America

The New AI Race is America Vs ‘China & Rest of the World’

In the long term, America’s chances of winning that race are much lower than America’s chances of winning an America vs China race.

One last thing ->

Anthropic and OpenAI are very, very dependent on massive amounts of capital and massive amounts of spending by their customers. These are capital intensive companies that are expensive to run and have never had to exercise any fiscal discipline.

Every dollar that goes away from these Frontier AI Labs and towards Open Source AI Models – really, really hurts the Frontier AI Labs.

Not only can Chinese Open-Source AI Models compete – As their usage goes up they can bankrupt Anthropic and OpenAI.

We are blessed and cursed to live in extraordinarily interesting times.