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The AI Race Through a Geopolitical Lens

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Published by INSEAD Knowledge in June 2025, this article offers a business-school perspective on AI geopolitics, relevant for understanding how compute governance and export controls intersect with great-power competition and AI development trajectories.

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Summary

An INSEAD analysis examining the US-China AI competition through a geopolitical framework, exploring how historical power dynamics (the 'Thucydides trap'), US chip export controls, and innovation capacity shape the global AI race. The piece assesses whether Chinese breakthroughs like DeepSeek and Huawei chips are game-changers, and how diffusion capacity may matter as much as raw innovation.

Key Points

  • The US-China AI race mirrors historical great power conflicts, with Xi Jinping's techno-strategic ambitions framed as restoring China's global dominance.
  • US chip export controls aim to curb China's AI compute and data storage capabilities, but may be backfiring by incentivizing Chinese domestic innovation.
  • AI is analyzed as a general-purpose technology (GPT) historically linked to the rise or competition of global superpowers.
  • Diffusion capacity—not just innovation metrics like R&D spending or patents—is identified as a pivotal factor in determining AI race outcomes.
  • DeepSeek and Huawei's chip advances are presented as evidence that export restrictions have not halted Chinese AI progress.

Cited by 1 page

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Multipolar Trap (AI Development)Risk91.0

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 The AI Race Through a Geopolitical Lens
 

 
 

 
 

 

 
 

 

 
 
 

 

 

 

 

 
 

 

 

 
 
 
 

 

 

 

 
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A new world order is unfolding as the US-China AI race meets geopolitics.

 
 

 
 

 

 

 

 

 

When a rising power meets with an established one, it inevitably leads to conflict. Is the Thucydides trap indeed playing out on the world stage, as the United States continues to guard its global technological lead – among other areas of dominance – against China’s ambitions? 

What can history tell us about China’s ambitions? From Mao Zedong’s “Raise China” to Deng Xiaoping’s “Rich China”, President Xi Jinping’s dream to “Restore China” as a global power is a preamble to the country’s quest for techno-strategic dominance. 

Well aware that its chip ecosystem advantage is also China’s 

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