China’s Campaign to Steal America’s AI Edge - Part II

Strategic competition with China in the artificial intelligence and semiconductor sectors necessitates a dual approach of rigorous export controls and robust domestic investment. While restricting China’s access to advanced chips and preventing intellectual property theft—specifically through model distillation—remains critical for national security, the United States must simultaneously prioritize domestic manufacturing, workforce development, and advanced packaging capabilities. Relying on offshore facilities for prototyping creates significant vulnerabilities, as evidenced by the rapid evolution of 3D chip design. Furthermore, China’s integration of AI into real-world industries and its active support for adversarial actors highlight the multidimensional nature of this threat. Strengthening the domestic industrial base, fostering an open-source AI ecosystem, and maintaining leadership in international standard-setting bodies are essential to ensuring long-term American competitiveness and preventing the displacement of the domestic workforce.