China is methodically executing an industrial policy designed to capture global artificial intelligence market share through massive state subsidies and scaled deployment, replicating the strategy that decimated American steel production. The playbook is direct: back industrial scale over innovation, favor rapid deployment, and push cheaper supply into the world market until U.S. competitors are forced to absorb unsustainable price pressure.
Targeting the U.S. Tech Stack
Chinese labs including DeepSeek, Kimi, and Qwen are now deploying low-cost, widely available AI alternatives that win users fast and squeeze margins. The U.S.-China Economic and Security Review Commission has documented this as a deliberate strategy applied to open-source software and embodied AI, aiming to consolidate market control and eventually gain pricing power. This poses a direct threat to the domestic AI infrastructure layer—chips, clouds, and models—where American firms have concentrated capital and where high-wage American jobs are anchored.
“China’s tactic is modern-day steel dumping. They push cheap AI into the U.S. market, force prices down, consolidate the market, and eventually gain margin power.” — NYU Stern professor Scott Galloway
American Worker and Sovereignty Impact
The flood of subsidized Chinese AI does not merely threaten corporate valuations on Wall Street; it undermines the economic nationalism required to protect domestic industries. The U.S. AI sector has driven significant capital spending and high-skilled employment, yet those gains are brittle if a state-backed pricing war erodes the ability of American firms to sustain premium pricing. The domestic workforce, not just billionaire investors, stands in the blast zone. Without robust trade enforcement and a policy response that prioritizes American technological sovereignty, the U.S. risks repeating the deindustrialization pattern seen in steel, where dumping hollowed out communities and forfeited supply chain control to a strategic competitor.
While U.S. private investment in AI remains substantially larger than China's on paper, the effectiveness of that capital is blunted when competing against a mercantilist state that treats profits as secondary to market share. The strategic imperative is clear: American AI dominance requires acknowledging that this is not a fair market competition, but a state-directed assault on a critical industry.