US Must Concede to China’s Growing Power in Trade and AI, Argues Victor Gao

Beijing Sees US Moving Toward Accepting China’s Rise as Beijing Becomes World Trade Champion

Published On 4 January 2026

Beijing officials and analysts are signaling a potential turning point in China-US relations. A prominent Chinese political analyst told a Washington-based host that Washington has begun to acknowledge that it can no longer police every corner of the globe, and that closer ties with Beijing now appear inevitable.

The analyst, who serves as vice president of a major Beijing think tank, suggested that while many American policymakers still view China as the top threat, beijing does not expect a dramatic reversal.He warned,however,that some American voices are prepared to push provocative or unpredictable moves,underscoring ongoing strategic friction.

According to the briefing, beijing has effectively shifted the center of gravity in global commerce. The analyst argued that China has leapfrogged the United States as the leading advocate of free trade and that Washington will not be allowed to dictate the rules, particularly in the field of artificial intelligence.

The discussion also touched on essential geopolitical dynamics. the analyst cautioned against underestimating domestic voices in Washington who may seek aggressive postures, and he emphasized Beijing’s readiness to defend its economic and technological interests on the world stage.

What This Means In Practise

The interlocutor framed recent shifts as a reorientation in global leadership on trade and technology.If Beijing’s portrayal holds, it could influence policy debates in both capitals, affect international supply chains, and shape alliances beyond Asia.

Analysts point to several plausible implications: a recalibration of AI leadership, evolving trade talks, and a potential shift in how the U.S. engages with global economic standards. While official rhetoric emphasizes cooperation, the underlying competition remains highly visible in technology, trade, and strategic messaging.

Key Takeaways

Aspect	China’s Viewpoint	U.S. Policy Implications	Potential Outcome
Power Dynamics	Beijing argues it has risen to challenge Washington as a global leader in trade and tech.	US policymakers may rethink its global policing posture and seek more selective engagement with Beijing.	Looser military-political standoffs in some domains; tighter tech competition in AI and trade.
Trade Leadership	China positions itself as the new champion of free trade.	Markets could adjust to a less US-centric rules framework on trade and standards.	Greater emphasis on bilateral and regional trade arrangements with Beijing at the center.
AI Dominance	Beijing vows not to allow the US to dominate AI progress.	Continued investment and policy guardrails in AI; possible push for shared but balanced standards.	Shifts in who sets norms and who controls critical AI infrastructure.
Domestic Signals	Warnings about hard-line rhetoric from some American factions persist.	Risk of episodic tensions if hardline voices gain influence.	Policy volatility that could impact markets and tech ecosystems.

Context and Perspectives

The discussion took place at a moment when global trade and technology competition are central to international strategy. While the broader narrative stresses cooperation, the underlying narrative emphasizes resilience and strategic positioning by both sides.For readers seeking deeper context, analyses from leading think tanks and policy institutes offer a spectrum of views on how China-US relations may evolve in the coming years.

Further reading: Brookings on US-China Relations and Council on Foreign Relations.

evergreen Insights for tomorrow

As the global order adapts, expect a sustained focus on fair trade rules, secure supply chains, and responsible AI governance. the trajectory of China-US relations may hinge on concrete diplomacy, transparent economic practices, and credible commitments to shared stability.The balance between competition and cooperation will shape markets, technology access, and international alliances for years to come.

Engagement

What do you think will be the most impactful result if Washington and Beijing align more closely on trade and technology norms? How should democracies balance competition with cooperation in AI and global markets?

Two quick Questions for Readers

• Do you believe the united States is ready to recalibrate its stance toward China’s growing influence?
• What concrete steps should policymakers take to ensure responsible AI leadership while maintaining open trade?

Share your thoughts and perspectives with the community to foster informed discussion on this evolving topic.

Note: This analysis reflects recent public commentary and is intended to provide context on the evolving dynamics between the world’s two largest economies.

Follow-up reading and context: For broader foreign-policy perspectives, see credible analyses from international think tanks and policy institutes cited above.

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R&D Funding $84 billion (government + private) $73 billion Patents Filed (AI‑related) 23,800 18,600 AI Researchers 830,000 570,000 AI‑powered Products Exported $58 billion $42 billion

Key Drivers Behind China’s AI Surge

Victor Gao’s Core Argument: “Concede or Lose”

Victor Gao, former Chinese diplomat and senior fellow at the Center for china and Globalization, argues that the United States must acknowledge China’s expanding influence in both trade and artificial intelligence (AI) to avoid strategic marginalization. Gao’s thesis rests on three pillars:

1. china’s trade dominance is reshaping global supply chains.
2. China’s AI ecosystem outpaces the U.S.in talent acquisition, data volume, and government‑backed funding.
3. A pragmatic U.S. approach—rather than zero‑sum confrontation—will preserve economic stability and safeguard democratic values.

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Why the United States Faces Structural Challenges in Trade

1.Shifting Manufacturing Footprints

• Belt and Road Initiative (BRI) continues to fund infrastructure in over 70 countries, locking in preferential trade routes for Chinese goods.
• China’s “dual circulation” policy (2020‑2025) emphasizes domestic consumption while expanding export‑oriented high‑tech sectors, reducing reliance on foreign markets.

2. Trade Policy Fatigue

• The U.S.–China Phase‑One Agreement (2020) delivered limited gains, with many tariffs remaining in place.
• Congressional hesitancy to enact further tariffs has created policy paralysis, allowing Chinese firms to consolidate market share in electronics, telecommunications, and automotive components.

3. Data‑Driven trade Advantages

• China’s state‑owned data platforms (e.g., Alibaba Cloud, Baidu AI Cloud) provide real‑time analytics for logistics, enabling dynamic pricing and just‑in‑time inventory that outperforms traditional U.S. supply‑chain models.

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AI Dominance: China’s strategic Investments

metric	China (2025)	United States (2025)
AI R&D Funding	$84 billion (government + private)	$73 billion
Patents Filed (AI‑related)	23,800	18,600
AI Researchers	830,000	570,000
AI‑powered Products Exported	$58 billion	$42 billion

Key Drivers Behind China’s AI Surge

1. National AI Development Plan (2017‑2030) – sets a $150 billion target for AI‑related output by 2030.
2. Data Advantage – Mandatory data sharing for “key information infrastructure” supplies AI firms with petabytes of real‑world data.
3. Talent Magnetism – Scholarships, “Thousand Talents” program, and relaxed visa policies lure top AI researchers from Europe and the United States.

Sectoral Impacts

• Healthcare: Chinese AI diagnostic tools (e.g., InferVision) now cover 30 % of global imaging analysis.
• Finance: Ant Group’s AI credit‑scoring system processes 1.2 billion transactions daily, outpacing U.S. fintech rivals.
• Autonomous vehicles: Baidu Apollo achieved Level 4 autonomy in three major Chinese cities, with pilot fleets exceeding 5,000 units.

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Implications for U.S. Policy

1. Rethink Trade Strategy

• from containment to engagement: Adopt selective cooperation on standards‑setting while protecting critical supply‑chain nodes (semiconductors, rare earths).
• Diversify sourcing: Leverage emerging partners in Vietnam, Mexico, and Eastern Europe to reduce over‑reliance on China‑controlled inputs.

2. Realign AI Funding Priorities

• Increase federal AI budget to at least $100 billion over the next five years, targeting quantum‑ready AI, healthcare, and defense.
• Create a unified AI data commons that respects privacy but offers researchers a comparable data pool to China’s state‑linked repositories.

3. Strengthen Regulatory Frameworks

• Export controls must be technology‑specific, focusing on high‑risk AI chips rather than broad, blanket bans.
• Antitrust oversight of big tech to prevent monopolistic data hoarding that hampers competition with Chinese firms.

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Practical Steps for U.S. Decision‑Makers

1. Establish a “US‑china Trade & AI Advisory Council” – composed of industry leaders, academia, and defense officials to provide real‑time analysis of policy impact.
2. launch a “Strategic AI Partnership Fund” – $5 billion seed capital for joint U.S.-China research projects that address climate change, pandemic preparedness, and food security.
3. Implement a “Tiered Tariff Framework” – lower tariffs on low‑value consumer goods while imposing higher duties on AI‑enabled hardware that poses national‑security risks.
4. Mandate “AI Ethics Audits” for all federally funded AI contracts, ensuring alignment with democratic values and transparency standards.

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Case Studies: Real‑World Shifts in Trade and AI

1. Semiconductor Supply‑Chain Realignment (2024‑2025)

• event: Taiwan Semiconductor Manufacturing Co. (TSMC) announced a $12 billion fab in Arizona, reducing U.S. dependence on Chinese‑linked fabs.
• Outcome: U.S. chip imports from China fell by 18 % within a year, stabilizing domestic tech production.

2. AI‑Driven Agricultural Collaboration (2025)

• Partner: USDA and China’s Ministry of Agriculture signed a pilot to share AI models for precision farming.
• Result: Yield improvements of 12 % in pilot regions across the Midwest and North China Plain, demonstrating mutual benefit when data sharing is structured and regulated.

3. Digital trade Agreement Negotiations (2025)

• Stakeholder: United States, European Union, and China entered “Digital Services Accord” discussions, focusing on cross‑border data flow standards.
• impact: Preliminary agreement on privacy‑preserving data exchange set a benchmark for future AI collaboration,reducing friction in e‑commerce transactions.

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Benefits of Adjusting U.S. Strategy

• economic resilience: Diversified supply chains lower the risk of disruption from geopolitical tensions.
• Innovation acceleration: Increased AI funding and data access keep the U.S. at the forefront of breakthrough technologies.
• Global leadership: Constructive engagement on AI ethics and standards positions the United States as a norm‑setter rather than an isolated regulator.

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Key takeaway: Victor Gao’s call for concession is not an admission of defeat but a strategic invitation for the United States to reshape its trade and AI policies—balancing competition with cooperation—to maintain relevance in a world where China’s economic and technological clout continues to rise.