"China has a hidden agenda" in artificial intelligence, meaning no slowing down in the race for technological supremacy, "traitors." The warning from Donald Trump to the owners of laboratories developing cutting-edge models, led by Dario Amodei, has all the ingredients of the American president's populist jargon. Including a huge falsehood. China's agenda is not hidden anywhere. Xi Jinping has given it a place of honor among the determining factors of its economy and ideological corpus.
The Chinese president's management over the past ten years can be summarized as a shift towards Marxist-Leninism in which technology plays a stabilizing role. Xi inherited a country that had gone from having the GDP of Spain to challenging the US as the world's leading power after Deng Xiaoping's embrace of the market economy. Deng unleashed the full power of production factors and lifted 700 million Chinese out of poverty. But he also created ultra-rich individuals and fueled a real estate bubble that burst in 2015.
Xi intervened in the economy, which went from double-digit growth to single-digit growth, and marginalized the millionaires. The capitalist repression also ended its efficiency in resource reallocation, and today four out of the five engines of the superpower (consumption, investment, and construction) are stagnant. Only exports and technology are driving forces.
The Chinese leader sees technology as the productive factor that will permeate the entire economy and facilitate overtaking the West. For Xi, AI is the Marxist version of Adam Smith's invisible hand, as noted by Kevin Rudd, former Australian Prime Minister and a leading global expert on the Chinese economy.
Xi's technological challenge to the US runs parallel to the commercial one. While the Chinese leader advocates for globalization and the elimination of borders, Americans are trying to erect barriers.
To understand Xi's strategy, one must learn two terms: open weight and distillation. The former, translated into Spanish as "pesos abiertos," is a level above open source. In short, those developing open-source models offer the public all their inner workings: training data, architecture, algorithms included. The mathematical connection of these factors generates a "brain" called a "weight."
The open weight is, therefore, halfway between open source and the completely sealed systems of the US. China feeds it with data from its own citizens and from closed American models through distillation (distillation), which involves extracting them massively through millions of bots.
China has promised to release the open weights so that developers worldwide can create their models with them. This terrifies US giants because it implies introducing thousands of financial competitors taking advantage of their own work. It's like a cyclist joining a race halfway through by holding onto the leader's bike.
Alphabet's (Google) second-quarter results left investors with a bitter taste. For the first time, the world's top tech company reported negative free cash flow ($5.9 billion). How could a multinational with astronomical recurring revenues record more cash outflows than inflows? Due to its massive investment in technological infrastructure.
Google is not in trouble, but in startups, "cash is king," as financiers say. And OpenAI or Anthropic are still startups in need of huge amounts of capital without balanced returns appearing yet. The accumulation of AI stocks and bonds on other companies' balance sheets would become a toxic asset if a potential bubble bursts.
Here, as with the green energy or automotive sectors, China plays with marked cards. There is no accounting standardization. Its companies do not go bankrupt when liabilities exceed assets, but when the Party wants. US labs indeed fear that their AI will destroy humanity, not before China wrecks their balance sheets.