By JANE ZHANG, SARAH ZHENG Bloomberg News/ TNS
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China’s tech sector has a new obsession: competing with U.S. titans like Google and Microsoft Corp. in the breakneck global artificial intelligence race.

Billionaire entrepreneurs, mid-level engineers and veterans of foreign firms alike now harbor a remarkably consistent ambition: to outdo China’s geopolitical rival in a technology that may determine the global power stakes.

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Among them is internet mogul Wang Xiaochuan, who entered the field after OpenAI’s ChatGPT debuted to a social media firestorm in November. He joins the ranks of Chinese scientists, programmers and financiers expected to propel some $15 billion of spending on AI technology this year.

“We all heard the sound of the starter pistol in the race. Tech companies, big or small, are all on the same starting line,” Wang, who named his startup Baichuan or “A Hundred Rivers,” told Bloomberg News. “China is still three years behind the U.S., but we may not need three years to catch up.”

The top-flight Chinese talent and financing flowing into AI mirrors a wave of activity convulsing Silicon Valley, which has deep implications for Beijing’s escalating conflict with Washington. Analysts and executives believe AI will shape the technology leaders of the future, much like the internet and smartphone created a corps of global titans. Moreover, it could propel applications from supercomputing to military prowess — potentially tilting the geopolitical balance.

China is a vastly different landscape — one reined in by U.S. tech sanctions, regulators’ data and censorship demands, and Western distrust that limits the international expansion of its national champions.

All that will make it harder to play catch-up with the U.S. AI investments in the U.S. dwarf that of China, totaling $26.6 billion in the year to mid-June versus China’s $4 billion, according to previously unreported data collated by consultancy Preqin.

Yet that gap is already gradually narrowing, at least in terms of deal flow. The number of Chinese venture deals in AI comprised more than two-thirds of the U.S. total of about 447 in the year to mid-June, versus about 50% over the previous two years.

China-based AI venture deals also outpaced consumer tech in 2022 and early 2023, according to Preqin. All this is not lost on Beijing. Xi Jinping’s administration realizes that AI, much like semiconductors, will be critical to maintaining China’s ascendancy and is likely to mobilize the nation’s resources to drive advances. The idea is that generative AI services could speed the emergence of new platforms to host a wave of revolutionary apps for businesses and consumers.

That’s a potential gold mine for an industry just emerging from the trauma of Xi’s two-year internet crackdown, which starved tech companies of the heady growth of years past. No one today wants to miss out on what Nvidia Corp. CEO Jensen Huang called the “iPhone moment” of their generation.

“This is an AI arms race going on both in the U.S. and China,” said Daniel Ives, a senior analyst at Wedbush Securities. “China tech is dealing with a stricter regulatory environment around AI, which puts one hand behind the back in this ‘Game of Thrones’ battle. This is an $800 billion market opportunity globally over the next decade we estimate around AI, and we are only on the very early stages.”