To compete with America, China warns AI companies: Stop disorderly competition

In a significant move to streamline its ambitious technological ascent, China is signaling a strategic shift in its approach to the booming artificial intelligence sector. Top economic officials have announced plans to curb what they call “disorderly competition” and wasteful investment among domestic AI firms, a directive aimed at strengthening the country’s position in its technological race with the United States.

The directive, led by the National Development and Reform Commission (NDRC), reflects a growing concern that a frantic, uncoordinated race for AI dominance could lead to inefficiencies and overcapacity, a pitfall that has previously plagued other rapidly expanding industries like electric vehicles. A senior NDRC official, Zhang Kailin, stated that the government would guide provinces to develop AI in a more coordinated and complementary way, emphasizing that growth should be rooted in local advantages and existing industrial foundations. “We will resolutely avoid disorderly competition or a ‘follow-the-crowd’ approach,” Zhang said.

This policy echoes recent warnings from Chinese President Xi Jinping, who cautioned against excessive local government spending on AI. The government’s new directive aims to harness the nation’s AI momentum while ensuring resources are allocated strategically rather than duplicated in a frenzied race to keep up with rivals. China has positioned AI as a critical new growth engine for its economy, viewing it as a key battleground in its technological competition with the U.S.

The government’s new approach is already taking shape with an action plan to accelerate AI development, application, and governance. The NDRC has promised improved national-level planning and increased support for private companies, expressing a desire to nurture more “dark horses” for innovation, a likely nod to the recent rise of Chinese startups like DeepSeek. The company has gained global attention for its powerful and cost-effective AI model, a development that has intensified the domestic race for hardware and talent. By encouraging provinces to specialize and collaborate, China hopes to build a robust and sustainable AI ecosystem that can support its long-term economic and technological goals. This policy shift underscores Beijing’s commitment to steering its AI industry toward a more mature and strategically sound future.