Book Review: AI Super-Powers: China, Silicon Valley and the New World Order

Kai-Fu Lee's 2018 book AI Superpowers: China, Silicon Valley, and the New World Order has proven to be remarkably prescient in light of recent developments in the AI industry, particularly the emergence of the Chinese AI company DeepSeek. Although the book is from 2018, it describes China's power well when the government decides where the nation wants to excel. China typically considers the long term, while many Western societies focus on short-term quarterly profits.

The book's relevance has been underscored by DeepSeek's recent announcement of advanced AI models that rival those of US tech giants. According to a Nature article titled "How China created AI model DeepSeek and shocked the world," government policies, generous funding, and a pipeline of AI graduates have helped Chinese firms create advanced LLMs. Microsoft has also announced it will now host DeepSeek R1, the AI model at the center of a recent controversy involving OpenAI, on its Azure cloud.

Key Predictions and Their Relevance

China's Rise as an AI Superpower

Lee accurately predicted China's rapid ascent in the AI field. He argued that China's unique advantages, including massive data resources, strong government support, and a vibrant entrepreneurial ecosystem, would propel it to the forefront of AI innovation.

Dr. Kai-Fu Lee’s book provides a glimpse of how humankind could coexist with artificial intelligence, which would render many people unemployed. The book also hints at the AI power game between the United States and China. The author claims China will be the victor due to its deeper understanding of how to implement AI technologies rather than simply developing them.

The recent success of DeepSeek, which has developed AI models comparable to those of OpenAI at a fraction of the cost, validates this prediction.

Cost-Effective AI Development

Lee's book emphasized China's ability to innovate efficiently. DeepSeek's claim of training their large language model for just $5.6 million, compared to the enormous investments made by US tech giants, aligns with Lee's foresight on China's cost-effective approach to AI development. However, there have already been reports that the numbers are unjustified, like the Chief AI Scientist from Meta. This is what he states:

"Yann LeCun, the chief AI scientist for Facebook AI Research, however, says there's a "major misunderstanding" about how the hundreds of billions of dollars invested in AI will be used. In a Threads post, LeCun said the huge sums of money going into US AI companies were needed primarily for inference, not training AI.

Inference is the process in which AI models apply their training knowledge to new data. It's how popular generative AI chatbots like ChatGPT respond to user requests. More user requests means more inference is required, and processing costs increase."

Government Support and Strategic Planning

The book highlighted the Chinese government's proactive role in fostering AI development. This has been borne out by China's comprehensive AI strategies, including the "Next Generation Artificial Intelligence Development Plan" and subsequent guidelines, which aim to make China a global AI leader by 2030. The World Economic Forum white paper "Blueprint to Action: China's Path to AI-Powered Industry Transformation" (January 2025) portrays China's strategic roadmap for AI development.

What Readers Should Consider

1. Global AI Competition: The book's central thesis of an AI race between China and the US remains highly relevant. Readers should consider how this competition might shape global technological and economic landscapes.
2. Ethical and Societal Implications: Lee's discussion of AI's impact on employment and society is crucial. As AI capabilities advance rapidly, it's important to consider the ethical implications and potential societal disruptions.
3. Diverse Paths to AI Innovation: DeepSeek's success demonstrates that there are multiple approaches to advancing AI, not just the capital-intensive methods of US tech giants.
4. Economic Transformation: The book's insights into how AI could drive economic restructuring are increasingly pertinent as AI's influence grows across industries.
5. Collaborative Opportunities: While the book focuses on competition, readers should also consider the potential for international collaboration in AI development and governance.

I wanted to highlight this book because AI Superpowers remains a valuable resource for understanding the current AI landscape. Recent events have largely validated its predictions about China's AI capabilities, making it an essential read for anyone seeking to comprehend the global dynamics of AI development and its far-reaching implications for the future.

I have stated multiple times in my LinkedIn newsletter, "Business Models in the AI Era," that I worry about the European competitiveness of AI. Politicians are keeping a stronghold on companies by creating different rules and regulations that put European entrepreneurs in a weaker position in the worldwide competition for AI dominance. If Europe is left behind in AI development, it will eventually impact the competitiveness of traditional companies due to factors such as lower productivity, etc. Some US companies are already restricting the release of AI technologies to Europe due to uncertainty in EU legislation.

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Yours,

Dr. Petri I. Salonen