AI Race Between America and China

The AI race between America and China has seen the gap significantly narrow, as indicated by Stanford University’s 2026 AI Index report.

The report states that the performance gap in AI models between the US and China has closed, highlighting that models from both nations “have traded the lead multiple times since early 2025.”

The Changing Landscape of AI Development

This transformation represents a notable shift from previous years when US laboratories were at the forefront of advanced capabilities. By February 2025, China’s DeepSeek-R1 briefly equalled the best-performing AI system from the US, while by March 2026, the leading model from Anthropic overtook it by a mere 2.7%.

Two Countries, Two Strategies

Despite the narrowing gap, the competition remains unbalanced. The US excels in creating top models and securing impactful patents, whereas China leads in overall research output.

The report notes that “China leads in publication volume, citations, patent output, and industrial robot installations.”

This disparity arises from two distinct approaches to AI development. In the US, a limited number of large private laboratories spearhead innovation and create the most sophisticated systems. Conversely, China emphasises scale, with robust involvement from universities, private companies, and state-supported initiatives.

Current Figures in AI Development

The report reveals that the US produced 50 significant AI models in 2025, compared to China’s 30, allowing the US to remain at the forefront of advanced systems. However, China is rapidly improving its research output, shown by an increasing number of highly cited papers and patents.

As of 2024, China holds 74.2% of all AI patents granted worldwide, totalling 97,206 out of the 131,121 patents issued globally. The United States, which had a 42.8% market share in 2015, has seen this drop to 12.1%. In terms of publication volume, China accounted for 17.8% of all AI research papers published in 2024, while the US contributed 7.6%. China’s citation share, an indicator of research impact, reached 20.6%, compared to the US’s 12.6%.

A Shift in Citation Dominance

Furthermore, among the top 100 most-cited AI papers worldwide, China’s representation has increased from 33 in 2021 to 41 in 2024. The US, which held 64 positions in 2021, fell to 46 in 2024.

Investment Trends and Future Prospects

While the US still leads in investment, with private AI funding surging to $285.9 billion in 2025—more than 20 times the disclosed private investment from China—the report highlights that this may underrepresent China’s total expenditure due to state-supported funding mechanisms.

In 2025, the US also established 1,953 newly funded AI companies, more than ten times the number in the next leading country.