“Why a country with 200 million people, a nation 524 years old with a globally respected intellectual foundation, [couldn’t] create its own mechanisms instead of relying on AI from China, the United States, South Korea, or Japan? Why can’t we have our own [AI]?”~ Luiz Inácio Lula da Silva, President of Brazil
Regarding the U.S.-China technological race, the focus is mostly on the creation of advanced technology in key sectors such as semiconductors, artificial intelligence, and quantum computing. However, the diffusion of technology may also carry significance in winning the race. In April 2025, the Atlantic Council published a report that highlights the importance of global diffusion of critical and emerging technologies (CETs), especially in the Global South. The authors urge the United States to build closer relationships with the Global South in order to expand market assess, cultivate talent, and enhance innovation.
In the beginning, the report introduces three key elements in the U.S.-China technological race. The first element is geopolitics. China has tried hard to solicit the Global South into its sphere of influence to counter American power, isolate Taiwan diplomatically, and expand Chinese companies’ overseas operations. The second element is economy. China views the Global South, which contains 85 percent of world population as well as 40 percent of world GDP, as an emerging export market for critical technology products like EVs and solar cell panels. The third element is norms and principles. China seeks to infiltrate its narratives into the Global South by means of international forums, such as the Belt and Road Forum for International Cooperation, the Forum on China-Africa Cooperation, as well as the Global AI Governance Initiative.
Why is the Global South so important? The key significance rests on its potential in the application, adoption, and advancement of critical technologies. The Global South is expected to be a key player in the global technological system through inducing consumption, supplying critical components, undertaking R&D, and rewriting technology norms. Though substantial digital gaps still exist in the Global South, many countries are striving hard to climb the technological ladder. India, Kenya, and South Africa launch workforce training programs in digital skills. To develop sovereign AI, In 2024 Brazil invested $4 billion in supercomputing capacity. The University of the Witwatersrand in South Africa launched Africa’s first AI institute, the Machine Intelligence and Neural Discovery Institute (MINDS), to conduct fundamental AI research. Besides, in 2022 there were 34 technological unicorns, whose value exceeded one billion dollars, in the Latin America and Caribbean region (LAC).
How is China playing the card of the Global South? China is seeking to use its advantage in ICT proliferation and infrastructure investment through the Global South to drive its AI competitiveness, as the training of AI models relies on specialized servers with high computing capabilities. Huawei has developed ICT products equipped with AI-enabled systems, such as cloud networks, e-government services, and smart city technologies. In 2024, ZTE launched an “all-in-one out-of-the-box” AI compute system that aims to minimize costs in training and inference.
Evidence shows that that China’s global ICT advantage does indeed boost its AI competitiveness in the Global South. In fact, China’s overseas AI-related projects grew dramatically in the 2010s. In 2019, there were 229 collaborative projects between Chinese technology firms and overseas partners. Huawei and ZTE accounted for nearly 40% of AI-related projects in the Global South. With comparative advantages in costs, speed, and energy efficiency, China’s AI solutions, especially lightweight models running with minimal computational power, are appealing to consumers in Asia, LAC, Africa, and the Middle East. Moreover, compared to ChatGPT’s paid subscription services, China’s open-source AI models, developed by Alibaba, DeepSeek, and Baidu, can be freely downloaded, widely adopted, and made available to any users in the Global South.
However, the U.S. still possesses considerable advantages. Studies show that American AI labs predominantly produce the best models in the world, as the largest closed-source models continue to outperform the largest open-source ones. With regard to cloud computing, Amazon’s AWS, Microsoft’s Azure, and Google Cloud totally account for nearly two-thirds of global cloud spending, while Alibaba, Huawei, and Tencent combine for less than ten percent. Besides, America’s AI companies enjoy lucrative private funding from America’s financial system. In January 2025, SoftBank, OpenAI, Oracle, and MGX announced a $500 billion investment in AI infrastructure in the U.S. over the next four years. Furthermore, due to the U.S. government’s export control, China’s AI companies are severely restricted in access to advanced AI chips, resulting in lower efficiency of Chinese data centers compared to their American counterparts.
How should America policymakers respond to China’s technological advantages in the Global South? The authors suggest tech-centric approaches to engage with partners in the Global South and address their core interests. First and foremost, the U.S. should make sure technology solutions meet the demand of and bring benefits to business partners in the Global South. To counter Chinese products featured with adequate performance and low costs, American technology companies should work with local partners and develop innovative products to address concerns and solve problems of consumers and companies in the Global South.
Second, the U.S. should leverage partnerships to maximize impact. American government ought to rely on multiple cross-national or public-private partnerships to make the best of limited resources. A good example is the Trilateral Infrastructure Partnership (TIP) that aligns America, Japan, and Australia to construct ICT infrastructure in Oceania. Another example is a mega project collaborated by Chile, Google, and the U.S. to construct a high-speed subsea cable that links Australia, French Polynesia, and South America. In addition, the U.S. should support and reinforce allies’ parallel initiatives, such as the EU’s “Global Gateway” in connectivity projects that seeks to contend with China’s Belt and Road Initiative, or the “EU-LAC Digital Alliance High-Level Policy Dialogues on Connectivity and AI” that aims to promote digital transformation based on common values and shared interests among LAC countries.
Third, the U.S. should promote competition with China across the whole technology stack, thus bringing benefits to consumers and reducing China’s undue influence in the Global South. Washington should help American technology companies to compete with their Chinese counterparts like Huawei or ZTE in global markets, strengthen America’s advantages in cloud computing, and promote diffusion and adoption of American AI models. Washington should also take actions in global standards-setting processes to encourage adoption of norms and standards that match American values and help build a level global playing field. With regard to AI governance, Washington needs to take a multilateral approach and engage in global initiatives, such as the AI Safety Summits.
Just like the Cold War between America and Soviet Union, the new Cold War between America and China occurs across a broad spectrum: political, military, economic, technological, cultural, and ideological areas. What matters in both cold wars is America’s strong leadership and firm commitment. It is extremely urgent for American policymakers to map out a technological strategy that accommodates geopolitics and advances partnerships. It may not be possible to contain China on every technological battlegrounds, but the intensifying technological race demands America to take bold initiatives and engage with its allies to work out an action plan lest China shape how technology is adopted worldwide, especially in the Global South. As the authors wrote in the concluding remark, “ensuring technological competitiveness today strengthens technological leadership tomorrow.”
The article is based on Atlantic Council’s “Navigating the US-PRC tech competition in the Global South”, authored by Cole McFaul and Peter Engelke. Read the full report