While American companies chase monopoly profits and astronomical valuations, China has embraced a radically different strategy: open-source AI models that democratize access and slash costs by 60-80%.

But reality is way more complicated than metaphors.

The Power Problem: China’s Massive Lead in Energy Infrastructure

At the heart of the AI race lies a brutally simple constraint: power. Modern AI systems are ravenous energy consumers, with advanced GPU racks now drawing up to 120 kilowatts—enough to power several homes.

The switch from traditional data centers to high-throughput supercomputing facilities caused an increase in power consumption per rack in data centers from around 6-12 KW to between 50 and 150 KW, resulting in current and expected increasing pressures on energy grids. And with the United States being home to almost 50% of the world’s data centers (approximately 5300 facilities), anyone can expect the struggle with energy demands the country is facing now, and it will increasingly face in the near future.

In 2024, China added 429 gigawatts of new power capacity, which is more than one-third of the entire US grid, compared to only 51 gigawatts added by the US.  This “electron gap” or Chinese power advantage was achieved because China invested around $85 billion in electric grid expansion and upgrade projects last year alone. And the state-owned approach in China enabled it to keep the cost of a kilowatt-hour for households at 8 cents, compared to 19 cents in the USA, due to utilities privatization and the rising demand of data centers, which, by market mechanisms, drives the power prices up for American households.

China’s installed capacity surpassed 3,348 gigawatts in 2024, with solar capacity increasing by 45.2% and wind power climbing 18%. This isn’t just about cheaper electricity; it’s about having the infrastructure foundation to support AI development at scale while America’s aging grid creaks under strain.

The Bubble Everyone Can See but Few Dare Name

Walk through Silicon Valley today, and you’ll witness what may be the biggest financial bubble in American history. AI-related capital expenditures surpassed the US consumer as the primary driver of economic growth in the first half of 2025, accounting for 1.1% of GDP growth. The numbers are staggering and increasingly absurd. Microsoft, Google, Amazon, and Meta forecasted $364 billion in capital investment for 2025, with Amazon devoting $100 billion to data centers this year and Meta spending over $600 billion over the........

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