America's perceived monopoly on artificial intelligence has collapsed according to TS Lombard's chief China economist, who warned on CNBC Monday that a "China tech shock" threatening US dominance is only beginning and could see most of the world running on Chinese technology infrastructure within five to ten years.
Rory Green, chief China economist and head of Asia research at TS Lombard, told CNBC's "Squawk Box Europe" that China is "moving up the value chain very rapidly" and represents the first time in history an emerging economy has reached the cutting edge of science and technology while maintaining emerging market production costs.
China Combines Advanced Tech with Emerging Market Economics
Green's analysis centers on China's unique position combining frontier technology capabilities with low-cost production and a massive supply chain backed by heavy state investment. Beijing launched a national AI fund exceeding $8 billion in 2025 and is expanding its "AI+" initiative across the entire economy.
"It's not just about AI, DeepSeek, and electric vehicles," Green explained during the interview. "China is moving up the value chain very quickly. For emerging economies, the choice is rather simple. We could easily see a world where, in five to ten years, the majority of the global population will be operating on Chinese technological infrastructure."
The warning comes as Chinese companies demonstrate rapidly advancing capabilities in large language models and AI hardware. Recent releases from companies like Zhipu AI, which trained its 744 billion parameter GLM-5 model entirely on domestic Huawei chips, and Alibaba's RynnBrain robotics AI have validated concerns about China's accelerating progress.
Closing the Hardware Gap
China is narrowing the gap in AI hardware by using domestic chips from Huawei and leveraging cheaper energy costs to scale computing power, directly challenging US leaders like Nvidia. The country's progress comes despite US export restrictions on advanced semiconductors, demonstrating the effectiveness of China's push for technological self-sufficiency.
Demis Hassabis, CEO of Google DeepMind, told CNBC in January that Chinese AI models may lag behind American and Western competitors by "only a few months," much closer in performance than estimated a year or two ago. However, Hassabis questioned whether Chinese companies could innovate breakthrough technologies rather than simply catching up to existing frontiers.
US Tech Giants Face Return-on-Investment Doubts
Meanwhile, American tech giants Amazon, Microsoft, Meta, and Alphabet recently announced AI capital expenditures potentially reaching $700 billion within 2026. These announcements sparked investor concerns about return on investment, leading to approximately $1 trillion in lost market value across major tech stocks, though some have partially recovered.
Karim Moussalem, head of investments at Selwood Asset Management, told "Squawk Box Europe" there is intense "nervousness around US exceptionalism," particularly as China demonstrates the ability to develop competitive AI capabilities with lower costs and less advanced chip technology.
The combined effect of China's rapid AI advancement and questions about US tech spending sustainability has created what Green characterizes as a fundamental shift in global technology leadership, with strategic implications extending far beyond just the AI sector into broader questions of economic and technological influence.
