China Could Dominate Global AI Market, Insulates itself from West Financial Warfare /Alastair Crooke

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Alastair Crooke argues that China learned from Russia’s post-2014 experience with sanctions and economic warfare and responded by becoming largely self-sufficient and minimizing dependence on the United States. China now sends only a small share of exports to the U.S., relies minimally on foreign technology, and is fully competitive in manufacturing.

China has also pursued a fundamentally different AI strategy than the West. Instead of building massive, data-hungry, military-linked AI systems, China has deployed “diffused” AI directly into industrial production. This has dramatically boosted productivity, cut labor needs, driven price deflation, and made Chinese manufacturing far more competitive, while the U.S. faces inflation, high energy costs, and tariff pressures. China’s cheaper electricity and open-source, revenue-generating AI model further widen the gap, making it very difficult for the U.S. to compete without drastic measures like major dollar devaluation.

Strategically, the speaker warns that the U.S. is mismanaging this shift by framing it as a confrontation rather than something to be managed. Efforts to block Chinese influence—especially in Latin America and Venezuela, including oil embargoes and naval pressure—risk escalating tensions with China, Russia, and Iran simultaneously. Such actions could provoke conflict, destabilize the region, and prove impossible to enforce.

The core contrast is between two economic models: a Western system where markets dominate society, and a Chinese model where markets are meant to serve national and social goals. The speaker concludes that China is confident it has economic and strategic “overmatch,” and urges the U.S. and Europe to recognize this reality, avoid military escalation, and seek pragmatic ways to manage competition rather than intensify it.