Lack of Agreement on AI Rules in U.S., EU Gives China a Leg Up

The Global AI Landscape: A Race for Dominance

In 2025, artificial intelligence (AI) emerges as a transformative force, reshaping economies, geopolitics, and digital infrastructure globally. As AI applications spread across sectors like automation, healthcare, national defense, and global commerce, nations are not only competing to innovate but also to regulate. However, the Western world, led by the United States and the European Union, finds itself ensnared in disagreements and legislative bottlenecks over how to govern this powerful technology.

Conversely, China is accelerating its AI strategies with focus, speed, and centralized support. This article explores how regulatory confusion in the U.S. and the EU allows China to surge ahead in AI dominance, influence global norms, and shape the future of innovation.

The U.S. Approach to AI Rules

The United States has adopted a sector-specific and agency-led approach to regulating artificial intelligence. Various federal bodies, such as the Federal Trade Commission (FTC), the National Institute of Standards and Technology (NIST), and the Food and Drug Administration (FDA), release their recommendations for AI usage within their respective domains. However, the absence of a unified legal framework results in ambiguity and inconsistent oversight.

While this can encourage innovation, it also delays ensuring safety, transparency, and ethical usage. Many tech companies remain uncertain about future compliance obligations, hindering long-term planning and risk mitigation. The lack of nationwide regulation leaves a critical gap in governance at a time when trust and accountability are urgently needed.

The EU Approach to AI Rules

In contrast, the European Union has taken bold steps toward comprehensive AI governance through the proposed Artificial Intelligence Act. This legislation categorizes AI systems by risk and aims to enforce principles such as fairness, privacy, and human control over these systems. However, its rollout has not been smooth.

Intense debate among member states—especially regarding how to handle general-purpose AI models like ChatGPT—has slowed legislative consensus. As a result, AI innovation in the EU faces delays due to regulatory caution. Many startups and businesses are left waiting for clarity before fully deploying AI tools, fearing non-compliance penalties. This lengthy deliberation process, although well-intentioned, limits the region’s ability to compete with faster-moving AI ecosystems.

Resulting Delays and Regulatory Gaps

With the U.S. opting for a fragmented model and the EU entangled in legal negotiations, both regions lag in developing a timely and agile AI governance framework. This delay creates uncertainty for developers, businesses, and investors while failing to establish enforceable standards for safety and accountability.

In this vacuum, China is progressing with an assertive, state-aligned AI strategy. The lack of unified Western regulation means that China faces less global resistance to exporting its AI technologies and practices, including those that raise concerns about privacy and surveillance. This regulatory stagnation, more than a technical lag, is now a strategic vulnerability for the West.

How China Benefits from Western Regulatory Delays

China’s AI ecosystem thrives on a centralized model that encourages experimentation, rapid development, and close coordination between government and industry. In this environment, delays and uncertainty in the West create space for China to scale its influence across multiple fronts.

• Faster AI Deployment: Fewer procedural barriers enable Chinese firms to roll out new AI tools quickly, securing market share and consumer feedback sooner than their Western counterparts.
• Government-Backed Innovation: With clear national objectives, state investments, and local policy support, China’s AI startups and tech giants align closely with long-term industrial goals.
• Data Access and Centralization: Centralized data collection enhances model training efficiency, providing Chinese developers with a significant performance advantage over firms constrained by Western privacy laws.
• Economic Expansion: AI is seamlessly integrated into China’s public services, manufacturing, urban development, and military technologies, accelerating modernization without interruption.

Geopolitical and Competitive Edge

China’s proactive strategy positions it not only as an AI innovator but also as a rule-setter. Its technologies are being adopted in countries across Africa, Southeast Asia, and Latin America, many of which lack local AI infrastructure. By embedding AI tools into digital infrastructure, China influences how surveillance, data privacy, and automated decision-making are handled globally.

Furthermore, China is working toward AI self-sufficiency. It has increased domestic semiconductor production and AI education programs to reduce reliance on foreign tech.

Sanctions imposed by the West have spurred innovation rather than halted progress. This steady trajectory gives China a first-mover advantage in AI diplomacy, particularly through AI-as-a-service initiatives and partnerships bundled into Belt and Road agreements.

Impact on Western Companies

Western tech firms face significant obstacles due to unclear and disjointed regulations for AI. Unlike Chinese companies operating under coordinated state guidance, U.S. and EU businesses navigate a shifting legal environment, which slows innovation, delays product launches, and creates uncertainty for investors. This uneven playing field puts Western innovation at risk.

• Regulatory Confusion: Companies like Google and OpenAI face varying and unpredictable legal frameworks, which hinder their decision-making processes.
• Investor Hesitation: Startups often struggle to secure funding due to the fear of future compliance issues.
• Slower Time-to-Market: New AI tools undergo lengthy legal reviews, which reduces their global competitiveness.
• Global Influence Loss: As China expands into emerging markets, Western firms experience a decline in digital and cultural relevance.

Global Power Shift and Urgency for Action

The winner of the global AI race will not be determined solely by who builds the most powerful models—it will be defined by who sets the ethical and operational boundaries of this technology. With China forging ahead, the West’s lack of regulatory alignment risks ceding control over the global narrative of AI. This could have long-lasting effects on democracy, privacy, and digital human rights.

Western nations need to close ranks, accelerate legislative cooperation, and create agile yet firm AI policies. Shared frameworks, cross-border audits, and transparent development standards could counterbalance China’s growing influence. The future of AI leadership depends as much on legal vision as on technological strength. Without bold steps soon, the opportunity to lead may vanish permanently.

Conclusion

Artificial intelligence is transforming the world at a faster pace than many governments can keep up with. In this pivotal moment, while the U.S. and EU struggle with policy disagreements, China is advancing its AI agenda with clarity, coordination, and long-term planning. From rapid AI deployment and state-supported innovation to international tech exports, China is steadily gaining strategic ground. The absence of cohesive governance in the West leaves businesses confused, progress stalled, and influence diminished.

Suppose the U.S. and EU do not urgently align their approaches to AI rules. In that case, they risk falling behind not only in technology but also in the ability to shape a safe, inclusive, and democratic digital future. It is time for bold, unified action—before leadership in the AI era slips permanently into the hands of others.