AI as the New Geopolitical Battlefield

(The Defining Rivalry of the 21st Century)

Key Takeaways

• In 2025, the U.S. and China unveiled rival AI action plans that mark a clear shift from technology competition to full-scale geopolitical strategy, with computing power now treated as a critical lever of national influence.
• The U.S. is executing an aggressive, deregulatory industrial strategy, backed by private capital and military-aligned exports, while China promotes a standards-based, Global South-friendly model positioning AI as a public good.
• Investors should watch the Gulf as the first battleground in this AI Cold War, where U.S.-backed data center deals and Chinese infrastructure diplomacy are defining the future of digital sovereignty and global tech alliances.
  

We may look back at 2025 and recognize it as the moment artificial intelligence stopped being a purely technological race and became the central axis of geopolitical competition. The release of dueling AI action plans—one from the White House and one from Beijing—was no coincidence.¹ They’re more than policy documents; they are ideological manifestos. Washington wants to build the most powerful, fastest-growing AI ecosystem in the world by supercharging its industrial base, data center infrastructure and cloud exports. Beijing counters with a vision that weaves AI into a global governance strategy, emphasizing openness, standards and a “public good” narrative. What’s clear is this: AI isn’t just a tool anymore—it’s the next theater of power projection.

Compute Is Power: The U.S. Reimagines AI as Grand Strategy

The U.S. plan reads like a blueprint for tech-enabled industrial dominance. It rejects regulatory drag and leans into a high-octane, private-sector-led model. The State and Commerce departments are now in the business of marketing U.S.-based AI stacks globally. Meanwhile, the federal government is clearing away permitting bottlenecks and dangling billions in procurement and tax incentives to create a bottom-up wave of AI-native firms. It’s as if Washington woke up to the idea that compute capacity, like oil in the 20th century, could become the most important strategic commodity in a software-defined economy. Data centers, nuclear power, graphics processing units (GPUs) and AI chips are no longer infrastructure—they’re arsenals.

Digging into the U.S. AI Action Plan for some of the most impactful statements, we see:

• Whoever has the largest AI ecosystem will set global AI standards and reap broad economic and military benefits.

This is the North Star of the plan. It frames AI dominance not as a technical achievement but as a geopolitical tipping point. The implication is that standards-setting—usually a dry regulatory matter—is now the domain of strategic competition. It also signals a decisive shift from treating AI as an industry issue to treating it as a national destiny.

• We need to ‘Build, Baby, Build!’

This rallying cry summarizes the plan’s deregulatory thesis: permit faster, build faster, scale faster. Whether it’s data centers, semiconductors or grid infrastructure, the posture is unapologetically pro-build, with climate concerns and red tape intentionally deprioritized. This could be a tagline for AI-era industrial policy.

• Open-source and open-weight models could become global standards. They also have geostrategic value.

The idea that open-source AI isn’t just good for innovation but also for foreign policy leverage is a major conceptual leap. The plan sees open models as a soft-power export akin to internet protocols or the English language—tools that lock in influence when adopted abroad.

• America’s environmental permitting system makes it almost impossible to build this infrastructure…fortunately, the Trump Administration has made unprecedented progress in reforming this system.

This quote hits at a key friction: AI scaling is now gated by energy, land use and permitting—things not traditionally associated with digital technologies. By declaring victory over regulatory bottlenecks, it opens a new lens: infrastructure as a lever for compute hegemony.

• It is imperative that the United States leverage this advantage into an enduring global alliance.

AI isn’t just a domestic contest—it’s the basis for a geotechnological alliance system. This quote directly connects America’s hardware, software and standards to a broader diplomatic architecture. It’s a call to weaponize the export stack in pursuit of strategic alignment.

Exporting the Stack: America’s AI Doctrine Hits the Desert²

The AI Action Plan makes its ambition plain: global AI dominance is not a technical preference—it’s a strategic necessity. As the document declares, “Whoever has the largest AI ecosystem will set global AI standards and reap broad economic and military benefits.” That ambition is no longer abstract. With the UAE and Saudi Arabia now locking in $6 billion+ data center deals with U.S. firms like G42 and HUMAIN, Washington is operationalizing its AI export model in a way that extends both infrastructure and influence. These deployments are not just commercial—they’re diplomatic payloads. The U.S. is seeding compute abroad, on American stacks, under American rules, at American scale.

The mantra “Build, Baby, Build!” now finds concrete expression in how the U.S. is tackling the compute bottleneck in the Gulf. These aren’t just data centers; they’re sovereignty extensions. UAE’s G42 has secured access to 500,000 Nvidia chips, while HUMAIN in Saudi Arabia will deploy 500 megawatts (MW) of capacity backed by Oracle and AMD. Both efforts are tied to explicit U.S. security and export compliance frameworks, aimed at minimizing diversion risk to Chinese actors—a key theme in both the plan and the SemiAnalysis piece. The open-source ambitions described in the Action Plan are mirrored here as well: Washington promotes a federated stack where AI sovereignty is exercised without losing the American technological center of gravity. This is an “open, but anchored” strategy, in both architecture and alliance.

The deeper game here is strategic enmeshment. “It is imperative that the United States leverage this advantage into an enduring global alliance”—and the Middle East shows what that looks like in practice. American hyperscalers gain market depth. Allied governments get compute sovereignty on trusted stacks. And China, whose ambitions include exporting surveillance-infused AI systems, finds the playing field tilted against it. The U.S. plan’s posture around deregulation, values-aligned open models, infrastructure scale and diplomatic export reinforces a doctrine that’s already advancing across borders. What’s playing out in Abu Dhabi and Riyadh isn’t improvisation—it’s the first major instantiation of an integrated U.S. AI geostrategy.

The Architect of Standards: China’s Long Game in Global AI Governance

Contrast that with China’s new 13-point plan, which leans heavily into state-guided openness. It aims to export a model of AI that is risk-classified, government-vetted and grounded in shared global norms. Don’t mistake this for passivity. Beijing is moving aggressively on international rulemaking, pitching itself as a bridge between advanced economies and the Global South. Its bet? That the next wave of digital infrastructure—especially in frontier markets—will be shaped not by who has the best models, but by who controls the standards. In other words, while the U.S. tries to win with speed and scale, China is playing the long game through institutional design.

• Artificial intelligence…is an international public good that benefits mankind.

China is deliberately framing AI not as a strategic asset to be hoarded, but as a global commons. This positions Beijing as a benevolent technological steward rather than a competitor. In contrast to the U.S. “national champion” approach, this language builds soft-power appeal among developing countries—and signals that China wants to set the normative rules of access, not just dominate compute or models.

• Support countries, especially the Global South, to develop artificial intelligence technology and services based on their own national conditions.

This is the infrastructure diplomacy clause. It implies compute deployment, standards and training pipelines tailored to emerging economies. China is effectively exporting AI sovereignty kits—models, data center templates, unified compute standards—designed to reduce dependence on Western platforms. It’s Belt and Road logic, retooled for algorithms.

• Promote the construction of open source compliance systems…and realize the open flow of non-sensitive technical resources.

This is a nuanced play: China backs open-source ecosystems, but within state-curated compliance boundaries. This creates an illusion of openness while maintaining state control. It undercuts the U.S. claim that China is inherently “closed” and allows China to participate in global developer ecosystems on its own regulatory terms.

• Establish an artificial intelligence risk testing and assessment system…and promote the sharing of threat information and emergency response mechanisms.

This is China signaling it intends to lead in AI safety regimes, especially for frontier systems. The phrasing echoes EU-style classification systems and proposes transparency-sharing architectures. It simultaneously appeals to Global South partners (who want baseline trust) and gives China cover to scrutinize and challenge Western AI exports as “risky.”

• Encourage AI companies from all countries to engage in dialogue…and promote AI innovation, application, ethics and safety cooperation in specific fields and scenarios.

This call to field-level governance is tactical. Rather than focus on abstract global treaties, China wants AI norms to be negotiated sector by sector—where its strength in smart cities, logistics, education tech and surveillance tools gives it asymmetric influence. It’s a bottom-up strategy to shape global AI architecture at the implementation layer.

The Gulf Becomes the Testbed: China Lays Groundwork, America Claims Narrative

While Washington’s 2025 AI Action Plan reads like a high-speed pivot into the Middle East, it’s not occurring in a vacuum. In fact, much of the urgency can be traced back to China’s quiet, methodical advance over the past 18 months. Beijing didn’t just articulate its 13-point governance plan this July—it prototyped it. Chinese firms like Huawei and Alibaba Cloud have been laying digital infrastructure across the Gulf since mid-2024, offering AI services tailored to local governments’ sovereignty and price concerns. The UAE and Saudi Arabia were not just markets—they were proving grounds for a China-branded model of “sovereign AI” that combines soft-power language with hard-power data centers, cloud platforms and Ascend chips that undercut Western incumbents.³

What the U.S. did next was less a response of parity and more an escalation. It wasn’t enough to match compute for compute—the U.S. moved to enclose the strategic narrative space. With the G42 and HUMAIN deals, Washington deployed an all-in-one package: GPUs, hyperscaler muscle, security audits, export guarantees and value alignment. It wasn’t just about hosting models but broadcasting trust. The fact that these deals emerged after China’s initial presence mattered. It gave the U.S. a foil. While China emphasized inclusivity, the U.S. offered reliability. While Beijing promised access, Washington sold security. The data center was no longer neutral ground—it was the front line of AI-era alliance politics.

What we’re witnessing is an asymmetric tempo: China moved first, low and slow, through bilateral deals and Global South outreach. The U.S. followed with a frontal policy cannonball and called it “leading the free world in AI.” But both are executing from doctrinal blueprints. China’s field activities in Abu Dhabi and Riyadh clearly trace back to points 4, 5 and 11 of its 13-point AI plan—emphasizing local infrastructure, sovereign standards and multilateral governance aligned with UN compacts. The U.S. plan, by contrast, reads like a counterstrike—reclaiming export markets, neutralizing diversion risk and ensuring that “American stacks” become not just the standard but the expectation. This is not two sides accidentally colliding in the Gulf. It’s policy in motion—and the first overt contest for digital spheres of influence.

Conclusion: AI Is Foreign Policy Now

What does all this mean for investors and policy makers? For starters, the old mental model—Silicon Valley vs. Shenzhen—is too narrow. This is now about compute liquidity, regulatory arbitrage, labor market adaptation and even biosecurity tooling. The U.S. is betting it can out-scale and out-innovate; China is betting it can shape the rules of the game. Both may be right in different domains. But one thing is certain: We’ve entered an era where AI policy is foreign policy. This is not just a tech story. It’s the defining strategic contest of the 21st century. And we’re only in Act I.

Originally posted on August 13, 2025 on WisdomTree blog

FOOTNOTES AND SOURCES

¹ Sources for this piece, unless otherwise specified, are as follows, since these are the actual plans: The U.S. AI Action Plan: White House. (2025, July). America’s AI Action Plan. Executive Office of the President of the United States. https://www.whitehouse.gov/wp-content/uploads/2025/07/Americas-AI-Action-Plan.pdf; China’s 13 Point Plan: Ministry of Foreign Affairs of the People’s Republic of China. (2025, July 5). Global AI Governance Initiative: Action Plan. https://www.mfa.gov.cn/mfa_eng/zy/gb/202407/t20240704_11448351.html

² The source for the details in the section ‘AI Doctrine Hits the Desert’ is: Patel, D., Ontiveros, J. E., Kourabi, A. J., Chiam, I., & Chu, W. (2025, May 16). AI arrives in the Middle East: US strikes a deal with UAE and KSA – 5 GW datacenter, HUMAIN, G42, diversion and misuse risks, security requirements, American AI wins. SemiAnalysis.

³ Source: A. Benito, “How China’s cloud giants are quietly gaining momentum in the Middle East,” Rest of World, 5/5/25.

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