The AI race

AI is the new front line in US-China competition [View in browser]( [Bloomberg]( It’s hard to believe that artificial intelligence only became mainstream in November with the launch of OpenAI’s ChatGPT program. AI is now the front line of US-China competition. President Joe Biden’s administration has turned the screw on high-tech sales to China that could have military applications, liberally deploying export controls to ban the most advanced semiconductors and chipmaking equipment with any US content. Key Reading: [Billionaires and Bureaucrats Mobilize China for AI Race With US]( [Nvidia Drops on Report US Plans More AI Chip Curbs for China]( [Republican Presidential Candidates Trade Barbs Over China Policy]( [Big Tech Wants AI Regulation — So Long as Users Bear the Brunt]( A Wall Street Journal report that Washington is about to expand its curbs caused shares in Nvidia and Advanced Micro Devices to sink in after-hours trading yesterday. The two lead the market for chips vital to the development of generative AI models. In China, meanwhile, scientists, programmers and billionaire entrepreneurs are all working to surpass the US on artificial intelligence, Jane Zhang and Sarah Zheng report. Top Chinese talent and financing is flowing into AI, mirroring a wave of activity in Silicon Valley. And even though US investment in AI dwarfs that of Beijing, the gap is narrowing and many in China are convinced they can overtake their chief global competitor. The race is accelerating because AI is seen as potentially capable of propelling applications such as supercomputing and other profound technological advances that could alter the balance of power. That fact only adds to existing points of friction, from Taiwan and the South China Sea to Beijing’s charges that Washington is seeking to block its ascent. And while the Biden administration has named China as its chief geopolitical challenge, contenders for the Republican ticket for next year’s US presidential election are competing to be more hawkish toward Beijing. It doesn’t take artificial intelligence to see that the US-China standoff is only likely to intensify.— [Alan Crawford]( Lan Zhenzhong, a veteran of Google’s AI Research Institute who founded Hangzhou-based Westlake Xinchen in 2021. Source: Lan Zhenzhong to our [Twitter Space discussion]( today at 8am ET (1pm London) on what to look for next after the Wagner rebellion that spiraled into the greatest threat to Vladimir Putin’s rule. And if you are enjoying this newsletter, sign up [here](. Global Headlines Russian President Vladimir Putin sought to portray rebellious Wagner leader Yevgeny Prigozhin as corrupt after [detailing]( more than $3 billion in state payments to his mercenary group and Prigozhin’s catering company that supplies food for the Russian army fighting in Ukraine. The brief rebellion by Prigozhin is likely to [bolster]( arguments in Washington from people seeking to enhance support for Ukraine’s war effort. Biden will launch his [most ambitious effort]( to persuade voters that the US economy is thriving on his watch and put the economy at the center of his campaign for a second term. In a speech today that the White House is calling a major address, he’ll outline the theory of “Bidenomics,” drawing contrast with the small-government philosophy of his Republican opponents and arguing that his more interventionist approach is boosting Americans’ living standards. - Three of the major US transportation safety agencies are [without permanent leaders]( as the nation contends with toxic railway spills, near-collisions on runways and surging traffic deaths. The Move Forward Party, led by Pita Limjaroenrat, won a surprise first place in Thailand’s election last month, but legal complaints and controversies have challenged his bid to take power after more than a decade of military-backed rule. The 250-member Senate — appointed by the royalist military establishment — is his [main obstacle](, with parliament set to meet July 3 and vote on a new prime minister soon after. Many members oppose his proposal to ease penalties for criticizing the royal family. Best of Bloomberg Opinion - [NATO Shouldn’t Overplay Its Hand on Putin: Lionel Laurent]( - [Supreme Court Stands Up for Electoral Democracy: Noah Feldman]( - [Once-Bold UK Is Now a Laggard in Climate Fight: Lara Williams]( Each minute, the world lost 11 football fields worth of [tropical forest]( in 2022 — a total area about the size of Switzerland, according to University of Maryland data presented by the World Resources Institute. Brazil, the Democratic Republic of Congo and Bolivia lost the most acreage of forests, which are vital to sequestering carbon and maintaining Earth’s biodiversity. A deforested area of the Amazon in northern Brazil in September 2022.  Photographer: Douglas Magno/AFP/Getty Images Explainers You Can Use - [Wagner’s Mutiny Creates New Questions About Its Business Empire]( - [Oil-Field Lawsuit Offers Rare Insight Into Harassment Complaints]( - [Why Getting Europe’s Green Deal Going Is So Hard]( A hacking group responsible for a series of outages at Microsoft this month had earlier [attacked targets]( in Israel, Sweden and other nations, part of an expanding campaign that some cybersecurity researchers have tied to Russia. “Anonymous Sudan” describes itself as a hacktivist group and says it’s waging cyber strikes out of Africa on behalf of oppressed Muslims worldwide, but experts have concluded it actually operates from Russia and is working toward an entirely different purpose: to advance Moscow’s objectives. Tune in to Bloomberg TV’s Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Former US President Donald Trump is intensifying [his legal brawl]( with E. Jean Carroll, suing the New York author for defamation weeks after a jury held him liable for sexually abusing her. - A Taiwanese vice premier is traveling to Japan [for the first time]( in 29 years to shore up economic ties and talk about the semiconductor industry, risking an angry reaction from China. - A major fundraising deadline in the US this week has campaigns flooding supporters’ inboxes with frantic appeals for cash, and some candidates are [trying a new tactic]( to stand out — transparency. - Sierra Leone President Julius Maada Bio [secured a second mandate]( to lead the West African nation as it faces an economic downturn. And finally ... Whether serious or in jest, Brazilian President Luiz Inacio Lula da Silva’s comments that the food he was served during his recent visits to Paris and Rome was “[not that great](” won’t go down well in two culinary capitals that take pride in their cuisine. During a webcast from his official residence in Brasilia, the former union leader said that when traveling he always misses having a big tray of choices. “In any case, we’ve survived,” he said. French President Emmanuel Macron welcomes Lula to the Elysee Palace in Paris on June 23. Photographer: Nathan Laine/Bloomberg Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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