China unveils 5-year AI and chip plan as it narrows gap with US

China is rapidly closing the artificial intelligence capability gap with the United States, emerging as a near-peer AI superpower despite years of American chip export restrictions, according to a convergence of expert assessments and new government reports from both countries.

"The gap between U.S. and Chinese models is narrow and fragile," said Samm Sacks, a senior fellow at the Johns Hopkins School of Advanced International Studies, in comments reported by ABC News on Tuesday. The Stanford Institute for Human-Centered Artificial Intelligence found in a recent report that China appears to be erasing the US lead this year.abcnews

A Wave of Chinese AI Models

Chinese companies have released a string of competitive models in recent months. Beijing-based Moonshot AI's Kimi K3 was ranked third globally in model intelligence in July, behind Anthropic's Claude Fable 5 and OpenAI's GPT-5.6 Sol, according to AI benchmarking platform Artificial Analysis. DeepSeek previewed its V4 model in April, while startup Z.ai rolled out GLM-5.2 in June and GLM-5.3 in August with improved coding and agentic capabilities. Alibaba ↘ 1.89% previewed its Qwen3.8-Max model in July.abcnews

Distillation Dispute Deepens Tensions

On September 8, the FBI, the National Security Agency, and the Cybersecurity and Infrastructure Security Agency issued what ABC News described as the most comprehensive government report to date on the matter, accusing Chinese AI developers of "aggressive, malicious, and targeted distillation activities" to extract capabilities from leading US models. The same day, US Treasury Secretary Scott Bessent said, "The Chinese distill our models and they can never get ahead of us".abcnews

China rejected the accusations, calling distillation a standard industry technique and accusing the US of pursuing a "monopoly of the AI industry". Lizzi C. Lee, a fellow at the Asia Society Policy Institute, noted the strategic implications are already clear: "The U.S. labs spend enormous amounts of compute pushing out the frontier. But Chinese developers can learn from those systems".abcnews

Beijing Lays Out a New Five-Year Plan

Adding urgency to the rivalry, China's Ministry of Industry and Information Technology and the National Development and Reform Commission on Tuesday outlined a new five-year plan for the electronics and IT industry, targeting breakthroughs in AI and integrated circuits, including open-standard RISC-V chips, to reduce dependence on Western technology, the South China Morning Post reported.scmp

The current debate takes on added weight ahead of Chinese President Xi Jinping's expected visit to Washington this month to meet President Donald Trump. Meanwhile, China's state security minister Chen Yixin warned in an article published Sunday that AI poses threats ranging from ideological manipulation to cyberattacks, calling it a "new arena for strategic rivalry among major powers".techradar+1