Comment by marcus_holmes
4 days ago
We can see the same situation play out with manufacturing capability.
The USA has recognised that it needs more manufacturing capability. But rather than just build that capability (which is what the Chinese state-planned economy would do, and did) it tries to incentivise private companies to build it. Which didn't work because the companies building domestic manufacturing face competition from Chinese imports. The investment money can get better returns chasing property deals or rent-seeking monopolies.
In the "we can do it back" case, it still takes a US private company a lot of time and money to distill their model off the Chinese model. There has to be a lot of profit for them to do that. That profit isn't really available - it's a competition with all the other models, and no monopoly rents. There's for sure a viable business there, but it's a "lifestyle business" not the 1000x growth business that VC's want.
> We can see the same situation play out with manufacturing capability.
I don't think manufacturing is a great analogy and we should be careful to try and compare these two very closely. But the closest comparison would be iPhone versus Android. Many more people use Android, and the phones are a lot cheaper and can be produced in mass, but the iPhone is the dominant phone and captures much more market share.
> There has to be a lot of profit for them to do that.
Sure... but if China is just subsidizing AI companies to copy/distill/whatever American models it's fair for the US (as it would be for manufacturing) to work to block those models. But also you have to remember that the US is in the lead, so while there isn't profit that I'm aware of to be had now, if the Chinese caught up then presumably there would be some level of profit. There's good and bad here though too because, well, as you can see in China's over-built housing market the government makes a lot of bad assumptions and mistakes and is subject to forces that can cause less than desirable outcomes. It goes both ways a bit.