Rawson Haverty, who leads Delphi Digital's AI and robotics intelligence division, offers a nuanced comparison of the US and Chinese AI ecosystems, drawing from his experience investing in both regions. He frames the AI race not as a technological competition, but as a clash of deeply rooted cultural, political, and economic philosophies.
The Efficient Oligopoly vs. The Subjugated Swarm
- "In the US, it feels like market structures move very quickly into an efficient oligopoly... In China, it seems much more like the state sets the direction... and you have this Darwinian bloodbath."
- "In the US, a lot of times people see capital as an expression of freedom... In China, I have found that capital is much more viewed by the leadership as a tool for national interests."
The US and China approach AI development through fundamentally different economic models. The US model, driven by deep capital markets and strong property rights, fosters an "efficient oligopoly" where capital flows quickly to market leaders like Big Tech, enabling them to pursue global dominance. China, in contrast, orchestrates a "subjugated swarm" where the state sets national priorities and unleashes thousands of companies to compete fiercely, creating deep supply chains and process knowledge at the expense of profitability.
Building God vs. Arming the Nation
- "In the US, there's this race for artificial super intelligence... people want to build God... In China, it seems to me that it's much more about harnessing AI for national priorities... Can you commoditize intelligence and shove it into as many parts of the economy as possible?"
These divergent models reflect contrasting ambitions. The US is focused on pushing the frontier, racing to build Artificial Super Intelligence (ASI) through closed, proprietary models. The end goal is a form of human transcendence. China’s strategy is more pragmatic and state-centric: commoditize intelligence through open-source models and rapidly diffuse it throughout the economy and industrial base. The goal is not building God, but achieving a kind of societal utopia as envisioned by the CCP.
Navigating AI's Narrow Corridor
- "The tragedy of the decaying US-China relationship is that in many ways their outlooks are actually quite complimentary. This tension between the two superpowers... might be exactly what's needed to walk this narrow corridor."
The development of advanced AI presents a delicate challenge: balancing state control with societal freedom to avoid either a despotic "AI-induced tech-feudalism" or the chaos of uncontrolled superintelligence. Haverty argues the US and China's opposing strengths are ironically complementary. The US excels at zero-to-one innovation (software, freedom), while China excels at one-to-n diffusion (hardware, stability). This geopolitical tension may create the necessary checks and balances to guide AI’s path safely.
Key Takeaways:
- The US and China's AI strategies are products of their unique historical DNA, leading to a competition between a market-led oligopoly focused on the frontier and a state-directed swarm focused on industrial diffusion.
- US Leads in Capital-Intensive Frontier AI; China Excels at Industrial Diffusion. The US leverages deep capital markets for its massive compute buildout and AGI research, while China uses state direction to embed AI into its vast industrial base via open-source models and hardware.
- Market Structure Dictates AI Strategy. The US "efficient oligopoly" model prioritizes global dominance and profit reinvestment by a few players. China's "subjugated swarm" model creates intense domestic competition, driving down prices and accelerating adoption at the cost of profitability.
- Geopolitical Tension May Be a Necessary Stabilizer. The competition between the US's freedom-oriented, frontier-pushing approach and China's stability-focused, diffusion-driven model creates a complementary tension that could be essential for navigating the "narrow corridor" between AI-driven totalitarianism and uncontrollable chaos.
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This episode reveals how the US and China's clashing economic and political philosophies are shaping two distinct, competing AI ecosystems—and what this divergence means for the future of decentralized intelligence.
Introduction: A View from Both Sides of the Pacific
Rawson Haverty, who leads AI and robotics research and investing at Delphi, frames the discussion from his unique experience investing in both US and Asian tech markets, including two years living in China. He positions his analysis not as a definitive expert view but as a comparative perspective on the market structures, strengths, and weaknesses shaping the global AI landscape. His goal is to unpack the intricate and often contradictory dynamics of each ecosystem.
The Paradox of Modern China
- Simultaneous Realities: China is simultaneously modern, with gleaming infrastructure, yet home to hundreds of millions living in poverty. It has experienced unprecedented growth, yet there is a palpable sense of individual anxiety and pessimism.
- Ideological Blend: The nation operates under communist rhetoric but functions with significant state capitalism. While often labeled a "copycat," it demonstrates profound innovation in tech and manufacturing, even as its broader economy faces headwinds like youth unemployment and a property slowdown.
- A Contradictory Approach to Information: Rawson highlights the paradox of China maintaining a "great firewall" while simultaneously leading in open-source AI releases, a tension that defines its strategy.
Historical Roots of Divergent Worldviews
- The US Frontier Mindset: The US is culturally defined by a "frontier mindset," born from a history of fleeing centralized power in search of individual liberty. This ingrains a deep skepticism of centralized authority into the American psyche.
- China's Pursuit of Stability: In contrast, China's 5,000-year history is marked by recurring cycles of calamitous events like civil war, invasion, and famine. This has cultivated a profound societal value for stability and order, leading to a greater acceptance of strong, centralized governance.
Capital as a Tool: Freedom vs. National Interest
- US View: In the US, capital is often seen as an expression of freedom and individual choice, with market forces driving allocation.
- Chinese View: In China, leadership views capital primarily as a tool to serve national interests. Rawson notes a common educational theme: "The Chinese people are oppressed by three forces: feudalism, imperialism, and capitalism." This perspective ensures that while capitalism is used for prosperity, it remains subordinate to state goals.
AI Risk Perception: Centralization vs. Chaos
- US Fear of Centralized Power: The US is more concerned with AI concentrating power in the hands of a few, creating a centralized, unaccountable authority—a "Leviathan."
- Chinese Fear of Disorder: China's leadership is more fearful of AI creating disorder and chaos if it becomes uncontrollable. AI is seen as a powerful tool for political control, but only if it remains firmly under state command.
Market Structures: The "Efficient Oligopoly" vs. the "Subjugated Swarm"
- The US "Efficient Oligopoly":
- Deep capital markets and strong property rights allow investors to quickly fund market leaders, creating dominant "category champions" that can expand globally.
- Pros: Efficient capital allocation, rapid global scale, and high profits that can be reinvested into further R&D (as seen with Big Tech's compute buildout).
- Cons: A less dynamic competitive environment, higher prices, and value capture concentrated in a few hands.
- The Chinese "Subjugated Swarm":
- The state sets key priorities, and provinces marshal resources across thousands of companies, creating a "Darwinian bloodbath" of intense competition.
- Pros: Produces high-quality products at affordable prices, develops deep and resilient supply chains, and fosters strong process knowledge.
- Cons: Leads to involution—a term describing intense internal competition that yields diminishing returns and lower profitability, leaving less room for private reinvestment.
Competing AI Priorities: Building God vs. National Utopia
- US Goal - The Frontier: The American AI effort is a race for the frontier—achieving Artificial Super Intelligence (ASI). The focus is on closed models, monopoly profits, and a vision of "human transcendence" or merging with machines.
- China Goal - Diffusion: China's priority is harnessing AI for national goals. The strategy involves commoditizing intelligence through open-source models and rapidly diffusing it throughout the economy to create a "societal utopia" as envisioned by the CCP. Rawson observes, "In China, I would say it seems to me that it's much more about harnessing AI for national priorities."
The Crypto AI Thesis: Can Decentralization Bridge the Gap?
- The Core Question: Can distributed incentives and technology harness global capital (the US model's strength) while keeping intelligence open and pushing for rapid diffusion (China's model's strength), all without a centralized elite making decisions?
- Early Observations: While vertically integrated, centralized approaches have a clear early lead, Rawson sees an emerging shift toward more modular, decentralized approaches to building intelligence.
- Strategic Implication: For investors, this suggests that while centralized incumbents dominate today, long-term opportunities may lie in decentralized protocols that can coordinate global compute, data, and talent more efficiently and openly.
The "Narrow Corridor": Navigating the Future of AI Governance
- Two Extremes to Avoid:
- Despotic Leviathan: Too much centralized control leads to "AI-induced tech-feudalism or totalitarianism."
- Anarchy: Too little institutional strength leads to chaos or uncontrolled superintelligence.
- A Complementary Tension: He argues that the US and China's opposing strengths—frontier vs. diffusion, software vs. hardware, freedom vs. harmony—are actually complementary. The tension between these two approaches might be exactly what is needed to navigate the narrow corridor and avoid dystopian outcomes.
Conclusion
The US and China's divergent paths in AI are not just a competition but a reflection of their core philosophies. Their strengths are complementary, suggesting that the ideal path forward requires a balance of both frontier innovation and broad diffusion. Investors should monitor how decentralized systems attempt to synthesize these models.
