The Banking Executive Magzine - July 2025 Issue

Who’s Winning in AI—China or America? signals deep industrial experimenta- tion. Expect more Chinese owner- ship of methods and sector-specific innovations, even when the very top general-purpose models remain U.S.-centric. 4) REGULATION AND GOVERNANCE: DIFFERENT OPERATING SYSTEMS The governance approaches diverge. In the United States, Executive Order 14110 (Oct. 30, 2023) directed agen- cies to set safety, reporting, and test- ing baselines for frontier developers, with NIST’s AI Risk Management Framework providing a voluntary, risk-based playbook businesses can adopt. China’s Interim Measures for Gener- ative AI (effective Aug. 2023) empha- size security reviews, content management, and provider account- ability, shaping how GenAI services are launched and operated domesti- cally. What it means: U.S. policy increas- ingly targets frontier risk and model diffusion; Chinese policy centers content, safety, and control in con- sumer-facing services. Multinationals must localize both compliance and product behavior. 5) DEPLOYMENT PLAYBOOKS: AGI VERSUS “AI+” There is also a philosophical split. U.S. players are still pushing hardest on the frontier/AGI vector, aiming for step-change capabilities that unlock new markets. China, constrained on chips yet rich in industrial scale, is pushing “AI+”—embedding practical AI in manufacturing, logistics, public services, healthcare triage, and fi- nance. This pragmatic emphasis is backed by state initiatives and fund- ing programs to accelerate sector adoption. What it means: If AGI-style break- throughs stall or take longer than ex- pected, a deployment-first model can win near-term economic impact. If the frontier keeps leaping, platform economics favor the U.S. incum- bents and partners. 6) NATIONAL CAPACITY: FUNDS, TALENT, AND THE LONG GAME Both sides are investing for the long haul. The 2025 AI Index notes gov- ernments worldwide stepping up; among them, China launched a $47.5 billion semiconductor fund (Big Fund III), while the United States doubled the number of federal AI regulations issued in 2024, signaling governance maturation alongside in- dustrial policy (and complementing CHIPS Act incentives for domestic capacity). St On talent, flows still generally favor U.S. labs and companies, attracted by compensation, equity upside, and access to compute—self-reinforcing advantages that are hard to replicate quickly. China, meanwhile, is build- ing capacity at scale in applied AI engineering and systems integration, benefitting from the world’s largest manufacturing base and vast data- rich platforms. the BANKING EXECUTIVE 10 ISSUE 199 JULY 2025