CNBC's The China Connection newsletter: U.S.-China tech rivalry heats up—in other countries

• Chinese companies are aggressively expanding globally: Alibaba opened its third European data center in France, while Chinese firms invest heavily in Southeast Asia where the region could account for 34% of global data center demand by 2030
• China's Premier Li Qiang highlighted 10 billion global downloads of China's open-source AI models, while PwC reports Chinese companies use generative AI far more than U.S. firms
• The U.S. is countering through its 'Pax Silica' initiative and State Department programs promoting American tech standards, while U.S. companies in China like Honeywell and Nvidia maintain partnerships to preserve market access

Market Summary: U.S.-China Tech Rivalry Expands Globally

Key Developments

The U.S.-China technology competition is intensifying beyond domestic markets, with both nations pursuing aggressive global expansion strategies in AI, cloud computing, and manufacturing infrastructure.

Major Players and Announcements

Chinese Expansion:

• Chinese Premier Li Qiang reported 10 billion global downloads of China's open-source AI models
• Alibaba opened its third European data center in France, joining facilities in the U.K. and Germany
• Alibaba and ByteDance investing heavily in Southeast Asia data centers
• Honeywell China partnered with ByteDance's Lark software, claiming 3-5x client returns

U.S. Response:

• State Department launched initiatives promoting American tech adoption internationally
• New AI governance program established with Stanford University following Pax Silica summit
• APEC meetings in July expected to feature U.S.-led workshops promoting American AI capabilities

Market Intelligence

Humanoid Robotics: Morgan Stanley doubled its China humanoid robot shipment forecast to 56,000 units by 2025, up from 28,000 previously. Shenzhen-based manufacturers are supplying both Chinese and American companies.

Data Center Demand: McKinsey projects Asia Pacific will account for 34% of global data center demand by 2030 versus North America's 46%, making the region a critical battleground.

AI Adoption: PwC research indicates Chinese companies use AI far more extensively than U.S. firms, suggesting competitive advantages in industrial integration.

Strategic Implications

The competition has evolved from pure technological development to ecosystem building, encompassing supply chains, manufacturing integration, and global infrastructure deployment. Both nations are positioning for dominance in emerging markets, particularly Southeast Asia and Europe, while American companies in China navigate between cooperation and competition.