AI is the subject of a massive hype machine. Dot coms are obsessively integrating AI into everything in part in order to boost valuation in a stock market that has taken a step back from highly overvalued tech firms. Unlike the Metaverse, AI is much more significant, despite being overhyped, and just as predictably, China is going in.

Major Chinese venture capital firms are quietly investing in American artificial intelligence startups, undeterred by growing concerns from U.S. officials about Chinese involvement in local technology firms.

Meanwhile, U.S. tech firms are investing in Chinese companies.

Companies like Microsoft, Apple and Amazon have contributed to China’s remarkably rapid development of artificial intelligence capabilities — all at the expense of American interests and security. Following the recent World Artificial Intelligence Conference in Shanghai, where Alibaba and Huawei showcased a new AI image generator and AI model upgrade, respectively, the repercussions have never been clearer.

For example, one recent report revealed that American technology firms and investors — including the investment arms of Intel and Qualcomm — poured $40.2 billion into Chinese AI companies between 2015 and 2021. Meanwhile, AWS continued hiring in China last year to build AI, even though Amazon’s CEO has been publicly arguing that “the U.S. [is] at risk of losing its technology leadership position to China as AI developments advance there.”

Microsoft, meanwhile, has partnered with researchers affiliated with China’s National University of Defense Technology on AI research that could be used for surveillance and censorship. Despite concerns that this technology would further the CCP’s oppressive tactics on its citizens, Microsoft said the research was “published to ensure transparency so that everyone can benefit from our work.”

The standard rule here is Catch 22.

Chinese investments in American companies mean a massive looting of everything while American investments in Chinese companies also go only one way. But it’s not to America. CCP rules mean that foreign companies are highly limited in their operations in China, but Chinese companies aggressively exploit every possible trick to gain IP from American companies.

American tech firms still love China for the massive market and the cheap labor. The dirty secret of Big Tech is that much of the actual work gets done by cheap labor from China and India, either insourced or outsourced. On the China front that means those same employees working for less than Americans go back home and build competitors like TikTok that then crush those same American companies.

Now the tech industry is about to repeat the same disaster with AI. And the potential applications, economic and military, are far more catastrophic.