AI Impact Series: The Global Economy

Welcome to part five of our AI Impact series.

America is part of a global economy and we’re not the only country developing artificial intelligence (AI) products. China is a major competitor in this area. When it comes to AI, who will reign supreme? Assuming, of course, that technological supremacy is the ideal goal.

According to the International Monetary Fund Trade (IMF) in 2024, AI could help accelerate economic growth, but only if it’s applied properly. This year IMF sang a different tune, warning that tensions and a reversal in the AI boom pose risks to global economic growth. Such global economic shifts can impact jobs and our country’s economy.

Senator Mark Warner addressed the issue of tech dominance during the Q&A portion of his December 2025 press video:

Do I think the AI revolution at the end of the day will be positive? Yes, but there will be enormous challenges and disruption and if we don’t get it right I think you could see, you know, populist moves from both ends of the political spectrum against artificial intelligence and that in the long run isn’t the right answer as well because who wins the AI race could very well dominate the 21st century and I’d rather that be America than China.

The China problem

Senator Warner has reasons to be concerned because China has been increasing its independence by becoming less reliant on resources from other countries. For example, “China has increased subsidies that cut energy bills by up to half for some of the country’s largest data centres.”

China also wants to lead the charge in electrifying the world as much as possible. The Chinese company Contemporary Amperex Technology “is marketing sodium-based batteries as an alternative to lithium batteries.” Cheap, plentiful sodium “is much less environmentally destructive to mine.” (via CEPR)

In other words, within a decade or so, China won’t need America for its minerals. That scenario alone could negatively impact American industries and jobs. It’s also one step closer to China winning the AI race—unless America develops the political will to, as Warner put it, “dominate the twenty-first century.”

The global AI race is possibly why President Trump wants to take over Greenland, home to “a massive deposit of rare earths, which are crucial to U.S. efforts to maintain its technological lead over China.”

What does it mean to “win” the AI race?

It’s less of a race and more about a state of ongoing competition in multiple areas of AI technological development. This competition can be characterized as collaboration vs. dominance, open source vs. closed, and transparency vs. secrecy. Think of it as Silicon Valley’s “move fast and break things” strategy vs. a cautious approach to AI applications.

One reason China has an edge is because its government oversees the development of AI technology to help advance the country’s interests. In the U.S., Big Tech companies like Amazon, Meta, and OpenAI commandeer AI research, and that means they’re working to advance their own interests, not America’s. Overall, the U.S. is focusing more on frontier bragging rights while China is concerned with real-world adoption of AI technologies.

China also supports more countries working together as well as regulation. The U.S., which historically took that kind of approach, is now coalescing around Big Tech to consolidate AI power and supremacy.

One example of China prioritizing open-source development while America relies on “big tech dominance” is the company DeepSeek. This Chinese AI startup created DeepSeek R1, a less expensive rival to OpenAI’s ChatGPT. “Its popularity and potential rattled investors, wiping billions of dollars off the market value of chip giant Nvidia – and called into question whether American firms would dominate the booming artificial intelligence (AI) market, as many assumed they would.”

China is also more focused on applying AI to industries such as manufacturing, healthcare, and finance, but in the U.S., Big Tech is pursuing AI superintelligence for other reasons. This context helps explain why Canada struck a deal with China on electric vehicles and canola and the U.S. did not.

As of this writing, the outlook of the AI race is unclear. The AI “spending frenzy” of recent years created a narrative that AI technology is growing the U.S. economy, but Goldman Sachs Chief Economist Jan Hatzius concluded that “investment spending has had “basically zero” contribution to the U.S. GDP growth in 2025.” Not exactly a happy ending to the story.

Misreporting and hype about AI’s capabilities means we should question if the technology’s incremental advances are worth its current evaluation in the hundreds of billions of dollars.

Regardless of where AI is headed, the AI competition at the global level has been impacting data-center heavy states like Virginia.

How will the global AI economy impact Virginia?

As of 2023, Amazon Web Services plans to invest $35 billion in Virginia for more data centers across the Commonwealth by 2040. The office of former Governor Glenn Youngkin called it “the largest capital investment in Virginia’s history.” If that’s the case, why isn’t Virginia leading the United States in Gross Domestic Product?

Rather, Virginia lost 1.6 billion in “sales and tax use revenue in FY 2025 to data centers.” We could have used that money to fund schools, healthcare, infrastructure, to name just a few benefits. Instead, we might end up with more data centers, Amazon warehouses, and other projects flying under the radar.

In related news, a recent computer component supply problem caused by AI and data centers is affecting consumers directly. A sudden, severe DRAM memory shortage is sending prices of computer components like RAM and graphics cards soaring. For example, a RAM for your computer costs about $900 now rather than the $200 it cost last year.

This situation means that Amazon CEO Jeff Bezos may be able to realize his longtime dream of making consumers rely on “subscription-based centralized cloud computing.” In other words, skyrocketing costs for physical computers could mean we’ll be forced to rent our computers rather than own them.

The root of this entire crisis is global manufacturing’s massive reallocation. As per reports, some leading DRAM manufacturers, including SK Hynix and Samsung, have sold out their production capacity for 2026. It’s also reported that these orders are overwhelmingly coming through corporations as well as national states that are building the AI data centers. Some initiatives like the Stargate project of OpenAI are now commanding future memory wafer production’s gigantic shares. They are creating an unprecedented supply squeeze for the consumer market.

As a result of the supply squeeze, consumers could experience a “loss in autonomy as well as ownership.”

An AI-dominated future isn’t inevitable

Government regulation and resisting Big Tech goals that don’t align with the needs of everyday Virginians may be key to controlling AI technology. Transparency at all levels of government as well as from the AI industry is important so we can determine which AI products help our communities and avoid those that cause harm. We should have the power to opt out of AI tools that don’t serve our interests and quality of life.