The new big bet
China and the US see technological leadership as a priority, while the European Union maintains the same approach as in the 20th century.
Victor Ausín
Updated Sunday, July 5, 2026 - 00:09
In 1950, North Korea launched a large-scale offensive against South Korea with the backing of the Soviet Union. The United States responded by supporting the South Korean government, turning the conflict into the first major confrontation of the Cold War. Beyond geopolitics, the Korean War became a laboratory to test the technological advances carried out by Americans and Soviets during the final phase of World War II and transformed the geopolitical rivalry between the two superpowers into a technological race that would shape the economic balance of the following decades.
In 1957, the Soviet Union launched Sputnik, implicitly questioning American leadership in the global technology race. From that moment, the United States responded with an extraordinary mobilization of resources toward R&D&I, education, defense technology, and the aerospace industry. During those years, another race also began: the European one. The Treaty of Rome laid the first stone of another great project: guaranteeing peace and prosperity through economic integration.
Seventy years later, history seems to rhyme. Ukraine has become a laboratory to validate the use of drones, commercial satellites, electronic warfare, and massive real-time data analysis, opening a new technological race whose outcome will condition the productivity, competitiveness, and security of the world's major economies. The emergence of DeepSeek at the beginning of 2025 reinforced the perception that China was capable of challenging the global technological leadership of the United States.
This provoked an immediate reaction from the United States. It promoted a set of measures reflecting a decisive commitment to mobilize large-scale private investment through strengthened tax incentives, immediate amortization of R&D investments, and the deployment of critical infrastructure (data centers, electrical capacity, and domestic semiconductor manufacturing).
However, China is willing to match the American bet, but following a radically different strategy. The Chinese government has reinforced its industrial policy and increased public credit to accelerate investment in artificial intelligence, semiconductors, robotics, advanced computing, and smart manufacturing. China's bet also pursues an internal objective: replacing a growth model supported for decades by investment in physical capital and employment with one based on productivity, innovation, and human capital accumulation.
Despite strategic differences, both governments have reached the same conclusion: the cost of falling behind would be greater than taking on higher debt. The great bet of the United States and China rests on a very concrete economic hypothesis: that artificial intelligence constitutes a general-purpose technology capable of permanently raising productivity. If that hypothesis is confirmed, future growth will offset the deterioration of public accounts caused by the current investment effort.
According to the IMF, the United States and China will maintain public deficits close to 7-8% of GDP until the end of the decade, accumulating around 25 additional points of public debt by 2030. Rarely have two superpowers simultaneously accepted a fiscal deterioration of this magnitude with the expectation that artificial intelligence would compensate for that effort through higher productivity gains. For its part, Europe constitutes the great exception. Seventy years after the Treaty of Rome, its main bet continues to be economic integration. The Letta and Draghi reports point precisely in that direction: deepening the single market as the main response to strengthen European competitiveness against the United States and China. While both powers have reformulated their economic policy around artificial intelligence, Europe continues to trust that greater economic, financial, and regulatory integration is the best response to the new technological revolution.
Almost seven decades ago, the Korean War, Sputnik, and the Treaty of Rome gave rise to two great strategies. The American one bet on technology, innovation, and scientific leadership, a strategy that ended up consolidating the economic hegemony of the United States after the end of the Cold War. The European one bet on economic integration as an instrument to guarantee peace, stability, and prosperity on the continent. Today, however, the scenario has changed. The United States has decided to renew that bet to face the great technological challenge of the 21st century and preserve its leadership against China. Europe, on the other hand, retains its old bet: deepening economic integration as the main instrument to preserve its competitiveness. Economic history shows that great powers retain their leadership not only by being able to persevere in their major projects, but because they know how to complement them with new bets when the historical context changes.
*Víctor Ausín Rodríguez is a trade and state economist and partner of 'aimTFP'
