Anthropic Warns of U.S.-China AI Race Risks by 2028

By 2028, the global balance of power in artificial intelligence (AI) could hinge on decisions made today, according to a newly released paper from Anthropic. The AI research firm outlined two possible futures for the escalating competition between the United States and China, emphasizing the critical role of compute access and export controls in determining which nation leads in transformative AI systems.

The report warns that inaction by U.S. policymakers could allow China’s AI development—largely directed by the Chinese Communist Party (CCP)—to catch up or even surpass the U.S. in key areas. “America is starting from a position of strength,” Anthropic stated, but cautioned that loopholes in export controls and widespread distillation attacks on U.S. AI models are enabling Chinese labs to narrow the gap.

The Compute Advantage

Anthropic stresses that “compute”—the advanced semiconductor technology powering AI training—is the most decisive factor in global AI leadership. American firms like Nvidia and AMD dominate this space, while U.S. export controls have stymied China’s ability to access cutting-edge chips. However, enforcement gaps, such as chip smuggling and offshore access to U.S.-origin data centers, have reportedly allowed Chinese labs to circumvent restrictions.

Recent U.S. policies have aimed to tighten these controls. As of May 2026, the Trump administration is weighing additional measures, including pre-clearance of advanced AI models and expanded oversight of AI-related cybersecurity risks. The Pentagon has also ramped up AI adoption, signing agreements with seven tech companies earlier this month to deploy AI on classified military systems.

Two Futures for AI in 2028

Anthropic outlines two starkly contrasting scenarios for 2028:

• Scenario 1: U.S. Leadership Secured – In this future, the U.S. has maintained a 12-24 month lead in AI capabilities, driven by tighter export controls and robust domestic innovation. Democracies set the global norms for AI safety and governance, leading to widespread economic and scientific breakthroughs. The U.S. advantage extends into cybersecurity, significantly reducing the CCP’s ability to exploit critical infrastructure.
• Scenario 2: CCP Near-Parity – Here, gaps in enforcement allow China to access advanced compute and replicate U.S. AI models through distillation attacks. While slightly behind in model intelligence, China’s rapid adoption and subsidized AI exports enable it to dominate markets in the Global South. This results in authoritarian regimes shaping global AI norms, with AI systems increasingly used for repression and military advantage.

Strategic Implications

The stakes for AI leadership extend far beyond technology. Anthropic highlights the dual-use nature of frontier AI, which could accelerate advancements across biotechnology, semiconductors, and military applications. For example, advanced AI models could significantly compress research and development cycles, giving the leading nation a cascading advantage across multiple industries.

China’s “AI Plus” policies, unveiled on May 8, 2026, aim to accelerate domestic AI adoption and integrate AI into critical sectors like defense and manufacturing. Meanwhile, U.S. policymakers are focused on ensuring democratic values underpin global AI development. Upcoming discussions between President Trump and Chinese President Xi Jinping, scheduled for later this month, will reportedly include talks on establishing guardrails for AI competition.

What’s Next?

Anthropic argues that the U.S. has a closing window to “lock in” its lead. Key actions include enforcing tighter restrictions on chip smuggling, addressing offshore compute access, and combating distillation attacks. Without these measures, the firm warns, the U.S. risks losing its strategic advantage.

With transformative AI systems expected to emerge by 2028, the decisions made now will shape the geopolitical and economic future of the next decade. For traders and investors, the stakes are equally high: the outcome of this competition will likely determine which nations and companies dominate the AI-driven economy.

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