Rhodium Group Maps 8-Layer AI Race, Warns China Could Dominate by 2035
Updated
Updated · Rhodium Group · Aug 4
Rhodium Group Maps 8-Layer AI Race, Warns China Could Dominate by 2035
3 articles · Updated · Rhodium Group · Aug 4
Summary
An 8-layer Rhodium Group report says US policy is too focused on chips, cloud and models, missing China’s advantages in deployment, devices, connectivity, energy and critical inputs.
China’s strongest leverage sits lower in the stack: it refines 19 of 20 strategic materials, could power 280 GW of US-hardware-equivalent data centers by 2030, and already leads connected-device manufacturing.
The report says G7+ still dominates semiconductors, cloud and digital services, but that edge depends on allied coordination because no single Western market can match China’s scale in demand and production.
Chinese open-weight models are gaining global traction despite a frontier gap, accounting for 41% of Hugging Face downloads in 2025, while cheap deployment helps Beijing push AI into industry and Global South markets.
Rhodium frames 2035 as a choice between a trusted ex-China coalition that pools demand and standards, or a fragmented West that leaves China the default supplier for physical AI and 6G-linked infrastructure.
Beyond Chips and Cloud: How China’s Physical AI Strategy and Open-Weight Models Are Redefining Global Power by 2035
Overview
This report reveals how US export controls on advanced chips have pushed China to shift its AI strategy from chasing frontier models to deploying cost-efficient, open-weight AI across its vast industrial base. Through the state-led 'AI+' initiative, China is rapidly integrating AI into manufacturing and physical infrastructure, outpacing Western rivals in real-world adoption and robot deployment. As Chinese open-weight models become globally popular—especially in the Global South—China is also setting new technology standards and building international institutions like WAICO. By 2035, the world is likely to see a split: a US-led sphere of proprietary AI and a China-led sphere of physical AI and open-weight models, fundamentally reshaping global power dynamics.