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Chart of the week: How US and China collaborate on AI despite rivalry

Figures show countries have worked together on more than 47,000 research papers in the past decade

Fadah Jassem

Fadah Jassem

January 28, 2025

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Despite the talk of a deepening rivalry between the US and China in artificial intelligence, our chart paints a different picture. Far from being locked in a tech war, the two nations are closely linked in AI research, with collaboration driving much of the innovation that underpins the major leaps in AI development today.

Data from the Emerging Technology Observatory at Georgetown University reveals how intertwined these two tech powerhouses are. In the past decade, researchers in China and the US have co-written more than 46,000 papers on AI – more than any other pair of nations. The UK and Australia rank a distant second and third, respectively, on China's list of research partners.

By working together, researchers from China and the US have made progress in fields from machine learning to natural language processing, creating a shared foundation for the next wave of AI applications. Much of this has been achieved through partnerships between US universities such as Stanford and the Massachusetts Institute of Technology (MIT) and Chinese institutions including Tsinghua University.

However, this spirit of collaboration contrasts sharply with the narrative playing out in markets and among tech companies. The recent rise of Chinese AI start-up DeepSeek is a case in point.

DeepSeek made headlines this week with the launch of its R1 model, designed to rival OpenAI's GPT-4. The real shock, however, was not the model's capability, but its cost – DeepSeek says it trained R1 in just two months at a cost of $6 million. By comparison, Meta reportedly spent $60 million to develop its Llama model, while OpenAI is said to have poured more than $600 million into the training of GPT-4.

The extraordinary efficiency of DeepSeek has rattled markets and sparked concerns about whether the US is falling behind in the global AI race. Investors and policymakers have called for accelerated innovation to maintain America's edge.

Yet the data on research collaboration tells a more complex story. While there is undeniable competition in the commercial space, research partnerships between the US and China continue to thrive. The relationship between the US and China in AI is better described as a balancing act – a mix of rivalry and co-operation.

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

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Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

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Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

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