01/12/2025
In “AI-Centered Industrial Revolution and the Institutional Race,” Professor Chenggang Xu argues that the AI-driven industrial revolution is historically unprecedented, transforming intelligence rather than physical power. He reframes the often-discussed US–China competition as an institutional race, where political, legal, and economic systems determine societies’ ability to generate and sustain disruptive innovation.
Historical patterns show that industrial revolutions consistently emerged in democracies with constitutionalism, rule-of-law, and market-based incentives. Such institutions fostered “0-to-1” breakthroughs, while totalitarian regimes could only scale existing technologies (“1-to-N”). Applying this framework, Xu shows that US democracy benefit from venture capital, open scientific exchange, and market-driven AI adoption. China, despite strategic planning, faces structural constraints, including limited domestic demand and deflation, restricting the development of original AI breakthroughs.
Ultimately, Xu concludes that institutional quality, more than geopolitics, will determine leadership in the AI-centered industrial revolution, offering a clearer lens to understand and contextualize the US-China AI race.
Composed by: Nicole Richi (TSE senior student)