Ex-Pentagon Official: China’s Ecosystem Strategy Eclipses US AI Lead

Is America's AI lead already history? On August 2, CNBC ran an opinion piece with a blunt message: The US lead over China in AI is all but gone. We need a change in national strategy.

Facing a barrage of breakthroughs from Chinese AI companies, the article presses a harder question. The real issue isn't whether China can compete at the frontier. It’s whether Washington can adapt fast enough to a rapidly maturing Chinese innovation machine.

The author Dewardric McNeal is a former US Defense Department official from the Obama years, where he handled East Asia and China security. Now he's managing director and senior analyst at Longview Global, a consulting firm.

Ex-Pentagon official: US AI dominance is vanishing. We must learn from China's strategy.

Look at the buzz around DeepSeek, Moonshot AI's Kimi K3, Alibaba's Qwen models, Tencent's Hunyuan, Zhipu AI, and MiniMax.  It's solid proof that China has built an AI ecosystem that churns out world-class capabilities from not one, but many companies.

The Ecosystem vs. the One-Off Mindset

McNeal argues that China's AI ecosystem isn't just leading on model benchmarks. It's pulling ahead on cost, deployment, customization, financing, standards, developer adoption, and global reach. The US, meanwhile, is stuck in reactive mode. It's scrambling to respond to one breakthrough after another, rather than shaping the playing field.

China's AI breakthroughs aren't flukes. They stem from a deliberate, world-class innovation ecosystem.

That's a bigger deal than any benchmark score or model launch. Policymakers, tech CEOs, investors, and US allies should be paying attention. The competition has moved beyond individual companies. It's now a clash of entire innovation ecosystems.

The biggest misjudgment? Washington, according to the article,  still views China's AI advances through the lens of individual companies and single technologies. But China is building something far more formidable: a complete industrial ecosystem.

“Whether those advances emerge through original innovation, engineering optimization, open-weight collaboration, or from distillation of US models is increasingly beside the point. The larger strategic reality is that they are occurring across an ecosystem, while the US continues to evaluate them one company at a time and often responds as though each breakthrough were an isolated event rather than evidence of a broader structural transformation.”

In McNeal’s view, projects like DeepSeek, Kimi, and Tongyi Qianwen are not isolated cases. They are pieces of a coordinated whole.

Over the past few years, the US has consistently underestimated China's long-term tech investments and its ability to turn domestic industrial strategy into global competitive advantage. From rare earths to EVs, robotics, semiconductors, and now AI, the pattern is the same.

China's AI breakthroughs aren't flukes. They stem from a deliberate, world-class innovation ecosystem.

McNeal noted: “the analytical mistake has remained remarkably consistent.”  The US tends to assess China's progress product by product, dismissing each advance as “exceptional” or “unsustainable”. China, on the other hand, has pursued a patient, meticulous strategy. It's cultivating conditions for the entire ecosystem to innovate and deploy in sync.

McNeal points out that China's plan to become a tech superpower was set long before Biden's tech restrictions came into play. DeepSeek's R1 release in January 2025 was a wake-up call. It forced many to finally admit what China has been signaling for over a decade through industrial policies, five-year plans, and national science and technology strategies.

China's Full-Stack Strategy Goes Global

China’s ecosystem strategy aims to shape the competitive environment for technology R&D, financing, standardization, deployment, and ultimately promotion and application.

Together, a giant net is woven: industrial policy, finance, innovation, global standards, university curricula, state-supported developer ecosystems, diplomacy, and commercial expansion, bonded into a single coherent national strategy. The objective: lock in long-term technological leadership.

It doesn't compete company by company or technology by technology. It shapes not just the technology itself, but the environment and conditions for technological success.

AI is the strategy's clearest expression today. But it's hardly the only one.

The same logic runs through China's push in semiconductors, electric vehicles, batteries, robotics, telecom, renewable energy, critical minerals, digital infrastructure, and advanced manufacturing. AI is no exception to China's industrial strategy, but the most refined version of it.

McNeal argues China is now taking this AI playbook global. It's pushing its technology outward through open-source development, international cooperation, and targeted promotion to developing countries. The goal: expand the reach of its tech ecosystem.

The old US playbook won't work here. Washington once squeezed Chinese telecom firms. But that model is much harder to replicate in AI. Why? Because AI adoption hinges on the autonomous choices of global developers, enterprises, and governments.

The article cites US Commerce Secretary Lutnick's earlier comments on chip export restrictions. He indicated that Washington wants to make global users unable to leave the American tech ecosystem. But the author pushes back, questioning whether the US technology ecosystem is really the best choice right now.

Moonshot AI's Kimi K3 is the latest Chinese model turning heads in the US tech world.

The Bottom-Up Battle Washington Can't Win

Forget the Huawei playbook. McNeal draws a sharp contrast. Steering countries away from Chinese AI, he argues, is a far tougher challenge than Washington's earlier crackdown on Huawei and ZTE.

Governments can regulate telecom infrastructure. But they can't stop millions of developers from weaving AI models, software libraries, and tools into commercial applications worldwide.

The reason? Technology adoption today is a bottom-up wave, not a top-down decree.

The article lands on a blunt conclusion. For the US, the real question isn't just whether American tech firms can keep building the world's most powerful AI models. It's whether Washington can craft a coherent national strategy.

Because once the fight shifts to ecosystems, success hinges on more than which model tops the leaderboard. It depends on which ecosystem global developers, researchers, entrepreneurs, universities, companies, governments, and investors choose to trust, adopt, and rely on.

Mao Paishou

** 博客文章文責自負,不代表本公司立場 **

When the Russia-Ukraine war broke out, energy costs in Germany, a country heavily reliant on Russian natural gas, spun instantly out of control. Electricity prices at one point surged sevenfold, forcing ordinary people to dream up all manner of clever tricks to save on their power bills. One of those tricks has become a distinctive sight on German streets: the "balcony solar" system.

To cut power bills, Germans turned balconies into power plants.

"Balkonkraftwerk": Miracles On Balconies

This simple generating setup costs just a few hundred euros, yet more than 1.33 million units have been installed across Germany in three years. The German government has even amended the law, granting tenants with no rooftop of their own priority installation rights.

What Germans call the "Balkonkraftwerk", or "balcony power plant", is actually just one or two solar panels hung outside the railing, an inverter the size of a shoebox, and a plug that goes into a household socket. The current then flows back into the home: the inverter sets its output voltage slightly higher than the 230V household supply, so solar power feeds in reverse into the wiring. A small storage battery can be added to keep the power coming at night.

The "Balkonkraftwerk": railing-hung panels, a shoebox-sized inverter, one plug.

The principle is not complicated. It works rather like a water supply system. Pipes maintain a steady pressure; turn on the tap and the pressure difference pushes the water out. The grid works the same way. China's standard household voltage is 220V and Germany's is 230V. The inverter in a balcony photovoltaic module simply nudges its output voltage slightly above the socket voltage, pushing solar power back in.

Once the current enters the socket, it is consumed on the spot, "drunk up" by the appliances at home. Less electricity is drawn from the grid, and the meter turns more slowly. If no appliances are running, then in areas where bidirectional metering is permitted, the surplus power flows out of the home along the mains line and back into the grid.

A Few Hundred Euros, Real Money Back

A "balcony power plant" sells for roughly 200 to 500 euros, depending on output. The best-selling 800W model goes for about 350 euros. A solar-plus-storage package with a battery costs between 800 and 1,500 euros.

A granny who lives in Stuttgart finds a 300W system enough to cover her basic needs: lighting, the router and electric fans. She now checks the next day's sunshine forecast every evening. If the sun will be out, she schedules a bike charge or runs the dishwasher. "Save whatever you can," she says.

Granny's 300W system covers her lights, router and fans.

Her nightly ritual: the sunshine forecast. "Save whatever you can."

Weyland, a young man in the northern city of Kiel, hung two panels with a combined output of 600W on the balcony of his rented apartment. In good weather they cover half of his daily electricity use. The whole system cost under 500 euros, yet saves him more than 90 euros a year, a payback period of about five years. These days he spends his time glued to the app, watching the generation figures roll in.

Kiel renter Weyland's two balcony panels total 600W.

In southern Germany, where the sunshine is better, a standard 800W system generates about 750 to 850 kWh a year. At last year's average price of 0.39 euros per kWh, that puts up to 295 to 334 euros a year back in the user's pocket.

For an ordinary household consuming 3,000 kWh a year, saving is about  25 to 28 percent. A single-person household using around 1,500 kWh could ideally save 50 to 57 percent.

No Roof? No Problem

Europe used to put solar panels on rooftops. But more than half of Germany's population lives in rented housing, the highest share in the EU. That means no roof, no land, nowhere to put panels, and no eligibility for the complicated installation and grid-connection approval process.

No roof, no problem: balcony solar is the tenant's lifesaver.

That was when Chinese manufacturers stepped up, Anker Innovations, EcoFlow and Zendure among them. They launched lightweight, low-cost balcony solar kits that skip the tedious paperwork and are far easier to use.

Panels have been slimmed down from the traditional 20kg to just 3 to 5kg. Hook-style railing clamps fix them in place with a few screws. Some models can simply be lashed on with metal cable ties, and they can be taken down easily when moving.

Voltage has dropped from the 600V to 1,000V high-voltage direct current of rooftop solar to a safe 30V to 60V. The plug goes straight into an ordinary socket, and monitoring is done entirely through an app. Installation and use are virtually "zero-threshold". German young people love it. Chinese manufacturers have turned solar "engineering" into a consumer electronics product for everyone.

Berlin Gives the Green Light

The German government has also given the green light. A legislative amendment in May 2024 allows self-installation without prior approval; simple registration afterwards is enough. Balcony solar is now a "privileged installation", on par with disabled-access facilities and EV charging points. Landlords and owners' committees may not block installations on grounds such as "spoiling the view". A landlord who wants to refuse must prove a safety hazard; if the tenant can fix the hazard, the installation goes ahead anyway. The government also waived the 19 percent VAT, and cities including Berlin and Stuttgart have rolled out dedicated subsidies of up to 500 euros. All income from generation is exempt from personal income tax.

With the government "loosening the reins", balcony solar has grown rapidly. Around 260,000 units were added in 2023. The figure soared to 435,000 in 2024, and another 430,000 or so were registered in 2025. That is 1.1 million units installed at lightning speed in three years. By May this year, cumulative installations had reached 1.33 million, the equivalent of more than a thousand German households signing up every day.

Policy green light: install first, register afterwards.

Other European countries have followed suit. The Netherlands had reached 600,000 cumulative installations by the end of 2025, the highest penetration after Germany, with nearly 5 percent of households equipped. Austria has installed 250,000 units, Italy 200,000 and Belgium 150,000.

Made in China, Invisible at Home

Of the solar panels imported into Europe, 98 percent come from China, and 70 percent of micro-inverters are Chinese-supplied. In balcony energy storage, Chinese companies had already secured the first seven places of the top ten best-seller spots in Europe as early as the third quarter of 2024. Industry forecasts see global installed balcony solar capacity exceeding 50 gigawatts by 2030, with China likely to claim more than 40 percent of it.

Yet in China itself, these products are practically invisible in cities. For one thing, electricity in China is genuinely cheap. For another, China follows a "centralized plus distributed" path.

The northwest builds gigawatt-scale centralized solar bases across deserts and the Gobi on a massive scale, using ultra-high-voltage transmission to solve the geographic mismatch. The east develops distributed solar on factory and detached-house rooftops. Rural rooftops easily run to tens or even hundreds of square meters, accommodating 20kW to 50kW systems. That is dozens of times the generating capacity of balcony solar.

With no domestic demand to speak of, Chinese companies have nonetheless struck overseas demand with pinpoint precision and taken command of the global balcony solar market. The same story has played out with saddle-style window air conditioners, fully automatic lawnmowers, electric-assist bicycles and AI game-tracking cameras. To Western politicians, China's technological rise is a threat. But to ordinary people abroad, Chinese products have made life better, time and again.