The artificial intelligence race between the United States and China will fundamentally reshape the world order, according to former U.S. Secretary of State Condoleezza Rice, who argues that a democratic system must win because it offers transparency, accountability, and the freedom to innovate openly. Speaking at INSITE 2026, a financial industry conference organized by BNY, Rice framed AI not merely as a technological competition but as a civilizational choice about which political system will guide humanity's most powerful tools.

Why Does It Matter Which Country Leads in AI?

Rice's argument cuts deeper than typical tech competition rhetoric. She contends that it is impossible to predict all the problems AI will create or all of its power, which is why development must occur in an open society with investigative journalism and institutional checks and balances. In contrast, she warned that China will manage AI very differently from a democracy, just as it did with COVID, by hiding problems and lying about them.

The geopolitical stakes are enormous. Rice noted that Xi Jinping stated in 2015 that China would surpass the United States in frontier technologies such as AI, and since then the Asian country has behaved more like a challenger to the global system than a participant in it. This represents a fundamental break from the post-World War II international order that progressively moved toward a non-zero-sum global economy. "For nearly 80 years, we had a system that progressively moved toward an international economy that was not zero-sum. My growth did not come at your expense," Rice explained. That system, she argued, is breaking down.

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"It is a two-horse race, and I want a democracy to win it," Rice stated, emphasizing that the question is not only technological but also political.

Condoleezza Rice, Former U.S. Secretary of State

Is the United States Actually Winning the AI Race?

The picture is more complicated than simple American dominance. Rice acknowledged that the United States holds an advantage in cutting-edge innovation, partly thanks to restrictions on exports of advanced chips to China. However, she warned against complacency: "We make a mistake if we believe everything China does is simply copying".

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She cited DeepSeek, the Chinese AI model that shocked the sector at the beginning of 2025, as a prime example. All national security experts were stunned by its capabilities, Rice noted, but no AI scientist was surprised because "they were reading the academic papers." Remarkably, none of DeepSeek's scientists studied outside China, revealing the strength of China's domestic research ecosystem.

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Rice identified two specific areas where China has a competitive advantage over the United States. These include the speed of AI adoption within its economy and the global spread of its low-cost, open-source models, which are expanding worldwide more rapidly than American models. This asymmetry means that even if the U.S. leads in raw innovation, China may win in practical deployment and market penetration.

How to Preserve American AI Leadership

Rice proposed a framework for maintaining U.S. technological dominance while avoiding regulatory overreach that could slow innovation. Her recommendations center on aligning the interests of key stakeholders:

• Infrastructure Providers: Major cloud and computing companies that supply the computational resources needed to train and deploy AI models must coordinate with policymakers.
• Frontier-Model Developers: Companies building cutting-edge AI systems need clear guidance and minimal regulatory friction to continue advancing the technology.
• Federal Government: Policymakers must establish guardrails without creating bureaucratic obstacles that would push innovation overseas or underground.

Rice called for preserving the U.S. innovation ecosystem and advocated for minimal regulation, proposing that this tripartite alignment could help avoid what she described as "an AI 9/11" without slowing innovation. The implication is that heavy-handed regulation could backfire by driving talent and investment to other countries.

She also emphasized that the answer is not to lay off workers and replace them with AI agents, but rather to explore combinations that enable greater productivity with the same number of people, enhanced by AI tools. This reflects a broader concern about how AI adoption will reshape labor markets and social stability.

What About AI's Impact on Education and Trust?

Rice, who is a professor at Stanford University, raised an alarm about how AI is changing learning and critical thinking. She argued that students must learn how to use AI agents with judgment, treating them as assistants to critical thinking rather than substitutes for it. "If the agent does all the work, the brain stops exercising itself," she warned.

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She cited research documenting how instant access to information reduces the practice of analytical thinking. Where someone once tried to remember the date of the Crimean War, they now simply perform a search. This phenomenon will force a rethinking of teaching methods and the way organizations train their employees.

There is also a troubling domestic trend: Americans are more skeptical of AI than any other population in the developed world. Rice attributed this skepticism to the prevailing narrative that technology will destroy jobs, increase energy consumption, and threaten people. "With that narrative around AI, is it any surprise that people are nervous about such a powerful technology?" she asked.

To illustrate the depth of this anxiety, Rice recounted the story of an 11-year-old daughter of a friend who was remarkably polite to her chatbot. When her father pointed out that it was only a program, the girl replied: "When they come for us, I'll be on the list of people who were nice to it." The anecdote captures a cultural unease about AI that goes beyond rational policy debate.

Rice concluded her remarks by describing AI, robotics, synthetic biology, and space exploration as "civilizational technologies." If future generations can look back and say these technologies were managed wisely, given their immense power, then humanity will have met the greatest challenge of its time. The stakes, in her view, could not be higher.

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