Manhattan Project 2.0? US eyes AGI breakthrough in escalating China rivalry

The growing US-China competition in Artificial General Intelligence (AGI) may soon undergo a major policy shift, following new recommendations from the US-China Economic and Security Review Commission (USCC). In its latest report to Congress, the Commission suggests launching a Manhattan Project-style initiative and imposing restrictions on advanced humanoid robots.

Published in November 2024, the annual report presents 32 policy recommendations that could significantly reshape the US-China dynamic, putting AI at the forefront of a new era in strategic rivalry.

The AGI race and tightening tech oversight

Central to the report is a bold proposal: a government-led effort to develop AGI—systems with cognitive capabilities equal to or greater than those of humans.

But the AGI program is only one part of a broader strategic framework. The Commission also emphasizes export controls, tighter investment screening, and revised trade policies to maintain America’s technological edge.

The proposed AGI initiative would involve multi-year contracts with top AI firms, cloud services, and data center operators. It would be given the Department of Defense’s “DX Rating”—the highest national security priority—usually reserved for the most critical projects.

This push for direct government involvement in AI mirrors past technological sprints and raises questions about how much the public sector should influence an area traditionally led by private companies.

Beyond AI, the report calls for additional tech-related measures. One key suggestion is to restrict imports of Chinese-made humanoid robots with high levels of dexterity, mobility, and intelligence.

The Commission also raises red flags about energy infrastructure equipment with remote monitoring functions, reflecting growing fears over vulnerabilities in connected infrastructure. It recommends expanding export controls in semiconductors and calls for greater oversight of tech transfers and outbound investments.

As China pushes ahead with domestic chip production despite global restrictions, the Commission proposes forming an Outbound Investment Office to stop American funding and expertise from boosting China’s capabilities in sensitive technologies.

Rewriting trade and investment ties

Perhaps the most impactful recommendation is to revoke China’s Permanent Normal Trade Relations (PNTR) status. This would mark a dramatic shift in global technology supply chains and trade patterns that have long connected the two economies. The move signals rising concern that such deep integration may now be a strategic liability.

Data transparency is another major concern. The Commission urges stricter reporting on tech investments and transfers, especially those funneled through offshore entities—an area currently lacking in oversight.

The timing of the report is crucial. China’s push for technological independence, particularly through its “new quality productive forces” strategy, underscores its ambition to lead in next-gen technologies. At the same time, advances in AI and quantum computing are intensifying the global tech race.

Still, turning these proposals into reality won’t be easy. AGI remains an immense scientific challenge that money alone may not solve quickly. Meanwhile, curbing tech transfers and investments could disrupt global innovation systems that have benefited both nations for years.

If enacted, these measures would introduce a more complex regulatory environment for the tech sector. Companies would need to comply with stricter rules on foreign investments, tech transfers, and cross-border research efforts.

Navigating what’s next

The success of these initiatives will likely hinge on international coordination. The report stresses working with allies and partners who share concerns about technology security and competitiveness, recommending joint approaches to investment screening and export restrictions.

The US-China tech rivalry appears to be entering a more policy-driven phase, where governments take a bigger role in shaping innovation paths. Whether this strategy accelerates progress or creates new roadblocks remains uncertain, but one thing is clear: the tech world should brace for tighter oversight and a shift in how global collaboration is conducted.