China's seemingly contradictory AI policy—promoting both openness and strict control—stems from its view of AI as a "normal technology" akin to the internet. Unlike some in the West who see it as an existential risk, Beijing sees a technology that should be diffused as widely as possible for economic gain, while managing its risks with conventional tools like robust cybersecurity.

The intensity of Chinese AI regulation fluctuates with the government's confidence in its domestic industry. When feeling behind (post-ChatGPT), they eased up to foster innovation. After recent successes, they feel more secure and may re-assert stricter, more hands-on control.

Contrary to fears that U.S. regulation cedes ground to China, the CCP has strong self-interested reasons to regulate AI. It is highly concerned with internal stability and control, cracking down on AI-driven social disruption and the risk of domestic cyberattacks, independent of Western policy.

Beijing manages new technologies in three distinct phases. First, it 'Controls' political and speech risks (censorship). Second, it 'Harnesses' economic potential (e.g., AI+ initiatives). Finally, it 'Governs' the broader societal impacts like labor displacement and addiction.

Xi Jinping's emphasis on "openness" in AI may be primarily aimed at a domestic audience. It serves to reassure Chinese AI researchers and developers that a harsh government crackdown, like the one against Jack Ma, is not imminent. This signaling encourages innovation by making them feel the government is on their side, at least for now.

Contrary to the argument that regulation stifles innovation, China has implemented extensive AI regulations over the past four years. During this same period, its AI technology has made significant inroads, challenging the notion that a laissez-faire approach is essential for competitiveness.

Contrary to expectations of a closed system, authoritarian China has taken the lead in developing the world's best open-source AI models. This may be a deliberate strategy to accelerate its progress by attracting a global community of developers to build on its platforms.

While the U.S. stalls on AI legislation, China is actively regulating it. This has led to significantly higher public trust and adoption in China (87% trust vs. 32% in the US), creating a more stable environment for AI development and deployment.

China’s leadership views AI as a normal technology, unlike Western leaders shaped by sci-fi warnings. They have not yet had a 'Mythos moment'—a domestic AI displaying shocking autonomous capabilities. Such an event would likely cause a sudden policy pivot from openness to a strict lockdown.