On July 15, Federal Reserve Chair Kevin Warsh, during a Senate Banking Committee hearing, once again named China as America’s main rival in artificial intelligence (AI). He claimed the two nations are engaged in a “proxy war” over AI dominance and urged U.S. financial institutions to stay alert to potential security risks posed by AI.
According to a report by CFO Dive, this was Warsh’s first testimony to Congress since taking office in May. At the hearing, he said the U.S. is still at the forefront of AI technology but “must not be complacent.” He described China as a “pacing power” in AI, stressing that the competition between the two countries over the next decade is essentially a battle for global influence and leadership.
Warsh also emphasized that the Federal Reserve is pushing regulated banks to be more vigilant against cyberattacks that so-called “adversary nations” might launch using AI. He revealed that since taking office seven weeks ago, assessing AI-related security vulnerabilities has become a top priority. He also announced the formation of a special task force within the Fed to study AI’s impact on financial stability, prices, and employment.
However, Warsh acknowledged that AI development also brings huge opportunities for the U.S. economy. He called AI “the most profound technological change” for the U.S. and the global economy in his adult life, and claimed the U.S. is “in the best position globally” to leverage AI to boost productivity, benefiting American businesses and workers.
In fact, Warsh has repeatedly hyped the so-called “China challenge” in recent years. As early as 2022, he wrote an op-ed in the Wall Street Journal warning that the development of China’s digital yuan could threaten the dollar’s international dominance, and called for the U.S. to launch a “digital dollar” for wholesale payments to maintain dollar hegemony.
In recent years, as China’s AI industry has grown rapidly, the U.S. government has continuously tightened restrictions on chip exports to China and elevated AI competition to a national strategic level. Meanwhile, discussions within U.S. political and business circles about “China catching up to or even challenging America’s AI leadership” are heating up.