This weekend, Trump met Chinese Premier Xi Jinping to discuss trade. However, much of what they discussed concerned the atoms of physical trade and not the bits of the data economy. Warfare in the 21st-century has become overwhelmingly digital, as has just about everything else. Cars are driven by computers, machines, not men trade stocks, and social media platforms connect us with the world. All these innovations involve a robust artificial intelligence component, and the future in almost everything from warfare to entertainment will hinge on AI.

What is AI and how does it work? AI software uses machine learning algorithms that train themselves on vast amounts of data to deliver predictions with superhuman accuracy. The name of the game is data, and companies or countries with large pools of data and the talent to take advantage of this data will have an edge in AI development. Currently, only two countries currently have enough talent and people that churn out enough zeros and ones to develop their AI capabilities: America and China.

China produces more data than any other country on the planet, and they already boast the world’s fastest supercomputer. Chinese tech companies like Alibaba, Tencent, and WeChat are enormously profitable and innovative enterprises with their thumbs on everything from social media to online payment. However, America’s expertise in manufacturing the chips that power Chinese technological assets is without compare. Look up a list of the world’s top ten semiconductor firms and Chinese firms don’t even place. The Chinese tech industry’s pride and joy, the Tianhe-2 supercomputer, was built using the same Intel chips one might find in their home PCs. If China wants to develop a technological edge over America, it will have to invest heavily in developing not only quality semiconductors but also the next wave of advanced chip-based technology. To offer an outline of what this next wave of futuristic tech might look like, researchers on the cutting edge of science are experimenting with quantum computing and special-purpose AI chips. Does China have the same commitment to innovation as Silicon Valley that will allow them to lead in these new technologies?

Increasingly, the answer is yes. Silicon Valley became the behemoth it is today because of the funding the Valley’s earliest entrepreneurs received from the federal government. Similarly, China invests heavily in a hybrid state and corporate development model. Far from stymying growth, state involvement in the industry has catalyzed growth and innovation. Of course, state involvement in the private sector does not come without its costs to consumers. The Chinese government runs the world’s most efficient and expansive surveillance state, all with the help of technology developed by the companies it has a hand in guiding.

All is not doom and gloom, however. The American government can manage China’s rise as a computing powerhouse by matching Chinese efforts to spur growth by investing more in its own tech companies, which are still by far the most advanced in the world. It could also do more to secure its intellectual property from Chinese hackers and in this respect, the Trump Administration is addressing an issue that should have been addressed long ago. If we can manage the rise of China in technology, then the world could become a more prosperous place as people around the globe benefit from better, cheaper technology. However, by ignoring China’s growing dominance in computing, we are effectively sticking our heads in the sand and hoping that world’s largest surveillance state will behave responsibly.