AI Race in Military Sector: U.S. AI Ambitions in Face of Budget Constraints and Chinese Competition

Concept art from the Air Force Research Laboratory shows a potential next-generation fighter concept

In modern warfare, the conversation invariably turns to the role of artificial intelligence (AI) and its transformative impact on military capabilities. From autonomous drones to sophisticated surveillance systems, AI is poised to redefine the nature of combat.

Yet, despite the technological promise, the gap between ambition and reality remains significant, particularly within the Pentagon. As budgetary constraints tighten their grip, questions about the United States’ ability to maintain its military superiority arise. It becomes increasingly clear that when it comes to military power, countries are defined by what they purchase, not just by what they aspire to achieve.

This concern is not lost on those familiar with both the inner workings of the U.S. military and the broader geopolitical landscape. As a former Chief of Naval Operations and a past member of the Joint Chiefs of Staff, I have witnessed the impressive growth of China’s military. Engaging in non-governmental dialogues across Asia, including with China, has provided firsthand insight into how the Chinese military’s capabilities are rapidly advancing. Chinese ships, aircraft, and technology might not yet match the sophistication of their American counterparts, but they are closing the gap. With AI becoming an increasingly vital component of modern warfare, Beijing’s focus on integrating this technology is evident, as is its determination to lead the world in AI-powered military capabilities.

Emergence of AI-Powered Warfare

In an era where AI technology is reshaping industries across the board, its role in warfare is undeniable. Years ago, the U.S. Air Force and Navy embarked on ambitious projects to create sixth-generation, AI-powered fighter jets. The intention was clear: to outpace Chinese advancements and maintain global dominance in the air. These projects led to the development of two distinct programs: the F/A-XX for the Navy and the Next Generation Air Dominance (NGAD) System for the Air Force. Although these systems cater to different operational environments—one for sea-based operations and the other for land-based missions—their objectives are aligned. They aim to ensure that the United States remains the premier power in AI-driven air warfare, establishing a new frontier in military technology.

However, ambition alone is insufficient. These projects require substantial financial investments, sustained research and development, and a long-term commitment from both the Pentagon and Congress. The Fiscal Responsibility Act passed by Congress last year has significantly impacted the military budget, causing delays and potential cancellations of critical programs. In March, the Navy postponed $1 billion in funding for the F/A-XX project. The Air Force has signaled similar concerns, suggesting that “tough decisions” may be on the horizon for the NGAD, including possibly ending the program entirely.

The potential consequences of such budgetary constraints are alarming. China’s military advancements are progressing rapidly, with a goal to have its own next-generation fighter system operational by 2035. If the United States fails to accelerate its AI-powered warfare initiatives, it risks losing its long-held air superiority. The global military AI market, valued at nearly $9 billion today, is projected to reach $25 billion by 2032. Countries like China and others with malign interests see this as an opportunity to challenge American dominance. If the U.S. hesitates or delays its modernization efforts, it effectively cedes ground to its adversaries.

Statements of commitment to AI and technological innovation ring hollow if not backed by action. The current pace of development and funding constraints suggest a lack of urgency that Beijing is undoubtedly monitoring. China’s goal to complete its military modernization by 2035 is not just a statement but a plan actively being pursued. The Pentagon, particularly the Air Force and Navy, must align their budgets and strategies to ensure the timely delivery of these critical systems. Congress, charged with providing for the common defense, must prioritize funding these programs to secure the United States’ position in the military AI race. In the high-stakes world of warfare, there is no second place.

China’s Strategic Advances

In many ways, China is already ahead. The country’s civil-military fusion strategy integrates civilian and military efforts, leveraging China’s position as a global manufacturing powerhouse to accelerate military development. This synergy between civilian industry and military objectives allows for rapid innovation and deployment of advanced systems.

The maritime domain offers a clear example of China’s strategic advantage. Between 2015 and 2020, the People’s Liberation Army Navy (PLAN) surpassed the size of the U.S. Navy, a trend that shows no signs of slowing. The Office of Naval Intelligence reports that China’s shipbuilding capacity far exceeds that of the United States, a reflection of its robust military and commercial shipbuilding industry. According to the Pentagon’s China Power Report, the PLAN added 30 ships last year alone, while the U.S. Navy managed to commission just two new vessels. This disparity is expected to widen as the U.S. reduces its submarine purchases in 2025, and other shipbuilding programs face delays.

The U.S. Air Force confronts a similar challenge. During testimony before the Senate Armed Services Committee in March, Navy Admiral John Aquilino, then the head of U.S. Indo-Pacific Command, warned that “the world’s largest navy [is] soon to be the world’s largest air force.” He emphasized that “the magnitude, scope, and scale of this security challenge cannot be understated.” China’s production rate of J-20 fighter aircraft, estimated at 100 units annually, is closing the gap with the United States’ output of approximately 135 F-35s, of which only 60 to 70 are allocated to the U.S. Air Force. As with shipbuilding, this trajectory points to a future where the United States may find itself outpaced in both quantity and technological sophistication.

The potential consequences of losing the AI arms race extend beyond immediate military capabilities. This is about safeguarding American jobs, maintaining a robust industrial base, and preserving the technological edge that has long been a cornerstone of U.S. national security. The development of advanced military systems is not just about producing cutting-edge fighter jets or naval vessels; it is about nurturing a complex ecosystem of companies, suppliers, and skilled workers who contribute to these extraordinary machines and the technology that powers them. Failure to invest in this ecosystem risks eroding the United States’ industrial capacity, diminishing its ability to innovate, and ultimately compromising its national security.

The United States’ technological and military superiority has been built on a foundation of sustained investment, research, and development. The innovations that emerge from military programs often have far-reaching implications, driving advancements in civilian technology and contributing to economic growth. The development of AI-powered military systems is no exception. The technologies that enable autonomous flight, advanced sensor systems, and AI-driven decision-making will have applications beyond the battlefield, potentially revolutionizing industries ranging from transportation to healthcare.

Strategic Investments and Policy Changes

To ensure that the United States maintains its leadership in AI-powered warfare, a multifaceted approach is needed. This begins with a clear recognition of the strategic importance of AI and a commitment to prioritizing its development within the defense budget. The Pentagon, Congress, and the broader defense community must work together to secure the necessary funding for programs like the F/A-XX and NGAD. This means making tough choices about resource allocation, but it is a choice that is essential for maintaining national security.

Beyond funding, the United States must also adopt a holistic approach to AI development that leverages the strengths of both the public and private sectors. Collaboration with the tech industry, academia, and international allies can accelerate innovation and bring fresh perspectives to the challenges of integrating AI into military systems. The U.S. has a unique advantage in its vibrant tech ecosystem, which has already produced some of the world’s leading AI research and applications. By fostering partnerships between the military and these innovators, the U.S. can ensure that it remains at the forefront of AI technology.

Additionally, the United States must take proactive steps to protect its AI research and development from espionage and intellectual property theft. China’s track record of acquiring sensitive information through cyber espionage and other means is well-documented. To safeguard its technological edge, the U.S. must strengthen its cybersecurity measures, protect critical infrastructure, and implement policies that prevent the unauthorized transfer of technology to potential adversaries.

The race to develop AI-powered military capabilities is not just about achieving technological superiority; it is about securing the future of national defense in an increasingly complex and competitive global landscape. The United States has long been a leader in military innovation, but maintaining that position requires continuous investment, strategic vision, and a willingness to adapt to new realities.

China’s rapid advancements in AI and military technology pose a significant challenge to the United States. The decisions made today about funding, development, and strategic priorities will determine whether the U.S. can maintain its air and naval dominance. It is a challenge that cannot be taken lightly. As history has shown, the nation that leads in technology will lead in power. In the realm of AI and warfare, there is no room for complacency. The United States must act with urgency, commit to its AI ambitions, and ensure that it remains the world’s preeminent military power.

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