Carney’s Middle Powers Race to Thwart US-China Dominance of AI

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Indian Prime Minister Narendra Modi, who oversees the world’s most populous nation, is looking to AI to create millions of jobs for its growing ranks of youth. It’s already starting to benefit farmers, a key voting constituency: They can now ask an AI chatbot how to access payments from a government-funded scheme, or for information on soil type and the amount of fertilizer to use. 

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In other places, governments are struggling to respond in the face of dire warnings. A World Bank study last year showed 19% of Philippine jobs risk being displaced by AI technologies, posing a majorthreat to its call center industry. Still, the government neither has a dedicated AI minister nor any major AI project underway, despite coming up with a policy “roadmap” and introducing a bill on deepfakes in Congress.

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One major challenge is figuring out the right mix on regulation. Whereas the European Union’s AI Act has been criticized for being overly restrictive, Japan’s AI Promotion Act focuses on innovation without strict bans.

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AI and labor-saving tools are seen as part of the solution rather than a threat to job losses in Japan, where the working-age population has been aging and shrinking fast with chronic labor shortages. Japan’s government has introduced a generative-AI pilot platform across all ministries aimed at speeding up policy and data analysis for overburdened officials, including drafting parliamentary responses. 

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South Korea, perhaps the biggest AI winner so far among the middle powers, has a “core national policy goal” of joining the US and China as one of three AI superpowers, according to the Science Ministry, which is driving policy. The government’s AI budget for 2026 more than tripled to 9.9 trillion won ($6.7 billion). 

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Home to both Samsung Electronics Co. and SK Hynix Inc. — memory chipmakers that are critical to power AI accelerators and data centers — government policy is focusing on large-scale expansion of advanced GPUs, development of proprietary AI foundation models, and expanding AI into manufacturing sectors where it holds a competitive edge including robotics, smart factories and shipbuilding.  

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Rather than focus on legislating against potential downsides, South Korea enacted an AI Basic Act in January that stipulates “the minimum necessary obligations” to foster corporate innovation. It also plans a Special Act on AI Data Centers to streamline the process of building them.  

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That proactive attitude still may not shield South Korea’s government from blowback. After street protests last month, officials helped broker a labor dispute between Samsung executives and union leaders over AI-wage related increases. Yet the solution may bring new problems: Signs of resentment are brewing after some Samsung workers were handed AI bonuses of around 600 million won ($400,000), and others a mere 1% of that sum.

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In one sign of enhanced cooperation among middle powers, France has been seeking to pool knowledge with scientific agreements and contacts between companies in South Korea and Japan, while pushing a joint research center with India in New Delhi, Clara Chappaz, France’s first-ever AI ambassador, said in an interview.

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France is an AI leader in Europe, having deliberately capitalized on its mathematics base, its abundant nuclear power and a rapidly growing tech ecosystem to unveil an AI strategy back in 2018 with the aim of encouraging new ventures. Today it has Europe’s most valuable AI company in Mistral, while Yann LeCun, who was formerly Meta’s AI chief, raised $1 billion in March for his new Paris-based startup, Advanced Machine Intelligence Labs.

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Japan’s SoftBank Group Corp. said on May 30 that it plans to invest as much as €75 billion ($87 billion) in data center capacity in France, which it hailed as poised to become a top European hub for AI infrastructure. France is committed to multilingual AI and access to artificial intelligence for all, according to Chappaz.

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“There is a growing awareness of the strategic and industrial importance — but not only that,” she said. “There are also diplomatic and economic stakes: With this technology comes a dynamic of cultural influence.”

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—With assistance from Jonathan Tirone, James Mayger, Gian Volpicelli, Viktoria Dendrinou, Shruti Srivastava, Olivia Fletcher, Yoshiaki Nohara, Kok Leong Chan, Heidi Taksdal Skjeseth, Andreo Calonzo, Soo-hyang Choi, Yoolim Lee and Irina Anghel.

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