I don’t think China is trying to race America [in anything honestly]. The US is like a schoolyard kid saying they beat you in a competition you weren’t even aware of. As a somewhat tangential example, look at their recent strides in the chip industry. They didn’t do this out of some desire to beat western manufacturers, they just did it because it was necessary with the US trying to cut off their supply.

As far as AI, China seems to be more interested in using AI for pretty dedicated tasks, which AI can actually be a useful tool for. They don’t see the benefit of trying to generally replace people, so aren’t. Not that there aren’t researchers focusing on that kind of thing there too I am sure, but it doesn’t seem to be of widespread interest right now.