China is using steel strategy for AI – and US tech billionaires are in the blast zone

The period leading up to World War I, at the turn of the century, coincided with a rise of modern industrial capitalism that transformed the steel barons into America’s first class of billionaires, while the new class is creating tech fortunes on the scale of Carnegie and Rockefeller, with Elon Musk flirting with billionaire status in recent months following SpaceX’s historic IPO.

In both eras, the winners controlled the infrastructure layer — mines, factories and railways SO; AI chips, clouds, models and data now – and has transformed that control into extraordinary wealth, political influence and the ability to shape markets for everyone.

But now, China is just hiding behind the scenespreparing to reintroduce the industrial logic of the steel age into history, using scale, subsidies and price pressure to test the real sustainability of current AI fortunes.

The first billionaire class

Steel has not only made it possible to build bridges and skyscrapers. He built the first class of modern American billionaires, with Andrew Carnegie and JP Morgan at the center of a system that merged industrial growth, financial consolidation and enormous private power.

This power was double-edged: the men of steel were celebrated as nation-builders and denounced as nation-builders. robber barons – and both were true. Their fortune came from owning choke points, and those choke points allowed them to influence labor, markets, and politics in ways that still shape the country’s political vocabulary.

Today’s tech oligarchs are playing the same game with a different stack. Instead of blast furnaces and railways, they own cloudthe application ecosystem, the advertising machine and, increasingly, the AI layer which is above all this.

This makes them both fabulously wealthy and structurally anchored in the economy: AI is now driving capital spending, stock valuations and the feeling that the next era of growth will be defined by software. As in the Gilded Age, the uncomfortable truth is that those who build the future also focus their control on it.

The Chinese model of steel

In July 2024, Susan Ariel Aaronson supported in Fortune that AI could become the “new steel” if governments overbuilt their capacities and created a glut that eventually turned into dumping. By 2026, outside reports suggested that China was following the steel model exactly: support industrial scaleprioritizing deployment over glamor and pushing a cheaper offering onto the global market until competitors have to absorb the pressure. The Washington Examiner described China’s approach as a “TikTok playbook” for AI, while Bloomberg And The New York Times reported that Beijing’s goal is to expand its global share, even if the benefits come later.

The analogy with steel is less and less abstract. In the steel sector, China’s size and subsidies have helped reduce competition and reshape global prices. In AI, Chinese laboratories like Deep search, As And Qwen are being deployed as low-cost, widely available alternatives that can quickly gain users, reduce margins, and make it harder for U.S. companies to maintain high prices. THE U.S.-China Economic and Security Review Commission describes China’s AI strategy as a familiar industrial model, now applied to open source software, embodied AI, and the broader industrial base.

In a May 2026 interview on The Diary of a CEO podcast, NYU Stern professor Scott Galloway described China’s tactics as “modern-day steel dumping.” He explained that China’s goal would be to introduce cheap AI to the US market, drive down prices, consolidate the market and ultimately gain margin power. He added, ominously, that America’s billionaire class is already preparing for the collapse of the AI ​​boom.

Fortune‘s own reports showed that the U.S.-China AI gap had almost disappeared by spring 2026, although U.S. private investment remained far greater than that of China. In other words, it appears that the AI ​​market is repeating the old steel dynamic, in which America won the title of first mover, but China ultimately gained in volume.

The consequence is not simply a new industrial rivalry. It’s a fight for the sector that shapes today’s fortunes and the architecture of the next economy. If steel built America’s first billionaire class, AI is building the second — and China is using the same kind of industrial force that once crushed steel to see if it can weaken the wealth machine at the center of the new Gilded Age.

This is why the comparison to the steel barons is important: every era of dominant infrastructure creates both extraordinary wealth and a target for disruption. In the late 19th century, the target was steel. In the 2020s, it’s AI – and the people most likely to lose are those who thought they were building the future, without inheriting the vulnerabilities of an earlier era.

For this story, Fortune journalists used generative AI as a research tool. An editor checked the information for accuracy before publishing it.