Just as Britain’s steam engines were bound into networks, China is building the infrastructure to let AI expand
When people talk about Britain’s Industrial Revolution, the name of James Watt is never far from their lips. His improved steam engine of the 1780s has become shorthand for the moment invention changed everything. Watt’s contraption, immortalised in textbooks and museums, is the symbol of the age of the genius lone inventor ushering in prosperity with a single spark.
It’s a lovely story. It’s also wrong. Watt’s engine didn’t transform Britain on its own; the real revolution was systemic. Britain’s rise came from the fusion of technology, labour, capital and empire into a single, self-reinforcing machine. The lesson of the Industrial Revolution is not that invention drives history, but that systems do.
Take Russia. In the 1760s, an engineer named Ivan Polzunov built a perfectly serviceable steam engine when Russia’s metallurgical output actually exceeded Britain’s. But it went nowhere. The water wheels already in use by Russia’s industrial centres in the Urals were cheaper, and they saw little reason to experiment. Innovation without incentive is just curiosity.
Britain was different. Its mines and workshops were scattered across regions with unreliable waterpower but abundant coal. That scarcity produced competition, and competition produced progress. Incremental improvements to Watt’s engine led to broader adoption, which created new demands and new industries. Steam became what economists now call a “general purpose technology”, powering everything from mines and mills to the factories that built more engines.
The United States still leads in creativity but lacks coherence
The result was that Britain raced ahead while Russia drifted. The technology mattered, but what mattered more was how deeply it was woven into the economy, including the canals, coalfields, ironworks, and financial networks that made it possible to scale and improve.
That same lesson applies today. China is attempting to do with artificial intelligence what Britain once did with steam: take an imperfect but potent invention and build an economy around it.
Despite the hype, AI remains primitive. It can summarise documents, spot tumours, and generate code, but it is unreliable, energy-hungry and easily confused. It dazzles, but it doesn’t yet deliver in the way that it one day surely will.
The challenge is to weave artificial intelligence into the machinery of daily life, into the factories, grids and institutions that make progress continuous rather than occasional. On that front, China looks more like industrial Britain than modern America. Beijing’s approach is deliberate and strategic. The state is expanding data infrastructure, semiconductor capacity and power generation to support the spread of the technology. It is less interested in the flashy consumer applications that dominate Silicon Valley and more focused on embedding AI throughout manufacturing, logistics and public administration.
America, by contrast, resembles eighteenth-century Russia. It excels at invention but struggles with integration. The United States is home to the world’s best AI research laboratories, yet diffusion is uneven, supply chains are fragile and politics is paralysed. Silicon Valley’s faith in decentralised disruption sits awkwardly with the heavy infrastructure that large-scale AI requires.
This is not simply an economic story. Britain’s steam and iron industries were driven as much by power as by profit. Coal, iron and shipbuilding were treated as national assets, essential to imperial competition with France and other rivals. China’s AI programme serves a similar purpose. It is both a tool for productivity and a weapon of geopolitical influence in its contest with the United States.
Beijing makes little attempt to hide its ambitions. It treats AI not as a gadget but as infrastructure, the foundation of a new industrial age. Just as Britain’s steam engines prospered because they were bound into networks of mines, canals and global markets, China is building the digital and material framework that will allow AI to expand. Its investments in data centres, rare-earth extraction, power grids and smart logistics are designed to make the technology indispensable.
The contrast with America could hardly be clearer. The United States still leads in creativity but lacks coherence. Its chip supply chains are fragile, access to critical minerals is limited and much of its infrastructure is decaying. Private enterprise has become a substitute for national strategy, admirable in principle but inefficient in practice.
In the nineteenth century, Britain’s networked economy rested on the foundations of empire. Access to markets, capital and resources across the world allowed it to feed the industrial machine indefinitely. The United States now finds itself dependent on the very rival it seeks to contain. China’s dominance in rare earths and its vast energy infrastructure give it an advantage that recalls Britain’s position two centuries ago.
That advantage may not endure. China’s state-led model carries its own risks, including bureaucratic inertia, wasteful duplication and the stifling of the creative spirit on which innovation depends. Yet there is a certain logic in Beijing’s industrialism. It recognises that the real revolution lies not in the brilliance of algorithms but in the breadth of the ecosystem that sustains them.
Two hundred years ago, Britain’s mastery of steam reshaped the world. Artificial intelligence may now be on the verge of doing the same. The crucial question is not who invents the next great machine, but who builds the system that makes it indispensable. In the eighteenth century that system was British. In the twenty-first it looks like it may well be China.
