China Just Built Its Own AI Governance Bloc That Doesn’t Include the U.S. The Implications Go Beyond Tech.

Published On: July 18, 2026

Yesterday, July 17, 2026, the 2026 World Artificial Intelligence Conference kicked off in Shanghai with more than 1,100 companies, 3,000 AI products, and over 300 global product debuts across a sprawling 100,000-square-meter exhibition floor. It was, by every measure, the largest WAIC since the conference launched in 2018.

While the conference is newsworthy, the real story should focus on what happened the night before the conference opened. On July 16th, representatives from 29 countries signed an agreement establishing the World Artificial Intelligence Cooperation Organization, or WAICO. The new body is an independent intergovernmental organization headquartered in Shanghai, and its stated mission is to promote international cooperation and global governance in AI. Chinese Foreign Minister Wang Yi signed on behalf of Beijing. UN Secretary-General Antonio Guterres attended the ceremony. The founding members include Russia, Brazil, Indonesia, Pakistan, Kazakhstan, Cuba, Venezuela, Belarus, and Serbia, along with ten African nations and twelve Asian nations.

No major Western democracy signed on, but nobody should be surprised by that. The U.S., the EU, the U.K., Japan, South Korea, and Australia were never going to be at that table. We are in the middle of an AI “arms race”, and the Western bloc and the China-Russia bloc have never been on the same side of it.

This Is the Digital Silk Road in Action

WAICO is the latest chapter in a strategy that has been building for years under Xi Jinping’s “Belt and Road Initiative.”

If you are not familiar with the Belt and Road Initiative, it is China’s massive global infrastructure and investment program, launched by Xi Jinping in 2013. China funds and builds physical infrastructure in developing countries (ports, railways, power plants, telecommunications networks) across more than 140 countries, often through loans that create long-term debt dependency. The “Digital Silk Road” is the technology layer of that same strategy: instead of ports and railways, it involves building 5G networks, data centers, undersea fiber optic cables, and smart city platforms, with Huawei as one of the primary contractors. The countries that receive this infrastructure become dependent on Chinese technology rather than American or European alternatives.

WAICO is the latest chapter in that strategy.

China has been working methodically toward two goals: making itself technologically independent from the West, and making other countries, especially those in Central and South America, Africa, and Southeast Asia, dependent on China rather than the U.S. or Europe for technology infrastructure, including AI.

Look at the membership list: Russia, Brazil, Venezuela, Cuba, Pakistan, Indonesia, Kazakhstan, ten African countries, twelve Asian countries. These are nations in China’s sphere of economic influence, many of them already receiving Chinese-built telecommunications infrastructure, Chinese-funded development projects, and now Chinese AI tools and training.

Chinese Premier Li Qiang first proposed WAICO at the 2025 World Artificial Intelligence Conference. For a full year, not a single country publicly announced its intention to join. Then 29 nations formalized their membership at a signing ceremony that turned a stalled proposal into a treaty-backed institution overnight. That kind of coordination does not happen spontaneously. It happens when you have spent years building relationships and dependencies.

WAICO is designed to operate outside the framework of existing Western-led AI governance bodies. On paper, membership is open to any sovereign state, with no requirement that member states adopt democratic governance or Western-style rights frameworks. The stated agenda prioritizes closing the global capability gap and promoting development. In practice, though, China built this organization, China is headquartering it in Shanghai, and China almost certainly has significant control over who actually joins. The Belt and Road Initiative has always been about China’s digital sovereignty and strategic interests, not about empowering other nations to chart their own course. WAICO is the AI chapter of that same playbook.

There is also a data and surveillance dimension to this that warrants attention. Chinese law requires tech companies operating in Belt and Road countries to store certain data on servers in China and submit to security checks. That means data collected through Chinese-built infrastructure flows back to Beijing. China has also been exporting the same surveillance technology it uses domestically on its own population: facial recognition, biometrics, GPS tracking, and AI-powered monitoring systems. “Safe city” projects have installed surveillance networks modeled on China’s Xinjiang security apparatus across cities in Pakistan, Africa, and Southeast Asia. The Cyberspace Administration of China provides training to partner countries on internet monitoring and content management, and countries that participate in these programs frequently adopt cybersecurity laws that closely mirror China’s own. The result is not just technological dependency. It is a governance relationship in which China gains access to the data, the surveillance capabilities, and significant political leverage over the countries that adopt its systems.

The WAIC Conference

President Xi Jinping attended WAIC for the first time in the conference’s nine-year history and delivered the opening keynote. Previous years had been handled by Premier Li Qiang. Xi’s presence alone elevated the event from an industry showcase to a geopolitical stage.

During his address, Xi called WAICO “an important milestone in the history of AI development” and announced that China would provide 5,000 AI training opportunities to developing nations over the next five years. Xi also announced the deployment of MAZU, an AI-powered meteorological early-warning system built on China’s FengYun satellite network, to 30 countries. More than 40 countries have already accessed the platform via Chinese cloud infrastructure, with customized versions deployed in Nigeria, Djibouti, and Pakistan. On the surface, it is a genuinely useful public good. Weather forecasting saves lives, and developing countries often lack the satellite infrastructure to build these systems on their own. That is exactly what makes it effective as a soft power tool. It is the kind of offering that is hard to refuse and easy to frame as benevolent, while extending China’s data collection infrastructure and AI training pipelines deeper into partner countries’ government agencies.

On the exhibition floor, Huawei unveiled its Atlas 950 SuperPod, an AI computing cluster built on 8,192 of the company’s Ascend processors. The system was designed and manufactured entirely without U.S.-origin components. It is China’s most developed demonstration yet that AI infrastructure can be built outside the American semiconductor supply chain.

China’s AI-related industry exceeded one trillion yuan (approximately $147 billion) last year, and the government projects more than 30% growth in 2026. Those numbers reflect industrial policy operating at national scale.

What This Means for Businesses and Brand Owners

For anyone doing business internationally, the practical takeaway is this: we are heading toward a world with two incompatible AI regulatory ecosystems.

Countries that align with WAICO will develop AI regulations that do not need to be compatible with the EU AI Act or GDPR, the OECD’s AI Principles, or the G7’s Hiroshima Process guidelines. If your company operates in markets that include WAICO member states, you will eventually need to navigate both systems. That compliance reality is already taking shape.

Lawyers advising clients who do business in WAICO-aligned markets will need to understand both regulatory regimes well enough to spot the conflicts and coordinate with local counsel who can navigate the specifics. You cannot advise a client on AI compliance or IP protection in those markets if you do not understand how the rules differ from what you are used to working with in the U.S. or the EU.

For intellectual property owners, this fragmentation raises familiar concerns in a new context. AI governance frameworks will shape how AI-generated content is treated, how training data is sourced and licensed, how AI tools interact with existing trademarks and copyrights, and how disputes across jurisdictions are resolved. Different governance frameworks will produce different answers to those questions. A trademark owner whose brand shows up in AI-generated content may find one set of protections under Western frameworks and an entirely different set under WAICO-aligned regimes.

For small and mid-sized businesses in particular, the companies with large legal departments and global compliance teams will navigate these dual systems most easily. You are going to need to build a relationship with an AI lawyer who can keep you updated and make sure you know how to operate in these competing systems compliantly. If you are a solo or small firm lawyer advising small and mid-sized business clients, you need to understand the governance landscape that is forming, because our clients will be operating in it whether they know it or not.

TL;DR

The U.S. has been focused on export controls, restricting China’s access to advanced AI chips and semiconductor manufacturing technology. China’s response has not been to protest the restrictions. It has been to build around them, and to bring as many other countries along with it as possible.

That materialized this week when twenty-nine countries, led by China, signed an agreement to establish WAICO, a new intergovernmental AI governance body headquartered in Shanghai. The founding members are largely nations already in China’s economic orbit through the Belt and Road Initiative, many of them already running on Chinese-built digital infrastructure that routes data back to Beijing. No Western democracy signed on, and none were expected to. This is the Digital Silk Road strategy applied to AI governance: provide the technology, provide the training, and build the dependency and get access to the data.

Yesterday, July 17, 2026, the 2026 World Artificial Intelligence Conference kicked off in Shanghai with more than 1,100 companies, 3,000 AI products, and over 300 global product debuts across a sprawling 100,000-square-meter exhibition floor. It was, by every measure, the largest WAIC since the conference launched in 2018. After signing the WAICO agreement, Xi Jinping attended the conference for the first time in nine years.

At the conference, Huawei debuted its Atlas 950 SuperPod, an AI computing cluster built entirely without U.S. components, and China announced the deployment of its MAZU weather forecasting system to 30 countries through Chinese cloud platforms.

WAICO is a central part of China’s strategy. So is the Atlas 950. So is the broader push to position Chinese open-source AI models as the accessible, supposed “no-strings-attached” alternative for developing nations that cannot afford, or do not want to depend on, American AI infrastructure. China is competing on relationships as much as technology, and it is winning those relationships in regions where the U.S. has been slow to show up.

The result is that we now have two incompatible AI regulatory ecosystems taking shape globally. If you run a business, sell online, use AI tools, or own any form of intellectual property, this affects you. And if you are a lawyer advising those clients, you need to understand both systems well enough to know where they conflict. It would be a good time to develop relationships with local counsel in the WAICO system.

 

Sources

Jessica Eaves Mathews is the founder of Leverage Legal Group, a trademark litigation and brand protection firm. She is an award-winning trademark, copyright and business attorney, AI governance expert, and founder of Leverage Legal Group, a trademark, copyright, AI, and digital regulatory compliance law firm focused on protecting founders, startups, small and mid-sized businesses, and independent creators. She writes about trademark law, copyright, AI governance, and the intersection of law and technology. 

Follow her on www.leveragelegalgroup.com and on www.LinkedIn.com/in/jessicaeavesmathews 

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