China and the US are engaged in a "new cold war" over technology and Beijing is narrowing the gap, the Munich Security Conference has heard.

Participants said Washington was likely to try to maintain its edge by increasing investment in military technology and tightening export controls on advanced chips.

"We're not competing for competing's sake. It is more accurately a new cold war," former Republican congressman Mike Gallagher, now head of defence at Palantir Technologies, told a panel discussion on Friday.

"It is global and the stakes are existential, in which at least one side is trying to destroy the free world. And if we don't understand it as such, I fear we will never muster the sense of urgency that is necessary to not only win that cold war, but prevent it from becoming hot."

He said afterwards that there was still "a window of opportunity right now with the new administration to make game-changing investments in key technologies and leverage AI at scale" for the US military.

"Technologically, I think we [the US] still have a lead, but it is a narrow lead," he added.

Mark Warner, vice-chairman of the US Senate select committee on intelligence, echoed this point, describing China as a "technology peer that we've never faced".

The US-China rivalry - particularly over trade and technology - is expected to intensify over the next four years.

On Donald Trump's first day back in the White House, he revoked a 2023 executive order - that required government inspectors to assess AI safety risks in areas such as human rights or cybersecurity - which the US president said "hindered AI innovation".

He has also warned that the emergence of China's DeepSeek AI model was a "wake-up call" for US tech.

Gallagher, who chaired the House select committee on competition with China, said he was concerned about China's advances and investment in artificial intelligence and robotics "an area where we could start to see our edge really erode".

He also said Trump would do more than Joe Biden's administration to retain that edge.

He called for external pressure on China "if we want to have a hope of deterring them from invading Taiwan in the short term, from controlling the commanding heights of critical technology in the mid term, and from displacing us as the world's sole superpower over the long term".

Beijing views Taiwan as part of its territory that must be reunited with the mainland, by force if necessary. Most countries, including the United States, do not recognise Taiwan as an independent state, but Washington opposes any attempt to take the island by force and is legally bound to arm the island to help it defend itself.

The US has already imposed strict export controls on advanced chips to China, aiming to curb Beijing's military advancements and limit its access to cutting-edge semiconductor technology.

The Pentagon has also launched the Replicator Initiative, which aims to build up thousands of low-cost, expendable autonomous systems across multiple domains to act as a deterrent by August this year.

China is also strengthening its military technology capabilities, including the use of AI.

Jason Hsu, a senior fellow at Hudson Institute, predicted the Trump administration would make AI a top national security priority and seek to "deregulate" the field.

He also predicted that Trump would make it easier for the government to acquire technologies - something "that could spur a new surge of defence tech in the US" - and tighten export controls on the advanced chips sold to China through third party countries.

But he said it was not clear how many chips China had stockpiled, adding: "To me or to the outside, it's a big black box. Nobody really knows what China is capable of, and no one really knows until it sort of exposes itself."

Sun Chenghao, head of the US-EU programme at Tsinghua University's Centre for International Security and Strategy, said China's strengths were in low-cost tech breakthroughs and "figuring out how [existing technologies] can be applied in different areas".

He said the country was catching up with the US in certain fields, which he did not name.

"Of course, DeepSeek is a small exception, but I don't think it is a sign [China is] surpassing [the US] overall," Sun said.

He also predicted that the US would intensify its technological pressure on China, including tighter chip export controls.

Under the Trump administration, there would also be uncertainty regarding efforts on the joint management of AI risks with China, Sun added.

In November, Biden and Chinese President Xi Jinping agreed that any decision to use nuclear weapons should be controlled by humans, not artificial intelligence. Sun said he was uncertain whether Trump "had any interest in this" and warned the lack of trust between the two sides could have an impact on this.

Ekaterina Zaharieva, the EU commissioner for start-ups, research and innovation, said the EU and US could only win the tech race by working together. "So Europe, it's really open to work with the US together. I still think we are like-minded," she said.

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