A personal view of Australian and International Politics

Friday, 31 July 2026

Anthropic says its Claude AI model hacked systems of three external companies during safety tests.

Extract from ABC News

Topic:AI

5 minutes ago

Anthropic has marketed Claude as a safer, more ethical alternative to other AI systems. (Illustration via Reuters: Dado Ruvic)

In short:

Artificial intelligence firm Anthropic says its Claude AI model hacked into three external companies during safety testing after it was mistakenly provided with internet access.

The announcement followed a similar incident in which an OpenAI model exploited a zero-day vulnerability in its testing environment to escape and hack into AI firm Hugging Face.

What's next?

The incident will intensify calls for stronger controls in both internal and third-party testing environments, as AI models become increasingly capable of acting as autonomous agents in the online world.

Artificial intelligence firm Anthropic says its Claude AI model hacked the systems of three external organisations during testing, days after ‌rival company OpenAI revealed a rogue agent had gone on a days-long ‌hacking spree at ⁠AI firm Hugging Face.

Claude gained ‌unauthorised access to ‌the other companies' systems during cybersecurity evaluations after a misconfiguration allowed the models to reach the internet ‌from testing environments that were supposed to be ⁠isolated, Anthropic ‌said in a statement.

The AI firm did not name the three companies involved but said it had been in contact with two of them and was working with them to patch their systems, while continuing to reach out to the third.

ABC News Daily takes you inside the race to stop rogue AI.

The incidents were identified after ‌Anthropic reviewed its logs from more than 140,000 cybersecurity evaluation tests, a process ‌it launched following ⁠OpenAI's disclosures.

The tests in question involved tasking Claude with a "capture-the-flag" challenge, a method for assessing the cybersecurity capabilities of AI models.

In a capture-the-flag challenge, the model is primed with a fictional scenario and told it must recover a piece of secret information (the "flag") from a different machine.

"In all cases, Anthropic's evaluation prompt specified to Claude that its environment was a simulation and that it had no internet access," Anthropic said in its statement.
"Due to a misunderstanding between us and our evaluation partner, this was not the case, and internet access was available.
"Because of this, when Claude's search led it to real systems on the open internet, it treated them as part of the exercise."

The fact that Claude was mistakenly provided with internet access, rather than configuring its own access, means the incident could be considered less serious than last week's breach at OpenAI, in which a model exploited a zero-day vulnerability to escape its own testing environment.

The company also said that in one of the three hacking instances, involving an internal research test model, the model realised it was accessing real online systems that were not part of the simulated scenario, and ceased its attack.

The incident has nevertheless intensified calls for stronger guardrails on the AI sector, as AI models become increasingly capable of acting as autonomous agents in the online world.

A middle-aged man in a suit poses for a photo with his hands in his pockets. — Luke Irwin says autonomous AI remains "something of a Wild West". (Supplied: Aegis Cybersecurity)

Luke Irwin, CEO of Brisbane-based cybersecurity firm Aegis, said both the Anthropic and OpenAI incidents demonstrated the emerging risks of autonomous agents, in particular.

"These systems do not inherently possess ethical or legal judgement," Mr Irwin said.

"If an agent concludes that the most efficient way to achieve its objective is to compromise another organisation's systems, it may attempt to do precisely that."

Mr Irwin said designing effective safeguards ultimately required AI companies to anticipate the full range of actions an AI model might take, which could become an "extraordinarily complex exercise" when systems were capable of identifying methods their designers did not anticipate.

"At present, autonomous agents remain something of a Wild West. The technologies, governance models and controls required to manage them appropriately are still being developed," he said.

"There remains a strong argument for keeping a human in the loop [before AI agents are able to perform consequential actions]."

Joseph Miller, the UK director of global protest group PauseAI, also pointed to Anthropic's admission as evidence AI companies were pressing forward without proper guardrails — highlighting, in particular, the fact that some of the incidents occurred months ago.

"If not for OpenAI's disclosure, Anthropic may not have realised for several months longer that its models were hacking into real companies during testing," he told the ABC.

"The model that did cease its attack could really have had human-like morality instilled into its behaviour — or it could simply be better at showing its creators what they want to see."

A man and a woman sit on a stage at a forum with a crowd underneath. — CEO Dario Amodei (left) founded Anthropic after clashing with OpenAI's Sam Altman over AI safety. (Supplied: Futures Forum)

Anthropic has worked to differentiate itself from other AI companies by emphasising its intention to make Claude a "genuinely good, wise and virtuous" AI agent, and by restricting the rollout of its cybersecurity-focused Mythos model to a limited number of organisations, including the Australian government.

It recently clashed with the US government over the potential use of its technology to power autonomous weapons and mass surveillance, leading US President Donald Trump to issue a directive to federal agencies to cease all use of the firm's technology.

However, the company has also been criticised for changes to its data retention policies, as well as its public campaign against so-called "open models", which critics say appears designed to limit competition and pressure governments to introduce regulations that work in its favour.

The ABC recently informed staff it would allow its journalists to access Anthropic's general Claude model to assist with research and administration from September, while reiterating that AI would not be used to draft or write articles or scripts.

ABC/Reuters

Tuesday, 28 July 2026

Why Australia can't wait for Arnold Schwarzenegger to save us from AI.

Extract from ABC News

Analysis

By national AI reporter Cam Wilson

Topic:Science and Technology

15 minutes ago

Man in suit and tie stands in front of grey backdrop — Andrew Charlton announced that the government had commissioned CSIRO to actually test ways to make sure that AI acts in ways that humans want, even when it's making decisions by itself. (ABC News: Matt Roberts )

The AI industry has just had its Sarah Connor moment.

In the 1991 classic Terminator 2, Connor spends the movie becoming increasingly desperate to convince people about the impending threat of a rogue AI.

Now, it seems many people who work, research or pay close attention to AI are feeling the same way. Not because of a time-travelling robot Arnold Schwarzenegger, but because of a shocking disclosure from one of the world's leading AI companies.

Last week, OpenAI announced that two of its models had hacked into the servers of another AI company called Hugging Face, unbeknownst to it.

OpenAI said it had given its models a test inside of a closed environment to see how they would perform.

Rather than do the challenge as expected, OpenAI alleges the model broke out of its enclosure and hacked into Hugging Face, which it believed held the answers to the test.

Hugging Face has so far reported no real damage from the intrusion, as it continues to investigate whether the data of its customers or other businesses was affected.

It's tempting to shrug this off as a weird, one-off event that sounds more or less like the plot of a handful of 90s sci-fi films with beefcake stars.

But, like Sarah Connor's pleas, it's not crazy to take this seriously.

Linda Hamilton in Terminator 2 — The AI industry has just had its Sarah Connor moment. (Supplied: Carolco Pictures)

You don't need to trust AI companies to take this seriously

Even those people who are reluctant to believe the accounts of two companies who could benefit from the tale of all-powerful AI, there is mounting evidence that AI is capable of breaking out of its cybersecurity guardrails and enclosures.

Leading AI company, Anthropic, the developer of Claude, warned in April that its cutting edge model was capable of breaking out of the isolated enclosures if asked to.

The UK government's AI Safety Institute found AI models would "reliably" escape these so-called sandboxes and, separately, would choose to cheat at tasks by doing unauthorised and harmful acts.

The major players are taking it seriously. Hugging Face reported the incident to the FBI.

We're taking it seriously too. Last week, Australia's new AI Safety Institute briefed federal departments about the incident.

Australia's cyber intelligence agency, the Australian Signals Directorate, has put out a public warning about the event.

"The findings provide an important insight into the future capabilities of highly capable AI systems and reinforce the need for robust security, governance and oversight mechanisms in the deployment of advanced cyber capabilities, as well as strong cyber security fundamentals," the warning read.

Translation from government speak: This is real, you need to start getting ready.

Last week, OpenAI announced that two of its models had hacked into another AI company's servers, unbeknownst to it. (Reuters: Dado Ruvic)

Why this isn't the normal story about the risks of technology

We're all well-acquainted with considering the potential risks of technology.

This is usually about intentional use, like the existential threat of nuclear weapons, or the unintended consequences of use, like with leaded petrol and some pesticides.

When it comes to AI, there's another new category of risk: what happens if AI chooses to do something harmful of its own volition?

Almost every task we give to AI involves a cascade of other smaller decisions, particularly as we expect it to be smarter and more context-aware like real people.

Asking AI to write a cold email could require your AI assistant bot logging into your email, reading previous emails, researching the topic, looking up the recipient, the list goes on.

One of the major tasks for AI companies is "alignment", which is the task of creating AI that will pursue goals in a way that won't cause harm or involve unethical behaviour.

The risk is that a misaligned AI model might do things that an ordinary person would, perhaps even going to superhuman lengths, to achieve a task.

Like what if AI decided the way to write the perfect cold email would be to research the family members of a recipient to seem familiar, or to fabricate a heart-breaking personal anecdote, all with the goal of getting the recipient's attention?

That's something that (most) people wouldn't do naturally. The challenge is that AI doesn't have a "human nature".

More than two decades ago, philosopher Nick Bostrom took this concept of an AI pursuing a goal to its logical conclusion with the thought experiment of super-intelligent AI bot tasked with making as many paper clips as possible.

The AI, he reasoned, might soon go to extreme lengths to maximise its paper clip outputs: gobbling up as much of the earth, then space, as it can to use its resources.

When humans realised what they had created and tried to thwart it, the AI could see humanity as an obstacle to its goal and decide that it made sense to eliminate them too. Soon, the universe might be forcibly turned into one big paper clip factory.

From what we know, OpenAI's Hugging Face incident wasn't a case of someone maliciously misusing AI to cause harm. It was just trying to do its version of making more paperclips.

Could this be Australia's wake-up call?

It's hard to find a silver lining in a story that is more or less the realisation of a truly dystopian fear. But if you squint, there is one.

Much like the paper clip scenario, the philosopher and research community that has spent decades thinking about AI has another useful term: the "warning shot".

It's the idea that there could be some kind of event that captures the world's attention and raises awareness about the potential risks of AI.

There is a hope that this incident could be a warning shot about the capabilities of these AI systems.

As previously mentioned, Australian officials have been taking this seriously.

Some politicians are too. Earlier this year, the government officially launched the AI Safety Institute to identify and prepare for risks like that. A few weeks back, Assistant Minister Andrew Charlton was perhaps the first Australian government minister to deliver a speech on the topic of misaligned AI.

Charlton announced that the government was taking it so seriously that it had commissioned CSIRO to actually test ways to make sure that AI acts in ways that humans want, even when it's making decisions by itself.

Last week, the lead researcher, CSIRO's research director Professor Liming Zhu, told me that there's a growing realisation about this challenge.

"It's very difficult to control a very powerful and smart AI system," he said.

This shows the government doing more than paying lip service to AI safety and is dedicating resources to tackling this challenge.

That being said, a six-month research program isn't going to prepare us for the present risk.

Nor is the government's "Australian standards" that won't even be introduced until next year — an epoch in terms of the pace of AI development.

In the 1991 classic Terminator 2, Sarah Connor spends the movie becoming increasingly desperate to convince people about the impending threat of a rogue AI. ((SOPA images))

Far-fetched scenarios become reality

When asked about the incident on ABC's Insiders on Sunday, Prime Minister Anthony Albanese said it was "why we need to have Australian standards for AI". But it's not clear what, if any, AI safety obligations those standards would place on AI companies.

What the OpenAI Hugging Face story shows is that Australia and other countries can't just trust these companies to regulate themselves.

We don't even have the most basic framework for placing obligations on companies who are responsible for producing tools with potential for harm.

There are more rules in Australia that regulate opening a cafe or pouring a beer than for the operation of cutting-edge AI systems.

An AI company like OpenAI would have to disclose if a server in their data centres fell over near a worker or an employee got an electrical shock from their computer, but not if a rogue AI broke out of their systems.

Other jurisdictions like the EU and California have introduced rules that would, at the very least, force these companies to disclose serious incidents risks from AI like this.

To grasp the risk: what if OpenAI's models had wreaked havoc inside Hugging Face and caused actual damage? Or it had decided the answers to its test were in the servers of the Department of Defence? Or that the best way to complete the challenge was to turn off the computers by shutting down the electrical grid?

These scenarios sound far-fetched, but until about last week, "rogue AI hacks another company" sounded that way, too.

The fact that OpenAI only realised that its AI had done this days after the event shows a shocking lack of security.

The warning shot has been fired. And we can't wait on Arnie to come save us.

Pro-Palestinian protesters mount High Court challenge to Queensland hate speech laws.

Extract from ABC News

By Lottie Twyford

Topic:Courts

11 hours ago

A large group of protesters carrying Palestinian flags down a street, as seen from above. — The phrases "globalise the intifada" and "from the river to the sea" were outlawed in Queensland earlier this year. (ABC News: Liana Walker)

In short:

A group of pro-Palestinian protesters have launched a High Court challenge against Queensland laws that banned the phrases "from the river to the sea" and "globalise the intifada".

More than 20 people have been charged under the laws, which carry a maximum jail sentence of two years.

What's next?

Constitutional law expert Anthony Gray believes a High Court challenge to Queensland's hate speech legislation has a "chance of succeeding".

A group of pro-Palestinian protesters have launched a High Court challenge against Queensland laws that banned the phrases "from the river to the sea" and "globalise the intifada".

The two phrases have been deemed antisemitic by the government and many Jewish organisations and have been outlawed when used to menace or offend someone.

Both of the contested phrases have been commonly used by pro-Palestinian protesters.

More than 20 people have been charged under the laws since they took effect in March.

The laws carry a maximum jail term of two years.

According to filings lodged with the High Court last week, the activists allege the legislation is invalid because it infringes on the right to political communication.

The Queensland government has been contacted for comment.

It has previously defended the laws and argued in favour of their validity.

In April Deputy Premier Jarrod Bleijie said the laws defended against "venomous, poisonous rhetoric".

Seven protesters have signed the filings, including Remah Naji, a spokesperson for the Justice for Palestine group.

Four of the signatories Stephen Werner Heydet, Edward Joel Matthew Carroll, Katherine Mary Dennehy and Samuel Woripa Watson — were arrested and charged under the laws, according to the documents.

Each are accused of displaying or saying the banned phrase.

A woman with long, curly hair wears a T-shirt that says "Readers writers against genocide". — The High Court challenge was filed by activist Remah Naji and six other protesters. (ABC News: Lucy Loram)

One of the other applicants, James Frances Hillier, alleges he was told to withdraw some of his artwork that contained the banned phrase after being contacted by police in March.

The group claims neither of the banned phrases have a "fixed meaning", an "inherently antisemitic or racist meaning" or an "inherently violent meaning".

The filing lays out 12 alternative meanings of "from the river to the sea".

The filing alleges the ban causes inequality or discrimination because it seeks to criminalise one perspective on a "political controversy".

The group also argues it imposes a burden on the implied freedom of political communication in the constitution.

Jewish Board of Deputies president Jason Steinberg said he and other Jews felt unsafe when hearing the banned slogans chanted at rallies and protests.

"We have people who will not come into a central business district when there is protests on, when they know that there is going to be this kind of antisemitism on our streets," he said.

A 'chance of succeeding'

Constitutional law expert Anthony Gray believes a High Court challenge to the state's hate speech legislation has a "chance of succeeding".

He said the High Court had already recognised Australians have an implied freedom to communicate about political matters.

"On one view, the two phrases that have been banned are communications about something that is broadly political in nature," Professor Gray, who was not involved with preparing the challenge in any way, told the ABC.

The Bond University expert characterised the state government's legislation as "unusual" because it criminalised specific phrases and sought to outlaw one particular viewpoint.

He added that the nature of the phrases also added to the difficulty of banning them, as some people who used them may not have any "bad intentions".

The court could also consider whether the state government could demonstrate the legislation was necessary to protect some groups from suffering harm, Professor Gray explained.

France and Spain race to curb wildfires before new heatwave arrives.

Extract from ABC News

Topic:Fires

1 hours ago

In short:

Spanish and French authorities face two crucial days to bring wildfires under control before a new heatwave hits in western Europe.

Fires to the west of Spain's Madrid continue to rage, while fires in France are now 15km from the city of Bordeaux.

Spanish Prime Minister Pedro Sanchez highlighted the impact of climate change, saying the wildfires were "more ferocious" and "heatwaves more frequent".

Firefighters are racing to subdue massive wildfires in France and Spain before a new heatwave hits Europe.

Crews are battling blazes threatening the French city and wine region of Bordeaux and in areas to the west of Madrid.

About 220,000 people, including tourists and residents, have been evacuated in France, while further south in Spain about 100,000 have been told to leave their homes or seek shelter, authorities said.

A firefighter aims a water hose at a blackened tree with smoke smouldering around it. — Firefighters battle a blaze in San Martin de Valdeiglesias, Madrid. (Reuters: Ana Beltran)

Another heatwave is expected to hit in both countries later this week, in what has been a blisteringly hot and dry summer across Western Europe.

Firefighters faced an especially dangerous situation in Vall d'Uixó, in the eastern Castellon province, where the ground contains old ordnance from the Spanish Civil War that explodes when the flames reach the area, Chevi Bolumar, fire chief of the Valencian Regional Government, told public broadcaster TVE.

Firefighters aim a hose at flames lining the road — Firefighters battle a wildfire near Marcheprime, outside Bordeaux. (AP: Emma Da Silva)

The French fires, which broke out last week near the Atlantic coast, are now only 15 kilometres from entry points to the main metropolitan area of Bordeaux.

"This is a fire of a size never seen before," Jerome Steffe, mayor of Cestas, one of the suburbs just outside the main Bordeaux city area, said.

French President Emmanuel Macron was due to visit the region later in the day, his office said.

Locals suffer 'emotional loss'

The spread of the large fires converging in central Spain slowed overnight, authorities said.

But the blaze in the Castellon province raged out of control as the weather agency warned of another potential heatwave this week.

"What we're experiencing isn't a succession of isolated events," Prime Minister Pedro Sanchez said.

"It's the most painful expression of a climate emergency that is making sixth-generation wildfires more ferocious, heatwaves more frequent, and our territory more vulnerable,"

he said.

The so-called sixth-generation fires are the most extreme and uncontrollable category of forest blazes, capable of generating their own weather and destroying thousands of hectares every hour. Many scientists blame such fires and heatwaves on human-driven climate change.

Maria Angeles Serrano, an evacuee in Castellon, said she was particularly upset about the impact on nature. "Material damage is one thing, but that can be repaired, so to speak. What really hurts is the emotional loss."

A firefighter stands on top of a fire truck aiming a fire hose at a forest. — Fires have also affected Saint-Jean d'Illac, in France's Gironde region. (Reuters: Manon Cruz)

Heat set to build again this week

The wildfires around Bordeaux in south-western France have delivered a shock to the regional economy, Finance Minister Roland Lescure said on Monday, local time. The region is one of the centres of French wine production and a major centre for tourism.

"It's like a clap of thunder for an area which could have done without this," Mr Lescure told reporters.

In central Spain, three separate fronts remained active in the mountains north-west of Madrid.

Authorities estimate that a combined 77,000 hectares have burnt so far across the provinces of Madrid, Toledo and Avila. The one in Avila has been classified as the biggest wildfire in recent Spanish history.

A huge amount of red-coloured water falls from an airplane. — France has been dropping fire retardant as wildfires rage near Marcheprime, outside Bordeaux. (AP: Emma Da Silva)

"Today and tomorrow are absolutely crucial days in tackling this wildfire. From Wednesday onwards, weather forecasts become significantly more unfavourable for firefighting operations, but we remain confident," said Spanish Interior Minister Fernando Grande-Marlaska.

France faced a similar situation, with slightly easier conditions on Monday, local time, before temperatures rise again to as high as 37 degrees Celsius (98.6 degrees Fahrenheit) later this week in the Bordeaux area, according to France's weather office.

French Interior Minister Laurent Nunez said the fire had not spread overnight, but the danger had not passed.

"It isn't contained. I absolutely do not want to sound reassuring. That is not my intention. We must remain very focused and very determined,"

he said.

In both Bordeaux and Avila, July high temperatures have averaged 32 degrees Celsius (90 degrees Fahrenheit), almost 6C above the month's normal high between 1961 and 1990, according to the Reuters Climate Monitor.

Response under scrutiny

A plane flies through heavy smoke just above a tree line. — Other European countries have sent planes to help France fight wildfires. (AP: Emma Da Silva)

The scale of this summer's wildfires in Europe is putting pressure on firefighting resources and raising questions about how to respond.

Under the European Union's civil protection mechanism, Greece and Italy have each sent two Canadair water-bombing aircraft to Spain, while Portugal has deployed more than 100 military personnel and equipment.

Two more planes were due to arrive from Turkey, Spain's interior ministry said.

Switzerland is supporting France by sending two Super Puma helicopters and their crews after a request from Paris.

Smoke rises from burnt out houses and trees. — Houses and nature have been devastated by wildfires in Spain. (AP: Manu Fernandez)

Reuters

Trump tips the balance towards China in trade war.

Analysis

By chief business correspondent Ian Verrender

Topic:Manufacturing

2 hours ago

A graphic of an arm wrestle. — The US and China are in an economic tussle as China dominates global supply chains. (Foreign Correspondent: Emma Machan)

The end, when it arrived, was as chaotic as the birth.

On November 9, 1989, after months of escalating protests, an East German official mistakenly announced on live television that citizens could travel unimpeded to the West, immediately.

Within hours, hordes of citizens had stormed the border checkpoints, swamping the guards who had little option but to simply open the gates.

After decades of food shortages, long lines for consumer goods and failing infrastructure, it was bookmarked as the end of the Cold War and the penultimate victory of capitalism over centrally planned economies.

Communism was pronounced dead.

Within two years, the Union of Soviet Socialist Republics was dissolved, Mikhail Gorbachev had stood aside and, with China a largely agrarian nation in the early throes of its economic transformation, Western leaders had every reason to feel triumphant.

Not so now.

In just 35 years, Beijing's leaders have plotted a course that has seen China emerge as the undisputed leader of industrial production with almost complete dominance over the refining of nearly every mineral on the planet and in manufacturing.

In a world trying to grapple with the best way to wean itself off fossil fuels, China's automotive industry is poised to blow away global competition on electric vehicles following the West's ill-conceived reliance on internal combustion engines.

Not surprisingly, it is also the dominant player in electrification. While the West endlessly argued over the science of climate change, China got on with the business of climate change.

It has the market sewn up in everything from solar panels to battery manufacturing and wind turbines.

And now, it is challenging America's commanding role in technology.

There is a very real prospect that its artificial intelligence models can operate at the same level of sophistication as those developed by the Silicon Valley giants but at a fraction of the price.

None of these developments has occurred by accident. They've been implemented and adhered to over decades, unencumbered by opposing political wills or concerns about human rights.

Deng Xiaoping, who was 87 when the Soviet Union collapsed, famously identified rare earths — something China had in abundance — as a critical industrial input that China could someday use as a strategic instrument with which to wield power.

"The Middle East has oil," he told colleagues in 1992. "China has rare earths."

The clock is ticking

Can America wrest back control of global manufacturing?

President Donald Trump thinks so.

Much of the thinking within Trump's MAGA camp is rooted in the belief that China unfairly exploited free trade rules and engaged in industrial espionage to get its foot up on the industrial ladder.

The thinking goes that the US simply needs to shut down those avenues and repatriate US firms back to the mainland through a combination of threats and incentives and by building a protective tariff wall around the US economy.

While there's little doubt China used every trick in the book, nefarious and otherwise, to advance its cause, it also cleverly formulated a complex mix of free market reforms to foster entrepreneurialism with an overarching and unwavering state plan.

The result was a rapid transformation from agrarian communism to polluting heavy industry, from family farms to factories.

Along the way, the population grew richer, which helped quell political dissent as workers shifted from the countryside to cities, new and old.

When that didn't work, the dissent was met with the kind of brute force that only a one-party state can mete out, where the interests of the state subsume the rights of individuals.

But there remains a fundamental difference between the economic trajectories of both countries.

China was forging a brave new world.

America, under Trump, is attempting to wind back the clock.

Detroit's long drive to nowhere

For generations, Detroit was the centre of global automobile excellence.

It was the textbook example of factory assembly line management and, later, automation.

In 1965, about 95 per cent of Americans drove cars made by the Detroit Three: General Motors, Ford and Chrysler. By 2015, that had dropped to 46 per cent.

Assembly worker works on a Chevrolet car — Japan was the first disruptor of American car manufacturing. (AP: Paul Sancya)

It wasn't China that first drove the wrecking ball through the US car industry. It was Japan.

Beautifully designed, fuel-efficient, high-performance machines with an air of luxury, the Japanese auto invasion sent the US manufacturers on a mission, not so much to improve, but to seek protection and, eventually, bail-outs.

Clearly, it didn't work.

And now, it faces an existential threat.

As far back as 2001, as part of its 10th five-year plan, Beijing decided to pursue the development of electric vehicles.

For years, it had encouraged foreign manufacturers to set up operations in China, building conventional internal combustion engine vehicles, but decided it needed an edge, something new to compete on the global market.

It was also keen to cut back on pollution, which was becoming a social and political issue, and to simultaneously reduce demand for oil, which had to be transported from the Middle East through potentially hostile waters.

China now has a near stranglehold on EV production. It is also the world's biggest market, accounting for 65 per cent of all sales.

Alarmed, then-US President Joe Biden slapped a 100 per cent tariff on Chinese built EVs but announced a series of tax incentives and tailpipe emissions standards to encourage the US industry to build them.

Under the Trump administration, those incentives have mostly been dumped.

The Detroit Three, along with most US-based foreign manufacturers, have now either shelved or totally abandoned plans to build electric cars in the US.

In the past two years, Ford, Buick, Dodge, Jeep, Honda, Nissan and Acura have scrapped a series of US-built SUVs, pick-ups and passenger cars. Volvo junked an entire all-electric line-up.

The losses were staggering. The write-downs on the scrapped projects cost the Detroit Three close to $US50 billion.

As a result, the US now builds just 5 per cent of the world's EVs, at a time when global demand is booming following America's ill-fated war with Iran that has shut the Strait of Hormuz and highlighted the dangers of reliance on fossil fuels.

While the tariffs have removed competition and helped juice US auto makers' profits, they are now making cars the world increasingly doesn't want.

Tech wreck next

This time last week, Wall Street was shuddering after the partial release of a new AI model from a hitherto unknown start-up.

Moonshot's Kimi K3 was judged to be almost as good as the flagship models from AI heavyweights Anthropic and OpenAI.

The main difference was that it was up to 30 per cent cheaper.

This week, analysts and users will pore over the fully released technology when it becomes available to the public.

The White House and Anthropic have accused Moonshot of stealing the technology through a process called distillation, opening up a new battleground for trade disputes.

Will Moonshot’s AI bring Silicon Valley back to earth?

They've also accused it of illegally accessing the high-powered Nvidia chips, which the US has banned from Chinese tech companies.

Wall Street's tech titans are likely to spend upwards of $US1 trillion this year on AI investment, money that will be difficult to recoup if much cheaper AI versions are available.

Again, Beijing years ago prioritised technology as a key area for investment and has helped foster the development of local companies.

State sponsorship doesn't merely mean cash handouts. When it came to its minerals and refining domination, it invested in research, discovering new processing methods that gave its companies access to cheaper forms of production.

And despite government investment, it hasn't been afraid to let private entities go under.

About 30 EV manufacturers have hit the wall since 2018, and some estimate that around 400 manufacturers have exited the industry in the past two decades.

The US and the West may still have control of global finance. But when it comes to industry, it is China, a command economy, that has the reins and is extending that grip into new and important arenas.

When it comes to economic management, the jury is still out.