AI Rivalry Hangs Over Trump-Xi Talks as US And China Clash on Chips And Regulation

The race for artificial intelligence supremacy is set to be a major backdrop to next week's meeting between US President Donald Trump and Chinese President Xi Jinping in Washington.

Both countries increasingly view AI as critical to economic growth, technological leadership and military capabilities. However, Washington and Beijing remain divided over advanced semiconductor exports, allegations of technology copying, access to computing infrastructure and the regulation of artificial intelligence.

AI Raises Military and Nuclear Risks

Beyond economic competition, US and Chinese security experts are increasingly focused on the potential military risks posed by advanced AI.

An AI system interfering with a nuclear command network or triggering a military cyber operation could potentially leave national leaders with only minutes to determine whether an apparent attack was deliberate or accidental.

Experts have discussed several possible safeguards, including:

• Establishing clear red lines around nuclear systems.
• Maintaining human control over consequential cyberattacks.
• Creating a dedicated hotline for incidents involving autonomous AI systems.

A major challenge is determining how the two nuclear powers would respond if an AI system behaved unexpectedly.

The countries would need to distinguish genuine attacks from technical failures or accidents, while also deciding which military decisions should never be delegated entirely to machines.

US Accuses China of AI “Copying”

Another point of tension is AI distillation, a technique in which smaller models are trained using the outputs of larger and more expensive AI systems.

Washington has accused Chinese companies of exploiting the technique to reproduce capabilities developed by US AI firms.

In September, the United States accused six Chinese companies of maliciously copying American AI products through distillation, saying the activity was likely conducted with Chinese government awareness.

The US made a similar accusation in April.

China has rejected the allegations. Its embassy in Washington described the claims as “baseless.”

The dispute illustrates a broader disagreement over what constitutes legitimate AI research and what crosses the line into improper technology transfer.

Advanced AI Chips Remain a Major Flashpoint

Semiconductors are another central issue in the US-China technology rivalry.

Since 2022, Washington has imposed increasingly extensive restrictions on China's access to advanced chips and semiconductor manufacturing equipment used for AI and other high-performance computing applications.

There is also evidence that advanced AI chips have been smuggled into China, although the overall scale of the activity remains unclear.

Washington is additionally considering measures to prevent Chinese companies from remotely accessing overseas data centres in ways that could provide indirect access to Nvidia's most advanced AI processors.

Trump Administration Faces Debate Over Nvidia Chips

The US approach has not been entirely restrictive.

Late last year, Trump allowed Nvidia to sell its H200 AI chips to China. The H200 is not Nvidia's most advanced processor, but the decision nevertheless prompted concerns among US policymakers who argue that providing advanced computing technology could strengthen China's AI capabilities.

The issue highlights the difficult balance facing Washington: restricting China's access to strategic technology while allowing US companies to compete commercially in the global AI market.

US and China Take Different Approaches to AI Regulation

The two governments also have significantly different approaches to AI regulation.

Trump has rejected calls for extensive new federal AI rules, arguing that the United States needs strong leadership rather than additional regulatory requirements. He has also dismissed demands for greater AI regulation as a “hoax.”

China has taken a more detailed regulatory approach.

Beijing has introduced rules covering areas including AI algorithms and training data, while requiring AI-generated content to be clearly identified.

The contrasting approaches reflect different priorities. Washington has emphasised innovation and technological competition, while China has developed a more formal framework for controlling how AI systems and their outputs are developed and used.

How Close Is China to the US in AI?

The precise gap between the two countries' most advanced AI systems remains difficult to measure.

US officials have generally estimated that China's leading frontier models remain several months behind their American counterparts.

In 2025, then-White House AI adviser David Sacks estimated the gap at roughly three to six months. Earlier this year, the US Commerce Department reportedly placed DeepSeek V4 Pro around eight months behind the leading frontier models.

However, some technology executives believe the gap is narrowing rapidly.

Clement Delangue, CEO of Hugging Face, has said China is already leading in open-weight AI models and could begin dominating at the frontier by the end of this year or next if its current pace of development continues.

AI Could Become a Key Trump-Xi Issue

The AI rivalry therefore extends well beyond the competition between individual technology companies.

The US and China are competing over advanced chips, computing infrastructure, AI models, data, military applications and international technology standards.

At the same time, both countries face the challenge of preventing AI-related incidents from escalating into broader military confrontations.

The Trump-Xi meeting could provide an opportunity to discuss some of these risks, but major disagreements over semiconductor controls, technology transfers and regulation remain unresolved.