Trump administration signals openness to bilateral engagement with China, with AI chip export controls potentially on the negotiation table.
The next phase of the US-China technology rivalry may not be decided by tariffs or trade alone. As US President Donald Trump prepares to meet Chinese President Xi Jinping in Washington, artificial intelligence is expected to feature prominently in discussions between the two countries—a critical moment given China's rapid expansion of AI capabilities despite restrictions on advanced American chip exports.
American companies including OpenAI, Google and Anthropic have produced some of the world's most advanced AI models. So have Chinese competitors: DeepSeek, Moonshot AI, Z.ai and Alibaba have developed models that increasingly compete with leading US systems. Researchers and policymakers now describe the gap between the two countries as narrowing rapidly. The bigger question is no longer simply who has the most powerful AI model, but who can build, deploy and scale AI across an entire economy.
China's approach to AI has developed under fundamentally different conditions. American AI development has been driven largely by private technology companies with access to vast capital, advanced computing infrastructure and cutting-edge chips. China, constrained by US export controls limiting access to high-end processors including Nvidia's most advanced chips, has pursued a different path. Chinese companies have increasingly focused on making models more efficient, reducing computing costs and building domestic alternatives for AI infrastructure. They are also competing aggressively on pricing, making AI services cheaper and easier for businesses to adopt. This creates an important advantage: AI does not need to be the most expensive technology to become widely used.
China's ambitions extend beyond chatbots. Beijing is pushing AI into manufacturing, robotics, autonomous systems and consumer technology. The country's enormous manufacturing base provides a vast domestic environment in which AI systems can be tested and deployed—critical because AI leadership depends not only on building powerful models but on access to data, computing infrastructure, chips, engineers, and companies willing to deploy the technology.
Price has become as important as capability. China's AI market is highly competitive, with companies cutting prices and competing on the efficiency of AI systems rather than simply the cost per token. Against this backdrop, AI is becoming a strategic issue for both Trump and Xi, with both countries concerned about what advanced AI means for national security.
US officials have accused Chinese AI companies of using model distillation to reproduce capabilities from American systems. Chinese officials reject these allegations and argue that distillation is a standard AI development technique. Simultaneously, both countries are discussing ways to manage AI risks. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng have discussed creating an AI dialogue, including a possible mechanism for communicating about serious AI-related incidents. AI is thus an area where Washington and Beijing seek to cooperate on safety while competing intensely for technological advantage.
Whether China is ahead of the US in AI remains difficult to answer simply. The US remains ahead in frontier AI research, advanced computing and access to leading-edge chips. Chinese companies, however, have demonstrated rapidly improving model capabilities and are competing strongly on efficiency, affordability and deployment.