The AI China Report #8 🇨🇳
Your executive summary on the geopolitics of AI - Issue #8
Welcome back to The AI China Report. This week we’re covering the Chinese unicorn stockpiling Nvidia chips and the expected meeting between Biden and Xi Jingping in San Francisco this Wednesday.
QUOTE OF THE WEEK
"The president is determined to see the re-establishment of military-to-military ties because he believes it's in the U.S. national security interest”
- National Security Advisor Jake Sullivan on the Biden / Xi Jinping meeting this week
ONE BIG STORY: BIDEN & XI JINPING SET TO MEET
President Biden and Chinese leader Xi Jinping are expected to have their first face-to-face meeting in over a year this Wednesday after the APEC summit in San Francisco. It will be a closed door meeting, the time and location have not been disclosed for security reasons - Chinese officials have also urged the US to ensure that there are no protestors anywhere near Xi Jinping’s motorcade or hotel.
Tensions between the two superpowers have escalated over the last year, specifically around technology, US support of Taiwan, and China’s support for Russia in the Ukraine war. Tensions are high on a personal level as well, after Biden publicly called Xi Jinping “a dictator” in June.
One of the primary goals of the meeting will be to reestablish communication channels between militaries, which China cut off in August of last year in response to Nancy Pelosi’s visit to Taiwan. Military tensions have escalated in recent months as China has been moving warships and air crafts around the South China Sea, in what the US military is calling a show of force. Just a few weeks ago, a Chinese fighter jet risked collision as it flew within 10 feet of a US bomber at high speed.
Both Chinese and US officials don’t expect any breakthrough or lasting agreements to come from the meeting. It’s expected to be a showcase of cooperation with asks from both sides.
Along with reestablishing military communication and deescalation in the South China Sea, Biden will be looking for assurances from China in cutting off it’s chemical exports to Mexico, which have been fueling the fentanyl crisis in the US.
China will be looking for Biden to commit that the US will not support Taiwan’s formal independence, and more accommodations to recognize and help China grow as a rising global power (by reducing technology sanctions), which isn’t likely.
However, coming out of Chinese media, South China Morning Post reported that Biden and Xi Jinping are expected to set a landmark agreement that pledges “a ban on the use of artificial intelligence in autonomous weaponry, such as drones, and in the control and deployment of nuclear warheads,”. This information has yet to be confirmed by any US-based news outlets.
NEWS ROUNDUP
Nvidia is reportedly making three new AI chips specifically for the Chinese market to comply with the new US sanctions. Last year, in response to US sanctions that blocked the sale of Nvidia’s top-of-the-line A100 and H100 GPU chips, Nvidia created lower performance A800 and H800 chips specifically for China. Last month, the US tightened restrictions again, blocking the new A800 and H800 chips. Nvidia has responded by creating new H20, L20, and L2 chips specifically to comply with the latest US sanctions. Notably, Chinese companies ordered over $5B of the A800 and H800 chips this year. Nvidia is likely to continue to respond to future US sanctions with new chips as the Chinese market remains a significant revenue driver for the company. (Financial Times)
Ant Group, the financial services affiliate company of Alibaba, received approval from the Chinese government to release its AI products to the public. This is one of the first major Chinese conglomerates to earn approval after the government put into place restrictions last month that require private Chinese companies to undergo an approval process before they can release AI products to the public. (Reuters)
The world’s biggest bank, Industrial & Commercial Bank of China Ltd.'s (ICBC) U.S. unit was hit by a cyberattack, suspected to be from the LockBit hacker gang, causing disruption in clearing U.S. Treasury trades and leading to the use of a USB stick for manual data transfer. This incident highlights growing cybersecurity concerns in the financial industry and the potential for significant systemic disruptions. (Bloomberg)
01.AI, the new startup from famed computer scientist and writer Kai-Fu Lee, announced it had raised funding at a $1B valuation two weeks ago. Last week, Lee revealed in an interview with Bloomberg that his company has been stockpiling top-of-the-line Nvidia GPU chips anticipating the new US sanctions announced in October. Lee said he has enough GPU power to fuel his company’s growth for the next 18 months. (Bloomberg)
Chinese President Xi Jinping, in a speech at the World Internet Conference Summit, emphasized the need for countries to collaboratively address the challenges and risks associated with artificial intelligence. He advocated for a common security approach in cyberspace, opposing "cyberspace hegemony," and highlighted China's commitment to promoting the safe development of AI through initiatives like the Global AI Governance Initiative. This stance contrasts with China's tight control over the internet and free speech, and its use of the internet for economic gains and propaganda. (AP)
DATA TO KNOW
Know someone who should be in the know about AI and China? Share The AI China Brief 🇨🇳 with your friends and colleagues!
Have feedback on how we can improve? Want to discuss this issue’s content? We’d love to hear from you in comments below!