Andrew here. Silicon Valley is embroiled in a heated debate over new open AI models from China, with critics claiming they have been “distilled” – read: stolen – from US counterparts. With this in mind, the Trump administration and Chinese officials are expected to discuss AI regulation ahead of President Xi’s meeting with Trump on September 24.
The big question: Will Washington try to block Chinese open-weight models from the US? And will this become a new pawn in trade negotiations?
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AI protectionism
The race between the US and China for artificial intelligence supremacy has changed dramatically in recent weeks, as more Chinese models (which are largely open models) have largely rivaled the best Western offerings.
New reports suggest Washington and Beijing are weighing steps to protect and develop their national industries – which many in the industry believe could pose more problems than they solve.
Some in the Trump administration are pushing for restrictions on foreign models. The emergence of powerful new open Chinese models from Z.ai and Moonshot AI, which are less expensive to use than closed Western models, has reinvigorated efforts to effectively ban such tools, Axios reports, citing unnamed sources:
The Commerce Department last year considered adding several Chinese AI labs to its “entity list,” which would effectively block U.S. access without a license, a source close to the administration told Axios.
The National Security Agency and the director of the White House Office of National Cyberspace also considered issuing an advisory last year on threats from Chinese AI labs, effectively stopping U.S. companies from using their technology, the source said.
These voices have gained more power in the administrationparticularly as a critic of the approach – including David Sacksthe former White House AI czar; Sriram Krishnana top White House AI adviser; And Chris Fallthe director of the Commerce Department’s Center for AI Standards and Innovation, has departed.
Prominent figures in the industry are still resisting He argues that, contrary to the views of Amodei and Altman, open source AI is good because it forces leading labs to compete on performance and price.
“Lobbyists are urging Washington to view open AI as a security threat. In fact, it is something more familiar: fair competition that should be embraced.” Bill Gurleythe veteran venture capital investor wrote in an opinion piece in the Washington Post
“The leading closed labs, already a duopoly in terms of revenue from AI models, want the government to eliminate their open source competition,” Sacks wrote on X.
China is reportedly weighing limits on its own models. The country’s Commerce Ministry is considering options to block foreign companies from accessing key AI and chip manufacturing data or acquiring key technology start-ups, the Financial Times reports, citing unnamed sources.
What you should see: According to Reuters, the US and China will hold talks in September about how to regulate their increasingly powerful models.
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https://www.nytimes.com/2026/07/21/business/dealbook/us-china-ai-limits.html
