US-China AI Race to Take Center Stage at Trump-Xi Meeting

SPEAKER_1 (0:02)

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John Liu (0:08)

China wants access to markets.

China's exporting lots and lots of stuff around the world. China wants access to those markets to continue to be open. And I think China wants there to be relative stability in terms of Taiwan.

K. Oanh Ha (0:24)

That's my colleague, John Liu. He's Bloomberg's co-head for Asia and has covered China for the past two decades.

Like much of the world, John's attention this week will be on yet another high-stakes summit between President Xi and Trump when they meet at the White House.

John Liu (0:39)

I think for Donald Trump, he's really hoping to get some wins on the board out of this meeting, be it agricultural goods, be it energy exports to China, and maybe even some help on Iran, although I think that seems relatively unlikely. But just to be able to come out of that meeting and say to the American people, look what we got.

K. Oanh Ha (1:00)

This will be the third meeting between the two leaders since Trump's second term.

But John says this week's meeting stands out. It's Xi's first state visit in more than a decade and comes weeks before the US midterm elections. It's also taking place amid a fragile trade truce, the ongoing war in Iran, and a growing debate over how to scale and regulate artificial intelligence.

John Liu (1:23)

I think both sides want to continue to show that they are making progress in some sort of normalization. In the ability to be responsible purveyors of AI around the world, then there will be a conversation about more competitive forces.

Will China be able to get its hands on NVIDIA chips? Will the US cut off access to additional technology that China wants to develop AI with? Can the US get rare earth magnets and other components from China that it needs? And I think actually there is a real opportunity at a macro level when it comes to being good citizens of the world, working together to protect humanity against unexpected things that might happen one day. I think there's an opportunity for the two countries to show some leadership there.

K. Oanh Ha (2:18)

This is the Big Take Asia from Bloomberg News. I'm Oanh Ha. Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today in the show, the Trump-Xi Summit in Washington. From tariffs to AI, what each side hopes to gain and why the world's two biggest rivals may have no choice but to cooperate on AI safety.

Now, back in May, the US and China launched new trade and investment channels that were designed to boost activity as well as reduce tariffs on products worth up to $30 billion in non-sensitive sectors. That was seen as a positive step towards stabilizing the relationship.

Since then, what actually, John, has been achieved so far?

John Liu (3:11)

I think there is real momentum in that there is a motivational force driving both countries to try and get something done. Here in China, the economy, the domestic economy has not been very strong. It's been weak primarily because the government is reducing the amount of money that it is spending.

When the government spends less, there's less consumption by state-owned enterprises, by local governments. That puts more of a burden on the households here in China. The households have been bogged down by this real estate bubble bursting for the last three, four, five years.

The domestic economy has been very weak. What saved China has been exports. That's a real impetus for Xi Jinping going into these talks. For Donald Trump, being able to show that he scored some wins on the international stage, I think is very important to President Trump. I think in this meeting between Xi and Trump, this month in September, I think what we are going to get is the rubber hitting the road and the actual things that are, the actual actions, the actual goods that are going to be traded from the United States and China.

K. Oanh Ha (4:23)

Now the deadline for the trade truce that the two superpowers struck is coming up in November. What's happening as the deadline looms?

John Liu (4:32)

So, what is, there's been a pattern we've seen over the course of the second Trump administration, which is between when the leaders meet, often when the leaders meet, there will be some sort of deal, either a trade deal where tariffs are lowered and exports continue, or some sort of a deal just to stabilize, not to escalate. But then in between those meetings, when the two leaders get together, we also see the cycle of deterioration, where whatever deal was previously struck, each side starts to suspect the other side is breaking the deal and starts to accuse the other side of undermining the agreement of not following through, until you get closer and closer to the next meeting when, again, I think both sides are making accusations and saying things to try to put themselves in the best possible negotiating position ahead of the Xi and Trump talks.