US Treasury Secretary Scott Bessent stated at the Economic Club of New York on June 24 that China's progress in artificial intelligence represents the biggest risk to American technology. He argued that if Beijing achieves dominance in AI, US defense systems and their supporting technology stack could become useless.
Bessent, who manages both the US-China economic relationship and AI policy, alleged that Chinese firms, including those linked to Moonshot AI, have been reverse-engineering US AI systems to extract capabilities without investing in research and development. He suggested that sanctions and further restrictions could be implemented if these practices persist.
The US continues to enforce strict export controls on advanced chips to hinder China's ability to train frontier AI models. Simultaneously, US officials are considering revenue-sharing agreements with companies like Nvidia to compensate for the loss of access to the Chinese market for their most profitable products.
Formal bilateral discussions on AI governance began after a May 2026 summit, with the next round scheduled for September 2026. While previous talks focused on preventing non-state actors from misusing AI, the September meeting is expected to address model distillation and competitive practices.