us china tensions

Published on 29/10/2025 – 11:09 GMT+1
•Updated
11:11

Nvidia shares continued their dramatic rise this week as investors banked on an easing of semiconductor trade restrictions between the US and China.

Ahead of a meeting with Chinese President Xi Jinping on Thursday, US President Donald Trump said he planned to discuss Nvidia’s advanced Blackwell artificial intelligence chip with Xi.

“We’ll be speaking about Blackwell, it’s the super duper chip,” he told reporters on Wednesday.

The president didn’t elaborate on specific policy aims, although he said he was “very optimistic” about the meeting with his Chinese counterpart.

By around 11:00 CET, Nvidia shares had jumped over 3% in pre-market trading, bringing the firm closer to a $5 trillion market capitalisation.

Semiconductors have been a key point of contention between the US and China as both nations seek to lead on advanced technologies such as AI.

The tiny chips, used to power a range of electronic devices from smartphones to medical equipment, are essential to this ambition. Since 2022, the US has therefore restricted Nvidia’s sales of advanced chips to China for national security reasons.

Trump has flip-flopped on export controls since his arrival in the White House, first restricting and then approving sales of Nvidia’s H20 AI chip to China. Nvidia designed the H20 specifically for the Chinese market to comply with Biden-era export curbs, although the Trump administration previously said it was concerned the tech could be used for military purposes.

With regard to the Blackwell processor, Trump suggested months ago that he would consider allowing Nvidia to export a downgraded version of the chip to China.

Progress on such a proposal would come as a relief to Nvidia CEO Jensen Huang, who has long criticised US restrictions. Huang has notably argued that such curbs are boosting China’s AI capabilities as the Chinese market is forced to become less reliant on US products.

It seems that such logic is already understood in Beijing, even as the US softens its stance. After Washington gave the green light to H20 exports, China’s regulator banned the country’s biggest tech companies from buying Nvidia’s artificial intelligence chips.

“The president has licensed us to ship to China, but China has blocked us from being able to ship to China,” Huang said at a Nvidia event this week in Washington. “They’ve made it very clear that they don’t want Nvidia to be there right now.”

In a document released by Beijing on Tuesday, the Communist party reiterated the importance of self-sufficiency, calling for “extraordinary measures” to achieve “decisive breakthroughs” in technologies such as semiconductors.

“The most important factor in promoting high-quality development is to accelerate high-level scientific and technological self-reliance,” Xi said in a speech released by state news agency Xinhua.

While it’s possible that Chinese restrictions on Nvidia chips could be a long-lasting policy, experts have suggested that the move may be a bargaining chip in trade negotiations with Washington.

Such policy U-turns are creating uncertainty for investors despite the fact that Nvidia shares have risen roughly 50% this year, driven higher by AI ambitions.

Global tensions are escalating over rare earth minerals after China applied severe export controls on critical minerals required to manufacture almost everything – from cars to weapons. The move has also sparked concerns about the global supply chain.

Strategic meetings will be held between European Union officials and Chinese representatives, starting with a videoconference Monday, to be followed by a meeting in Brussels the following day.

Meanwhile, US President Donald Trump will meet his Chinese counterpart Xi Jinping on Thursday in South Korea, with financial markets attentive to whether the world’s two largest economic powers can bury the hatchet in their trade war.

At the heart of the dispute is China’s 9 October decision to restrict exports of rare earth elements. While these controls were initially a response to US tariffs, the EU has become collateral damage in the dispute and is considering ways to respond.

Why is China restricting rare earth exports?

Tensions first emerged between the US and China after Donald Trump returned to the White House and carried through an aggressive tariff policy – which the administration argues is needed to narrow a growing trade deficit – on allies and rivals alike.

On 2 April 2025 — coinciding with what Trump defined as US’ “Liberation Day” — Washington announced a 34% tariff on Chinese goods imported into the country, which, added to the existing 20%, brought total duties to 54%.

The trade war escalated after China responded with counter-tariffs, which surpassed the 100% threshold, making trade between the two practically impossible. Beyond the tariffs, to hit back, China looked to weaponise its monopoly over rare earth elements, imposing additional export restrictions on 4 April that have since remained in place.

Rare earths are a group of 17 elements used across the defence, electric vehicle, energy and electronics industries.

The world, including the EU, is heavily dependent on China, as the country controls 60% of global production and 90% of their refining, according to the International Energy Agency (IEA).

After a short truce, the dispute flared up again in September, and on 9 October 2025, China decided to extend its control over rare earth elements from seven to 12. The announcement was seen as China building leverage over the United States. The meeting between the two sides this week is crucial in dictating the path forward.

Meanwhile, the EU is caught between the two. While these restrictions aimed mostly at the US, it has also impacted the European industry. The controls take the form of licenses that are difficult to obtain, with European companies bearing the brunt, as European Commisisioner for Trade Maroš Šefčovič has repeatedly pointed out.

How is the EU responding?

In a speech over the weekend, European Commission President Ursula von der Leyen, said the Union is prepared to use all the tools at its disposal to combat what some European leaders, including French President Emmanuel Macron, have described as economic coercion from China.

The remarks from the Commission president alluded to what is known as the anti-coercion instrument – designed with China in mind but never used.

The ACI, adopted in 2023, would allow the EU hit back at a third country by imposing tariffs or even restricting access to public procurement, licenses, or intellectual property rights.

“In the short term, we are focusing on finding solutions with our Chinese counterparts,” Commission president Ursula von der Leyen said on Saturday, warning, however, “But we are ready to use all of the instruments in our toolbox to respond if needed.”

European Council President António Costa met on Monday with Chinese Premier Li Qiang on the sidelines of the ASEAN Summit in Kuala Lumpur.

“I shared my strong concern about China’s expanding export controls on critical raw materials and related goods and technologies,” Costa said after the meeting, adding: “I urged him to restore as soon as possible fluid, reliable and predictable supply chains.”

Yet, tensions persist.

A planned meeting between Šefčovič and his Chinese counterpart Wang Wentao was cancelled and replaced by high-level talks between Chinese and European experts, a Commission spokesperson has confirmed. A video conference took place on Monday, and Chinese officials are set to arrive in Brussels for a meeting on Thursday.

While Brussels insists it wants to achieve a constructive solution without escalating, the Commission is pursuing a “de-risking” strategy to reduce its dependence on Chinese minerals. In addition, Germany and France have also suggested they would support stronger trade measures if a comprehensive solution cannot be found.

On Saturday, Von der Leyen announced a new plan – RESourceEU – exploring joint purchasing and stockpiling of rare earth, as well as “strategic” projects for the production and processing of critical raw materials here in Europe.

The EU also hopes to diversify its suppliers worldwide.

“We will speed up work on critical raw materials partnerships with countries like Ukraine and Australia, Canada, Kazakhstan, Uzbekistan, Chile or Greenland,” von der Leyen said.

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There has been a huge wave of relief across European and US markets after Friday proved to be a dark day for investors.

Leading European stock indexes started the week in the green, as well as the US futures, while bitcoin, silver and gold rallied.

After leading stock indexes on the Wall Street dropped between 1.9 and 3.6% on Friday, Asian indexes followed the lead on Monday morning, and unanimously lost between 1% and 1.7%.

US stocks skidded on Friday after US President Donald Trump threatened to crank tariffs higher on China, signalling more trouble ahead between the two biggest economies. He was responding to restrictions Beijing is imposing on exports of rare earths, which are materials that are critical for the manufacturing of everything from consumer electronics to jet engines.

However, by the European opening on Monday, investors appeared to be cheered by the US president’s promising words, as he commented on the mounting US-China trade tensions on social media, saying, “Don’t worry about China, it will all be fine!”

Stock markets appear to reverse the losses from the end of last week, the FTSE 100 in London was up by 0.3% at around 10h CET on Monday, the Paris CAC 40 cheered the promise of a new government by gaining 0.7% and the Dax in Frankfurt joined the crowd by rising 0.5% by this time.

The Ibex 35 in Madrid also gained 0.8% and the European benchmark Stoxx 600 was up by nearly 0.5%.

Crypto rallies after Friday’s sharp decline

Bitcoin approached $115,000 on Monday, while Ethereum exceeded $4,200.

“The crypto market capitalisation stood at $3.9 trillion on Monday, up 4.4% from the previous day but down 6% from pre-Friday crash levels,” Alex Kuptsikevich, the FxPro chief market analyst, said.

Gold was up by more than 2.3%, trading at $4,092 an ounce, nearing 11h CET, while oil prices were also climbing, the US benchmark crude was up by nearly 0.9% at 59.85 a barrel, whereas the international benchmark Brent cost $63.69 a barrel, 1.5% increase in the price.

Meanwhile, US futures advanced, with the contract for the S&P 500 gaining 1.1% while that for the Dow Jones Industrial Average gained 1.5% and Nasdaq futures were climbing 2% by 10.30 CET.

In other dealings early Monday, the dollar rose 152.22 Japanese yen from 151.89 yen late Friday. The euro fell to $1.1605 from $1.1614.

Published on
24/09/2025 – 9:33 GMT+2

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Shares in Alibaba rose around 9% in Hong Kong on Wednesday afternoon after CEO Eddie Wu said that he would lift the firm’s AI budget.

The e-commerce giant had already pledged to invest 380 billion yuan (€45bn) in AI-related infrastructure over the next three years, seeking to stay ahead as firms race to develop new models. Wu did not give details on the additional expenditure.

The pledge came as Wu was launching Alibaba’s most powerful AI model during a company conference in Hangzhou, China. The firm’s chief technology officer, Zhou Jingren, said that the Qwen3-Max model contains more than 1 trillion parameters. These are learnt values that determine how the system processes information and makes predictions.

In certain metrics, Alibaba claimed that its Qwen3-Max model outperformed rival offerings like Anthropic’s Claude and DeepSeek-V3.1, citing third-party benchmarks.

“The industry’s development speed far exceeded what we expected, and the industry’s demand for AI infrastructure also far exceeded our anticipation,” Wu said on Wednesday. “We are actively proceeding with the 380 billion investment in AI infrastructure, and plan to add more.”

Stressing that Alibaba must push ahead, Wu estimated that total global investment in AI will exceed $4 trillion (€3.4tn) in the next five years. Chinese rivals such as Tencent and JD.com, as well as US tech firms, have invested heavily in AI over the past year.

Complicating Alibaba’s progress, however, are access restrictions on AI processors from Nvidia.

Last week, China’s internet regulator banned the country’s biggest tech firms from buying Nvidia’s artificial intelligence chips, according to the Financial Times.

The reported ban comes as China seeks to boost its homegrown chip industry and wean itself off dependence on the US.

In August, Chinese firms had previously been advised not to buy Nvidia’s H20, a chip designed specifically for China, with officials in Beijing warning of perceived security risks to national data and systems.

The warning arrived after the US lifted its own ban on the export of H20 chips to China, imposed in April amid a trade spat.

By&nbspAP with Eleanor Butler

Published on
08/08/2025 – 9:20 GMT+2

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Intel shares slumped on Thursday after President Donald Trump said in a social media post that the chipmaker’s CEO needed to resign.

“The CEO of Intel is highly conflicted and must resign, immediately,” Trump posted on Truth Social. “There is no other solution to this problem. Thank you for your attention to this problem!”

Trump made the post after Senator Tom Cotton sent a letter to Intel Chairman Frank Yeary, expressing concern over CEO Lip-Bu Tan’s investments and ties to semiconductor firms that are reportedly linked to the Chinese Communist Party and the People’s Liberation Army. Cotton asked the board whether Tan had divested his interests in these companies to eliminate any conflicts of interest.

It’s not immediately clear if Tan, who took over as Intel’s CEO in March, has done so.

In a statement, Intel said it was “deeply committed to advancing US national and economic security interests”. The firm said it was making “significant investments aligned with the President’s America First agenda”.

Cotton’s allegations

“In March 2025, Intel appointed Lip-Bu Tan as its new CEO,” Cotton wrote in the letter. “Mr. Tan reportedly controls dozens of Chinese companies and has a stake in hundreds of Chinese advanced-manufacturing and chip firms. At least eight of these companies reportedly have ties to the Chinese People’s Liberation Army.”

Cotton specifically called out Tan’s recent leadership of Cadence Design Systems in the letter. According to the US Department of Justice, Cadence, agreed in July to plead guilty to resolve charges that it violated export controls rules to sell hardware and software to China’s National University of Defense Technology, which is linked to the Chinese military.

Tan was the CEO of Cadence when the company violated the rules between 2015 and 2021.

The US Department of Commerce’s Bureau of Industry and Security also fined Cadence $95 million for the same breaches, saying Cadence admitted that “employees of its Chinese subsidiary knowingly transferred sensitive US technology to entities that develop supercomputers in support of China’s military modernisation and nuclear weapons programs.”

Cadence did not immediately respond to AP requests.

The digital race

Tan previously launched the venture capital firm Walden International in 1987 to focus on funding tech start-ups, including chip makers.

China’s state media has described Tan as “actively” devoted to Chinese and Asian markets, having invested not only in the Taiwan Semiconductor Manufacturing Company, but also China’s state-owned enterprise SMIC, which seeks to advance China’s chipmaking capabilities.

The demands made by Trump and Cotton come as economic and political rivalries between the US and China increasingly focus on the competition over chips, AI and other digital technologies that experts say will shape future economies and military conflicts.

Cotton, the chairman of the Senate Intelligence Committee, has raised concerns that Chinese spies could be working at tech companies and defence contractors, using their positions to steal secrets or plant digital backdoors that give China access to classified systems and networks.

On Thursday the Arkansas Republican wrote to the Department of Defense, urging Defense Secretary Pete Hegseth to ban all non-US citizens from jobs allowing them to access DoD networks. He has also demanded an investigation into Chinese citizens working for defence contractors.

“The US government recognises that China’s cyber capabilities pose one of the most aggressive and dangerous threats to the United States, as evidenced by infiltration of our critical infrastructure, telecommunications networks, and supply chains,” Cotton wrote in an earlier letter, calling on the Pentagon to conduct the investigation.

National security officials have linked China’s government to hacking campaigns targeting prominent Americans and critical US systems.

“US companies who receive government grants should be responsible stewards of taxpayer dollars and adhere to strict security regulations,” Cotton wrote on the social platform X.

Playing catch-up

Intel had been a beneficiary of the Biden administration’s CHIPS Act, receiving more than $8 billion (€6.9bn) in federal funding to build computer chip plants around the country.

Shares of the California company slid 3.5%, while markets, particularly the tech-heavy Nasdaq, gained ground.

Founded in 1968 at the start of the PC revolution, Intel missed the technological shift to mobile computing triggered by Apple’s 2007 release of the iPhone, and it has lagged behind more nimble chipmakers. Intel’s troubles have been magnified since the advent of artificial intelligence — a booming field where the chips made by once-smaller rival Nvidia have become tech’s hottest commodity.

Intel is shedding thousands of workers and cutting expenses, including some domestic semiconductor manufacturing capabilities, as Tan tries to revive the fortunes of the struggling chipmaker.