The transformation of the Sino-US AI competition landscape: The US accelerates "full-stack exports", while China counterattacks the encirclement with "laws + alliances".

Just three days after the United States released a policy roadmap - the "Artificial Intelligence Action Plan" - aimed at ensuring its leadership over China in the field of artificial intelligence, on July 26, 2025, the Chinese government also announced a global artificial intelligence action plan - to establish a new international organization to promote cooperation in the field of artificial intelligence. Meanwhile, Chinese artificial intelligence companies announced the establishment of two new industry alliances - the "Model Chip Ecosystem Innovation Alliance" and the Artificial Intelligence Committee of the Shanghai Federation of Commerce - aiming to develop the domestic ecosystem and reduce dependence on foreign technologies in response to the US export restrictions on NVIDIA's high - performance chips.

So far, a new pattern is emerging between the "multilateralism" represented by China and the "America First" represented by the United States. Artificial intelligence is no longer just a race among a group of over - valued technology companies and billionaires, but also part of the fierce competition between China and the United States.

This means that it will have less to do with profits and return on investment and more to do with geopolitics. It also means that the transition from artificial intelligence to artificial general intelligence (AGI) - where machines theoretically surpass human intelligence - will come earlier.

I. The Aftershocks of the US Being Hit by China Continue

The Trump administration in the United States recently warned global companies that using Huawei's Ascend 910 artificial intelligence processors without permission would face legal sanctions. This action implicitly acknowledges that China's advanced semiconductor technology is now attractive enough to win some global commercial users and serve as an alternative to US products; and the US effort to hinder China's development of advanced artificial intelligence is far more complex than expected.

These realizations have prompted the United States to rethink how - or whether - it can prevent artificial intelligence from falling into the hands of Chinese companies. In addition to warning that using Huawei's 901B, C, and D chips would violate US export controls, the US Department of Commerce also abolished the Biden administration's "Artificial Intelligence Diffusion Framework", which aimed to restrict the export of US artificial intelligence technologies to prevent China and other rivals from obtaining them.

The Trump administration seems to be shifting the US focus from "preventing China from obtaining cutting - edge artificial intelligence technologies" to "controlling the spread of artificial intelligence" because Chinese companies are becoming more and more competitive. If third - countries can now choose increasingly powerful and possibly cheaper technologies made in China, why sacrifice the commercial interests of US companies? Trump's idea is that if absolute non - proliferation is no longer feasible, then the spread of US technology might be better than leaving the vacuum to be filled by Chinese chips.

The US "Artificial Intelligence Action Plan" makes it clear that the United States not only wants to win the artificial intelligence race but also tries to unilaterally control the entire track. The plan ambitiously aims to export US - made chips, models, and standards, which marks a cutting - edge strategy to unite allies against China. However, it does not jointly design artificial intelligence governance with democratic allies and partners but simply promotes the model of "Buy American, Trust American". For countries in Europe and the Indo - Pacific region that have invested heavily in building their own artificial intelligence rules in terms of transparency and digital fairness, this is likely to make the plan meaningless.

II. Containing China's Artificial Intelligence Progress Remains US Official Policy

Containing China's artificial intelligence development remains the official policy of the United States, but industry lobbying and bilateral relations will have a significant impact on policy implementation. US companies represented by NVIDIA have been trying to convince legislators that export control restrictions for economic and security reasons will only make Chinese technology companies stronger, with the emergence of DeepSeek and NVIDIA's billions of dollars in losses as evidence.

The end of the Biden administration's artificial intelligence diffusion framework will make it easier for countries to obtain US artificial intelligence. The Trump administration still hopes to include a "no - China" clause in bilateral artificial intelligence contracts, as mentioned in the agreements it just signed with Saudi Arabia and the United Arab Emirates. However, this way of doing business may still enable China to indirectly obtain restricted US chips.

It is worth noting that all the above factors may lead to unstable decision - making by the US government.

Huawei's Ascend 910B can match the performance of the world's mainstream AI chips - the A100 designed by NVIDIA in the United States, and its main components are made in China. If Huawei can overcome production restrictions and provide a "one - stop service" at a lower price, its AI technology will be very competitive, especially in developing countries. Malaysia recently announced an AI infrastructure plan, which was initially aimed at running on Huawei chips (although the government later denied this). Alibaba and other Chinese companies are also performing well in the Middle East because they integrate AI into cloud services.

NVIDIA's AI chips still guarantee performance, connectivity, and ease of use far beyond those of chips in the same class, which is why leading AI companies will continue to use them. But the comprehensive and customizable low - cost packages offered by Chinese companies may attract companies whose main business is not AI. For example, German car manufacturers are planning to integrate DeepSeek into cars sold in China - and large telecommunications companies that have cooperated with Huawei around the world are also potential customers.

China has strongly reacted to the US threat against companies using Ascend A910 chips. The Chinese Ministry of Commerce said that any company or individual that complies with US guidelines may be punished under the "Anti - Foreign Sanctions Law" - this is the first time China has linked specific US actions with possible penalties under a four - year - old regulation. This may lay the foundation for Huawei to sue "any organization or individual that complies with US export controls on artificial intelligence chips".

China only mentioned this move by the Trump administration without referring to the abolition of the artificial intelligence diffusion framework or other guidelines issued at the same time, indicating that China has always planned to use Huawei's artificial intelligence chips for strategic purposes. Ren Zhengfei, the founder of Huawei, said at a seminar in March this year that all private Chinese technology companies need to strengthen the research and development of core technologies and global layout to meet the challenges of global competition in the technology field.

III. The Confrontation of Extraterritorial Rules between China and the US: Intensifying the Dilemma of Enterprises

The Trump administration's inconsistency on the issue of artificial intelligence diffusion and China's recent intention to counter US extraterritorial rule - making with its own extraterritorial rules have put other countries and global companies, especially those doing business in the United States and China, in a difficult situation.

Violating US export control laws may result in huge fines, imprisonment, and even the loss of export privileges; while the "Chinese Anti - Foreign Sanctions Law" introduced in March 2025 allows comprehensive counter - measures such as asset freezing against entities that "implement, assist, or support" US measures.

Then, to what extent does the United States expect its allies to decouple from China technologically? And to what extent can China tolerate its partners' technological decoupling?

It is still unclear how the United States will ensure the non - proliferation of artificial intelligence after revoking the Biden - era plan, and it is also unclear how severely China will crack down on companies that it believes have succumbed to the US threat of not using Ascend 910 chips.

The rapid changes in the Sino - US technological competition may not be good news for the rest of the world.

This article is from the WeChat official account "Internet Law Review", author: MERICS, published by 36Kr with permission.