The US and China have signed a technological truce. However, as Chris Miller, the author of ‘The Chip War’in your newsletterthey have not signed peace at all. What they have agreed is a strategic pause in which both powers believe that time is on their side. Each one has their own theory of how they will win the game. And these theories are radically different, as can be expected in the current confrontation scenario.
The Administration led by Donald Trump has made an important concession: has allowed Nvidia to deliver its second chip to some of its Chinese customers for artificial intelligence (AI) more powerful, the GPU H200. Their most advanced hardware is still subject to strict restrictions. However, this maneuver does not reflect any type of generosity: selling the H200 generates income for Nvidia and its allies, while the truly strategic chips (Blackwell and Vera Rubin) remain, in theory, out of Beijing’s reach.
The Trump administration’s logic is this: if AI is going to be the engine of the economy and geopolitical power for decades to come, the US only needs to maintain its advantage on the technological frontier long enough for that advantage to become structural. At the base of its strategy lies the conviction that the general artificial intelligence (AGI) will transform the world irreversibly. The truce gives it time to consolidate that advantage and for its AI models to prove their economic value before China can catch up.
The structural fragility of the truce
The way in which the Chinese Government is reading the current situation is very different. When Chinese leaders talk about “major changes unseen in a century,” they mean a rebalancing of the industrial world order, not a revolution in language patterns. The most eloquent proof is the one that Chris Miller points out: If Xi Jinping was genuinely worried about running out of computing power, he would have accepted the H200 GPUs that Trump is so keen to sell him. And he hasn’t.
Behind the scenes each party sharpens its knives for a new wave of supply chain conflicts
China is playing with a different logic. Xi Jinping has warned to provincial governments that they should not treat AI as an uncontrolled spending race: “When developing new quality productive forces we should not rush or launch all at once (…) China must not abandon the old for the new. New technologies must be integrated into existing sectors.” This is not skepticism about AI. In fact, the Chinese leader has described it as an “epoch technology” comparable to the Industrial Revolution or the birth of the Internet. What he defends is a clear prioritization: first the industrial bases, then the digital superstructure.
The inherent problem with a truce in which both sides believe they will win is that it is inherently unstable. Neither side has confused the technological truce with peace. China has continued to ship some rare earths to the US, while Washington has postponed several previously delayed restrictions looming over Chinese chipmakers. Still, behind the scenes each party is sharpening its knives for a new wave of supply chain conflicts.
China’s current industrial push spans semiconductors, AI, biotechnology and batteries, and is focused on capital-intensive and relatively job-poor sectors. This strategy suggests that the Chinese government is willing to accept certain internal social costs in exchange for accumulating strategic capacity. The US, for its part, is betting that this capability will become irrelevant if AI rewrites the rules of the game before China can deploy it. Both bets are coherent. Both can be wrong. And that, more than any tariff agreement, is what makes this truce so provisional.
Image | Gage Skidmore | Wikipedia
More information | Chris Miller
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