First, China is formally establishing a national security review mechanism for outbound investment. The National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), and other relevant agencies will review overseas investments, as well as related transfers and disposals of assets and interests, that affect or may affect China’s national security.

Second, Beijing continues to encourage Chinese companies to “go global,” but outbound investment is increasingly viewed through a national security lens. Historically, regulators focused primarily on whether an investment was commercially viable and whether it could contribute to capital outflows. Going forward, authorities will also assess its implications for national security, critical technologies, data security, and supply chain resilience.

Third, companies cannot use overseas expansion as a vehicle to transfer technologies, services, or data that are subject to Chinese export restrictions. The regulation explicitly notes that dispatching engineers abroad, stationing technical experts overseas, conducting overseas training programs, or providing remote technical support may constitute transfers of controlled technologies.

Fourth, the regulation strengthens China’s legal basis for responding to foreign restrictions on Chinese investment. If another country imposes discriminatory investment barriers, sanctions Chinese firms, seizes Chinese-owned assets, or forces foreign companies to cut off business ties with Chinese entities, the Chinese government may adopt countermeasures, including adjusting investment policies, restricting trade or services, or invoking China’s counter-sanctions framework.

At the same time, the Regulation provides that the detailed rules governing outbound investment by Chinese resident individuals and other relevant investors will be formulated separately by the NDRC and MOFCOM.

The Regulation also states that investments made by investors in overseas financial markets shall be governed by the Regulation as well as other applicable state regulations. This means that dedicated financial regulatory frameworks governing overseas portfolio investment—such as QDII and QDLP—will continue to apply, consistent with China’s existing regulatory regime.

Because of the limits of ministerial rulemaking authority, existing regulations such as the NDRC’s Administrative Measures for Enterprise Overseas Investment and MOFCOM’s Administrative Measures for Overseas Investment have largely relied on measures such as restricting access to preferential policies and ordering corrective actions to address violations.

Building on this framework, the new Regulation further strengthens the legal liability regime for investors that violate outbound investment requirements. This is intended to “enhance risk prevention, safeguard national security and national interests, promote compliant corporate conduct, and support the rule-based development of China’s outbound investment activities”, according to the official interpretation of the Chinese government.

According to the official Q&A accompanying the regulation, the drafting process took more than a year and involved extensive consultation with government agencies, businesses, industry associations, academics, lawyers, local governments, and other stakeholders. The regulation was first included in the State Council’s 2025 legislative agenda and later elevated into the 2026 legislative work plan. Multiple rounds of consultation and revisions were conducted before the final text was approved by the State Council.

More broadly, China’s outbound investment regime has evolved through three distinct phases.

The first phase was characterized by strict approval requirements and foreign exchange controls. In an era of limited foreign currency reserves and tightly controlled capital accounts, outbound investment was treated less as a routine commercial activity and more as a matter of state resource allocation. A major turning point came in 2004, when the State Council formally established the principle of “who invests, who decides, who benefits, and who bears the risk,” laying the groundwork for a more market-oriented approach.

The second phase emerged under the “Going Global” strategy. Regulatory reforms in 2014 largely replaced comprehensive approval requirements with a filing-based system. Non-sensitive investments generally became subject to filing, while investments involving sensitive countries, regions, or sectors remained subject to government approval. The shift did not eliminate regulation; rather, it redirected regulatory resources toward higher-risk transactions.

The third phase began around 2017–2018, with a stronger emphasis on industrial policy guidance and “look-through” regulation. Authorities introduced the well-known categories of encouraged, restricted, and prohibited outbound investment, while expanding oversight to cover offshore reinvestments by overseas entities ultimately controlled by Chinese investors. The focus shifted from reviewing only the first layer of a transaction to examining the ultimate destination of capital and the underlying control structure.

In practice, China’s ODI compliance framework today operates through three interconnected regulatory channels.

The NDRC focuses on the investment project itself: whether the transaction involves a sensitive sector or destination, whether it raises policy concerns, and whether offshore structures are being used to circumvent regulation.

MOFCOM focuses on the investor and the overseas business arrangement: whether the transaction constitutes an outbound investment under Chinese law and whether ownership structures, investment details, and industry classifications are accurately disclosed.

SAFE focuses on the movement of funds. Since 2015, outbound investment foreign exchange registration has largely been delegated to commercial banks. As a result, banks have become a critical gatekeeper, particularly with respect to transaction authenticity, compliance reviews, and beneficial ownership verification.

These three tracks are not independent. Rather, they form a chain linking project legitimacy, investor compliance, and capital execution. In practice, whether a transaction can close often depends less on any single approval than on whether the descriptions, ownership structures, counterparties, funding sources, and ultimate destinations are consistent across all three regulatory channels.

From a policy perspective, elevating ODI governance into a State Council-level administrative regulation appears intended to address several longstanding issues. First, while NDRC, MOFCOM, and SAFE have developed a relatively stable division of responsibilities, inconsistencies in interpretation and local implementation remain. Second, key concepts such as look-through review, ultimate destination analysis, offshore reinvestment, and national security coordination have largely relied on ministerial rules and regulatory practice rather than higher-level legislation. Third, the existing framework has struggled to integrate three objectives simultaneously: promoting outbound investment, regulating risk, and protecting Chinese companies overseas.

The new regulation arguably marks the beginning of a fourth phase in China’s outbound investment regime—one increasingly centered on national security and technology security.

Some observers have speculated that recent high-profile cases, including the Manus case, may have contributed to the policy momentum behind the regulation, although neither the text nor the official explanatory materials make any reference to specific incidents. Historically, however, major regulatory initiatives in China have often followed prominent cases that exposed perceived gaps in the existing framework.

The practical implication is that Chinese companies expanding overseas may increasingly face a three-layer compliance framework. In addition to ODI regulation itself, firms may also need to navigate China’s technology export control regime administered by MOFCOM and China’s cross-border data transfer requirements overseen by the Cyberspace Administration of China (CAC). These regimes overlap in important ways, making outbound expansion significantly more complex than it was a decade ago.

Full translation (unofficial) of the New Regulation

Regulation of the State Council on Outbound Investment

Article 1

This Regulation is formulated in accordance with the Foreign Relations Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China, and other relevant laws, for the purposes of advancing high-standard opening up, promoting the high-quality development of outbound investment, strengthening the administration of outbound investment, protecting the lawful rights and interests of investors and their overseas investments, and safeguarding national sovereignty, security, and development interests.

Article 2

This Regulation shall apply to outbound investments conducted by investors within the territory of the People’s Republic of China (hereinafter referred to as “China”).

For the purposes of this Regulation, “outbound investment” or “overseas investment” refers to activities whereby investors directly or indirectly acquire ownership, control, management rights, or other related interests in enterprises, assets, or other interests located in foreign countries or regions through capital contributions, equity participation, financing, guarantees, or other means.

The term “investors” includes enterprises, other organizations, and individual residents within China.

Article 3

Outbound investment shall adhere to the fundamental national policy of opening up, implement a holistic approach to national security, coordinate development and security, balance domestic and international considerations, improve the management and service system for outbound investment, enhance the quality and effectiveness of outbound investment, and promote open cooperation and mutual benefit.

Article 4

The State shall proactively align with high-standard international economic and trade rules, advance high-quality Belt and Road cooperation, strengthen bilateral and multilateral investment cooperation mechanisms, actively participate in the formulation of international investment rules, promote international cooperation in industrial and supply chains, oppose unilateralism and protectionism, and support the development of an open global economy.

Article 5

The State supports investors in conducting outbound investment activities in accordance with market principles and participating actively in international competition and cooperation.

Investors shall enjoy autonomy in outbound investment in accordance with law, make independent investment decisions, bear risks independently, and assume responsibility for profits and losses.

When carrying out outbound investment and related activities, investors shall comply with applicable laws, regulations, and international practices; respect local customs and cultural traditions; observe business ethics; act in good faith and engage in fair competition; fulfill social responsibilities; and safeguard China’s national image.

Investors shall not disrupt market competition, damage the ecological environment, infringe upon the lawful rights and interests of workers, endanger China’s national security, or harm national interests or the public interest.

Article 6

The State shall improve the comprehensive overseas service system, promote the integration of trade and investment, enhance public platforms and services, coordinate resources relating to foreign affairs, legal affairs, taxation, finance, commerce, logistics, immigration, customs, and trade promotion, and provide support and services for investors.

People’s governments at or above the provincial level and their relevant departments shall improve public service capacity and provide investors with public services and products relating to laws and regulations, policies, investment guides, intellectual property, risk prevention and response, and rights protection.

Article 7

The State supports professional service institutions, including consulting, legal services, accounting and auditing, credit rating, mediation and arbitration, and intellectual property service providers, in expanding their overseas service networks and enhancing their international capabilities to provide high-quality professional services for investors and outbound investment activities.

Such institutions shall follow the principles of good faith, diligence, independence, and objectivity, establish effective risk-control and internal-control mechanisms, employ personnel with appropriate professional qualifications, and conduct their activities in accordance with law.

Article 8

Banking and financial institutions shall, within the scope of their business operations and in accordance with the principles of market orientation, rule of law, commercial sustainability, and prudent risk management, provide financing and other financial services for outbound investment activities.

Policy-oriented insurance institutions are encouraged to provide overseas investment insurance and related services.

Article 9

Relevant industry associations and chambers of commerce shall strengthen self-regulation in accordance with laws, regulations, and their respective charters, improve their capacity to serve investors and outbound investment activities, and promptly communicate industry concerns.

Industry associations, chambers of commerce, and trade and investment promotion organizations may provide information consulting, market development, economic and trade exchanges, rights protection, and dispute resolution services related to outbound investment in accordance with their governing rules.

Article 10

The State shall improve the outbound investment administration system, refine regulatory measures, implement classified and tiered supervision throughout the investment lifecycle, strengthen risk prevention and control, enhance the quality and security of outbound investment, and strike a balance between investment facilitation and risk management.

Article 11

The competent investment authority and commerce authority of the State Council, together with other relevant departments, shall formulate, adjust, and implement outbound investment policies in light of national economic and social development needs, changes in investment environments, and risk conditions in foreign countries and regions.

Such authorities shall identify encouraged, restricted, and prohibited categories of outbound investment, strengthen regulatory oversight, and guide and supervise investors in conducting compliant investment and business activities.

Article 12

Where outbound investment activities require approvals, filings, information reporting, cross-border capital registration, or other procedures under applicable laws and regulations, investors shall complete such procedures in accordance with relevant requirements, truthfully submit required materials, and cooperate with supervision and inspections conducted by competent authorities.

Article 13

Investors shall not export, use, or otherwise transfer goods, technologies, services, or related data that are prohibited from export under Chinese law, nor export, use, or transfer restricted goods, technologies, services, or related data without the required authorization.

Investors shall not transfer prohibited goods, technologies, services, or related data to foreign countries or regions through means such as dispatching technical personnel abroad, organizing personnel to work overseas, providing cross-border technical guidance, or arranging overseas training programs. Restricted items may not be transferred through such means without the required authorization.

Article 14

Matters relating to outbound investment involving foreign exchange, imports and exports of goods and technology, cross-border trade in services, cross-border data flows, immigration and emigration administration, merger control review, export controls, cybersecurity regulation, tax administration, and state-owned asset supervision shall be governed by applicable laws, administrative regulations, and relevant state provisions.

Article 15

The State shall establish and improve the national security review system for outbound investment.

The competent investment authority and commerce authority of the State Council, together with other relevant departments, shall conduct national security reviews of outbound investments and transfers or disposals of related assets and interests that affect or may affect national security.

Relevant organizations and individuals shall cooperate with such reviews, shall not refuse or obstruct review activities, and shall comply with review decisions.

Article 16

Investors and the enterprises they establish or invest in overseas shall improve their corporate governance structures, establish and strengthen systems for compliance management, internal controls, workplace safety, and emergency response, enhance risk identification, prevention, and mitigation capabilities, and allocate necessary personnel, funding, equipment, and other resources to ensure the safety of their employees and assets.

Article 17

Investors shall conduct investment and business activities in a lawful and orderly manner and shall not:

• Damage the business reputation or commercial goodwill of other investors;

• Infringe upon the trade secrets of others;

• Dump products at unfairly low prices without legitimate justification;

• Obtain improper benefits through bribery, fraud, or other improper means; or

• Disrupt the order of the outbound investment market.

Article 18

Relevant departments of the State Council shall strengthen monitoring, early warning, and risk assessment mechanisms for outbound investment, promptly release information regarding security conditions in relevant countries and regions, provide investment risk alerts, guide and assist investors in risk prevention and mitigation, and safeguard China’s overseas interests and the lawful rights and interests of investors.

Article 19

In accordance with treaties and agreements concluded or acceded to by the People’s Republic of China, or on the basis of reciprocity, China shall engage in cooperation and exchanges with foreign countries, regions, and international organizations in law enforcement and related fields, with a view to protecting the safety of investors, their overseas enterprises, project personnel, assets, and the lawful rights and interests of relevant organizations and individuals.

The State shall actively negotiate bilateral and multilateral trade and investment agreements and other international economic agreements in order to strengthen protections for outbound investment and promote investment liberalization and facilitation.

Article 20

The State shall, in accordance with law, provide consular protection and assistance to Chinese citizens, organizations, and Chinese employees working for overseas enterprises and projects in which they have invested, and shall protect their lawful rights and interests.

Where wars, armed conflicts, riots, major natural disasters, serious accidents, major infectious disease outbreaks, terrorist attacks, or other major emergencies occur in a host country or region, and the personal safety or property of investors or Chinese personnel associated with overseas enterprises or projects is threatened, Chinese diplomatic and consular missions abroad shall promptly verify the situation, urge the relevant foreign authorities to take effective measures to protect Chinese citizens and organizations, and provide appropriate assistance where necessary.

Where the Chinese government adopts evacuation or other risk-avoidance arrangements, relevant organizations and individuals shall cooperate accordingly.

Article 21

Investors are encouraged to resolve disputes relating to outbound investment through consultation, mediation, arbitration, litigation, and other lawful means in order to protect their legitimate rights and interests.

Article 22

Where organizations or individuals within China participate in arbitration or litigation relating to outbound investment, or become subject to investigations conducted by foreign judicial or law-enforcement authorities, and need to provide evidence or other materials outside China, they shall comply with applicable laws, administrative regulations, and state requirements relating to state secrets protection, data security, personal information protection, technology export administration, export controls, and judicial assistance.

Where approval from a competent authority is required by law, the relevant legal procedures shall be followed.

Article 23

Where investors encounter trade-related investment barriers or other obstacles to investment and business operations in a host country or region, the competent commerce authority of the State Council may, independently or jointly with other relevant departments, conduct investigations.

Relevant organizations and individuals shall cooperate with such investigations.

Based on the findings of the investigation, relevant departments of the State Council may adopt measures including:

• Adjusting country-specific investment policies;

• Restricting or prohibiting the import or export of goods and technologies; or

• Restricting or prohibiting international trade in services.

Article 24

Where any foreign country, region, or international organization adopts discriminatory prohibitions, restrictions, or similar measures against the People’s Republic of China in investment, business operations, or related matters in violation of international law or the basic norms governing international relations, the Chinese government and its relevant authorities may take corresponding measures as appropriate in order to protect the safety and legitimate rights and interests of investors and their overseas investments, and to safeguard China’s overseas interests from threats or infringement.

Relevant departments of the State Council may, in accordance with the Anti-Foreign Sanctions Law of the People’s Republic of China and related implementing regulations, place organizations and individuals that directly or indirectly participate in the formulation, decision-making, or implementation of such discriminatory measures on a countermeasures list and adopt corresponding actions against them.

Article 25

Where a foreign organization or individual:

• Endangers China’s sovereignty, security, or development interests;

• Violates normal market transaction principles by interrupting ordinary commercial dealings with Chinese enterprises, organizations, or individuals; or

• Adopts discriminatory measures against investors or their overseas investments and unreasonably deprives or restricts their lawful rights and interests,

relevant departments of the State Council may adopt one or more of the following measures:

• Restricting or prohibiting their involvement in import and export activities related to China;

• Restricting or prohibiting their investment activities in China;

• Restricting or prohibiting Chinese organizations and individuals from engaging in transactions or cooperation with them;

• Restricting or prohibiting the entry into China of relevant individuals, products, or means of transportation; and

• Revoking or restricting the right of relevant individuals to work, stay, or reside in China.

Such measures may also be applied to entities that are controlled by, or established and operated with the participation of, such foreign organizations or individuals.

Offical Q&A

China recently issued the Regulation on Outbound Investment (the “Regulation”), which will take effect on July 1, 2026. Officials from the Ministry of Justice (MOJ), the National Development and Reform Commission (NDRC), and the Ministry of Commerce (MOFCOM) recently answered questions from the press regarding the Regulation.

Q: Could you briefly explain the background behind the Regulation?

A: Outbound investment is an important component of China’s opening-up policy.

Since the 18th National Congress of the Communist Party of China, the CPC Central Committee and the State Council have introduced a series of measures to deepen reform in outbound investment and improve the legal framework governing overseas investment. China has remained one of the world’s leading sources of outbound investment, while its participation in international industrial cooperation has continued to deepen.

At the same time, profound global changes are accelerating, geopolitical risks are rising, and international competition is becoming increasingly intense. The long-standing model of regulating and servicing outbound investment primarily through ministerial regulations and normative documents is no longer sufficient to meet current needs.

There is therefore an urgent need to elevate effective long-standing regulatory measures into a higher-level legal framework, better align with high-standard international economic and trade rules, clarify the institutional arrangements governing outbound investment services, administration, and protection, effectively safeguard the lawful rights and interests of investors and their overseas investments, protect China’s sovereignty, security, and development interests, and promote the high-quality development of outbound investment under the rule of law.

The Regulation represents an important step in implementing the decisions of the Third and Fourth Plenary Sessions of the 20th CPC Central Committee regarding the improvement of China’s outbound investment management and service framework. It is a necessary measure for balancing development and security, promoting high-quality outbound investment, advancing China’s commitment to opening-up, and supporting a more open, inclusive, balanced, and mutually beneficial form of economic globalization.

It is of landmark significance in the history of China’s outbound investment development.

Q: How were opinions and comments solicited during the drafting process?

A: The drafting authorities strictly followed the principles of scientific, democratic, and law-based legislation and extensively consulted stakeholders throughout the drafting process.

The State Council’s 2025 Legislative Work Plan called for advancing legislation on outbound investment, and the Regulation was formally included in the State Council’s 2026 Legislative Work Plan.

The Ministry of Justice, NDRC, and MOFCOM systematically reviewed both the achievements and challenges of China’s outbound investment regime. They collected views through written consultations, local field research, company visits, and expert symposiums, while carefully studying and incorporating feedback from government agencies, enterprises, industry associations, academics, and legal practitioners.

Following the preparation of an initial draft, the Ministry of Justice conducted three rounds of consultations involving more than 100 central government agencies, local governments, and public organizations. Multiple expert reviews were organized, and additional feedback was sought from enterprises, industry associations, academics, National People’s Congress deputies, and members of the Chinese People’s Political Consultative Conference.

Field visits were also conducted across various localities. Based on these consultations, comments and recommendations were carefully reviewed, incorporated where appropriate, and repeatedly refined before the draft was submitted to the State Council Executive Meeting for deliberation and approval.

The Regulation therefore reflects broad consultation and extensive input from a wide range of stakeholders.

Q: What is the overall legislative approach behind the Regulation?

A: The Regulation is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and follows three main principles.

First, it implements the decisions and policy arrangements of the CPC Central Committee and the State Council by codifying the experience and reform achievements accumulated in outbound investment regulation since the 18th Party Congress.

Second, it adopts a problem-oriented approach by addressing emerging challenges, clarifying the fundamental principles governing outbound investment, and improving the legal framework for outbound investment services, administration, and protection.

Third, it balances development and security. The Regulation promotes the high-quality development of outbound investment through multiple measures, reaffirms China’s commitment to multilateralism and opening-up, and supports market-based outbound investment activities. At the same time, it establishes mechanisms for risk prevention and response in the investment sector and firmly safeguards China’s sovereignty, security, and development interests.

Q: What activities fall within the scope of the Regulation?

A: Based on long-standing regulatory practice, the Regulation applies to outbound investments conducted by investors within the territory of the People’s Republic of China.

Outbound investment, or overseas investment, refers to activities through which investors directly or indirectly acquire ownership, control, management rights, or other interests in enterprises or assets located in foreign countries or regions through capital contributions, equity investments, financing, guarantees, or other arrangements.

Investors include Chinese enterprises, other organizations, and individual residents.

Investments in Hong Kong, Macau, and Taiwan are generally subject to the Regulation by reference, unless otherwise provided by laws, administrative regulations, or separate State Council provisions.

Q: What fundamental principles govern outbound investment under the Regulation?

A: The Regulation establishes the guiding principles for China’s outbound investment policy.

It provides that outbound investment shall adhere to China’s fundamental policy of opening-up, implement a holistic approach to national security, coordinate development and security, balance domestic and international considerations, improve the outbound investment management and service system, enhance the quality and effectiveness of outbound investment, and promote open cooperation and mutual benefit.

The Regulation also reaffirms China’s commitment to high-level opening-up and support for outbound investment. China will actively align with high-standard international economic and trade rules, advance high-quality Belt and Road cooperation, strengthen bilateral and multilateral investment cooperation mechanisms, participate in the formulation of international investment rules, promote international industrial and supply-chain cooperation, oppose unilateralism and protectionism, and support the development of an open global economy.

Investors remain the principal actors in outbound investment activities. The Regulation supports investors in conducting outbound investment on market-oriented principles and participating in international competition and cooperation.

Investors enjoy autonomy in making investment decisions, bearing risks, and assuming responsibility for profits and losses.

At the same time, the Regulation emphasizes investor responsibility. Investors must comply with laws, regulations, and international practices; respect local customs and cultures; observe business ethics; conduct business in good faith and fair competition; fulfill social responsibilities; and safeguard China’s national image.

They must not disrupt market competition, damage the environment, infringe upon workers’ lawful rights and interests, endanger China’s national security, or harm national interests or the public interest.

And you could also find experts’ comments endorsed by the government here.

Guo Jiakun responded that, as two major AI powers, China and the United States should work together to promote the development and governance of artificial intelligence, and ensure that AI better serves the progress of human civilization and the common well-being of the international community.

He added that during President Trump’s visit to China, the two leaders held constructive discussions on AI-related issues and agreed to launch a government-to-government dialogue on AI.

The White House has not formally announced the dialogue yet. But President Trump and Treasury Secretary Scott Bessent has kind of confirmed it informally:

Bret Baier(Fox News):
On AI, was there any agreement about any kind of guardrails that China and the U.S. might agree to so that AI does not go crazy?

Donald Trump:
We talked about it. Yes, we talked about it. AI is mostly a great thing. Mostly.

And we are leading China. We talked about that. We are leading China by a lot. I gave AI companies the right to build their own electricity-producing plants. That is a big deal. They can now generate their own electricity, which we could never have gotten from the grid.

Now you have these very rich companies, headed by lots of geniuses, building electric plants. Because of that, we are leading China by a lot in the AI race.

Now it is mostly the two of us. Other nations are in it, but mostly it is the two of us. Whoever wins the AI race — and we are going to win it. If we are smart, we are going to win it. If we are not smart, we are not. But we are leading by a lot.

We talked about that last night. President Xi was very surprised at how well we have done with AI, because when it started, they thought they had taken this gigantic lead. And now, of course, we are substantially ahead of them in AI.

Bret Baier:
But do you think there will be some buy-in, some setup, guardrails or something?

Donald Trump:
That could be. We talked about it. But at the same time, we are competing. So it is a little hard to say, “Let’s put on guardrails,” when we are competing with each other. It does not really work that way too much.

But AI, if you look at medicine, some of the things coming up in medicine, some of the cures they are coming up with — people would never have gotten there otherwise. It is going to be mostly a good thing, but we want to have some guardrails.

KERNEN(CNBC): Let’s get back to our conversation with Treasury Secretary Bessent. I asked him, you probably saw if you were watching earlier, how he sees the U.S. navigating through the A.I. revolution.

BESSENT: Well, all three of the leading companies, Anthropic, OpenAI and Google/Gemini, their large language models are increasing in power very quickly. We saw a step function jump with Anthropic Mythos. I think we’re going to see a big step function jump with OpenAI’s next release. And I think in a few months, we’re going to see a big step function jump with Gemini.

And, Joe, first of all, the good news is the U.S. is the undisputed leader in the world here. We have the greatest A.I. companies. We’re actually going to be discussing the A.I. guardrails with the Chinese. It will, because the Chinese are substantially behind us, but they have a very advanced A.I. industry here. So the two A.I. superpowers are going to start talking. We’re going to set up a protocol in terms of, how do we go forward with best practices for A.I. to make sure non-state actors don’t get ahold of these models.

And you know, Joe, what I will tell you is all three of the big players have been very good partners with the U.S. government because what we don’t want to do is stifle innovation. So our responsibility is to come up with the highest performance calculus, where we can get the most innovation and the highest level of safety. And we, I am very satisfied that we are well on our way to that. Everything has been voluntary by the companies, and they have been very good partners with the U.S. government.

My previous pieces on U.S.-China AI dialogue：

Is Mythos Restarting U.S.-China AI Safety Dialogue?

China and the US agreed to hold the 2nd intergovernmental dialogue on AI

A few thoughts on the first Sino-US intergovernmental dialogue on AI

China’s readout of the first Sino-U.S. intergovernmental dialogue on AI

Zheng Yongnian: Hoping that the Sino-U.S. Dialogue on AI Does Not Turn into a New “Nuclear Weapons Negotiation”

Some background:

on May 14 2024, China and the U.S. held their first-ever government-to-government AI dialogue. This was the first formal AI communication mechanism established at the government level between the two countries.

Both sides released readouts afterward, but overall, this felt much more like a “setting up the table” meeting rather than one designed to produce immediate deliverables.

Based on the public information available, there were no major substantive agreements or concrete cooperation outcomes. Beyond acknowledging that AI brings both enormous opportunities and serious risks — and that global governance is needed — there was no joint statement, no specific cooperation project, and no new rules framework. That was not particularly surprising. U.S.-China relations are already highly competitive and tense, and AI has become one of the most sensitive areas in both technology and national security. In that context, the fact that the two sides were still able to sit down and calmly discuss AI governance and safety was itself already a meaningful step.

That said, the tone of the talks actually seemed fairly positive. The U.S. described the discussions as “candid and constructive,” while the Chinese side called them “in-depth, professional, and constructive.” Both sides also signaled interest in continuing the dialogue. The U.S. specifically said that keeping communication channels open on AI risks and safety is an important part of “responsibly managing competition,” while China emphasized continued implementation of the consensus reached by the two leaders in San Francisco.

Of course, there was still some friction beneath the surface. The U.S. side explicitly raised concerns about the “misuse” of AI, including by China. While the readout did not go into detail, this likely referred to familiar U.S. concerns around surveillance technologies, disinformation, and human rights issues. Meanwhile, the Chinese side made clear that it raised strong objections to U.S. restrictions and pressure on China’s AI sector, including export controls on AI chips.

The two sides also approached the dialogue from somewhat different angles.

On the Chinese side, the talks were led mainly by the Department of North American and Oceanian Affairs at the Foreign Ministry, rather than by the agencies that usually handle technical AI governance negotiations. Other agencies — including the Ministry of Science and Technology, NDRC, CAC, and MIIT — participated as supporting agencies. Overall, China seemed to view the AI dialogue more as part of the broader effort to stabilize U.S.-China relations, somewhat similar to past climate dialogues: both a technical discussion and a “cooperation pillar” within the broader bilateral relationship.

The U.S. side, by contrast, approached it much more through a “national security + technology governance” lens. The talks were jointly led by the White House National Security Council and the State Department, with participation from senior officials focused on AI safety and critical technologies. That suggests Washington sees the dialogue more as a specialized governance and risk-management channel focused on AI safety, misuse, and security concerns.

The two sides also still differ significantly on what “global AI governance” should look like.

China continues to push the framework outlined in its Global AI Governance Initiative, emphasizing that the United Nations should play the central role and that AI rules and standards should be based on “broad consensus,” rather than being driven by a small group of countries.

The U.S., meanwhile, did not directly endorse a UN-centered approach to global AI governance. Washington also appears more cautious about using hard terms like “rules” or “standards,” preferring broader language around building “global consensus.”

Later, after President Trump returned to office, many people expected the U.S. might restart a broader U.S.-China AI safety dialogue mechanism. In reality, however, the U.S. government remained relatively lukewarm about it. Over the past period, the real center of gravity in U.S.-China AI negotiations has still been much more focused on practical issues like chip export controls and compute restrictions.

At the November 2024 APEC Summit in Lima — the final face-to-face meeting between Biden and Xi— the White House announced that “the two sides affirmed the need to maintain human control over decisions regarding the use of nuclear weapons.” In practice, this marked the first time that the United States and China, at the leader level and in formal political language, confirmed that artificial intelligence should not be allowed to autonomously make decisions on nuclear strikes.

Announcement No. 5 of the Ministry of Justice of the People’s Republic of China

Pursuant to Articles 3 and 6 of the Regulations of the People’s Republic of China on Countering Improper Extraterritorial Application of Foreign Laws and Measures, the Ministry of Justice, together with the Ministry of Commerce and other relevant authorities, has investigated and determined that the European Union’s use of the Foreign Subsidies Regulation (FSR) to conduct cross-border investigative actions against Chinese entities in the Nuctech case constitutes an improper extraterritorial jurisdiction measure.

No organization or individual may implement or assist in implementing such improper extraterritorial jurisdiction measures.

This announcement takes effect immediately upon publication.

Ministry of Justice
May 15, 2026

Ministry of Justice Spokesperson’s Q&A on the EU’s Foreign Subsidies Investigation Practices Constituting Improper Extraterritorial Jurisdiction

Question: On May 15, 2026, the Ministry of Justice issued an announcement determining that the EU’s cross-border investigative actions against Chinese entities in the Nuctech case under the Foreign Subsidies Regulation constitute improper extraterritorial jurisdiction. What is the rationale behind this decision?

Answer:
The EU’s use of the Foreign Subsidies Regulation to investigate Nuctech involved arbitrarily demanding broad and unnecessary information located within China from Chinese entities. These demands constituted improper requirements imposed on the relevant entities and clearly violated international law and the basic principles governing international relations.

In order to safeguard China’s sovereignty, security, and development interests, and to protect the lawful rights and interests of Chinese citizens, legal persons, and other organizations, the Ministry of Justice, together with the Ministry of Commerce and other relevant authorities, identified and determined in accordance with the Regulations on Countering Improper Extraterritorial Application of Foreign Laws and Measures that the EU’s actions constitute improper extraterritorial jurisdiction measures.

No organization or individual may implement or assist in implementing such measures.

The EU Foreign Subsidies Regulation is a unilateral instrument created by the EU itself. Since its implementation, the EU has frequently used the FSR to investigate Chinese companies in a manner that is clearly targeted and discriminatory, representing a typical case of using the banner of “fair competition” to pursue protectionism.

Back in January 2025, China’s Ministry of Commerce had already determined through investigation that relevant EU FSR practices constituted trade and investment barriers. Rather than correcting its actions, the EU has continued further down the wrong path.

China will never accept foreign countries or regions abusing “long-arm jurisdiction” against Chinese citizens and enterprises. This announcement is a concrete action implementing the Regulations on Countering Improper Extraterritorial Application of Foreign Laws and Measures in accordance with the law.

We urge the EU side to immediately correct its wrongful practices and create a fair, just, and predictable market environment for China-EU cooperation. If the EU insists on overstepping boundaries, China will resolutely take countermeasures in accordance with the law.

MOFCOM Spokesperson’s Q&A on the Determination that EU FSR Investigation Practices Constitute Improper Extraterritorial Jurisdiction Measures

Question: On May 15, the Ministry of Justice issued an announcement stating that the EU’s cross-border investigative actions against Chinese entities under the Foreign Subsidies Regulation constitute “improper extraterritorial jurisdiction measures.” What is MOFCOM’s response?

Answer:
China has consistently opposed the EU’s abuse of unilateral tools such as the Foreign Subsidies Regulation (FSR) to suppress Chinese companies.

Recently, the EU has not only increased the frequency and scope of investigations targeting Chinese firms, but has also escalated investigations into companies such as Nuctech into in-depth probes. It has further compelled Chinese banking institutions to cooperate with investigations while unreasonably demanding broad amounts of information located within China that are unrelated to the investigation itself.

These actions have seriously negatively affected the normal investment and business operations of multiple Chinese companies and banking institutions in Europe.

As early as January 2025, MOFCOM had already determined through investigation that relevant EU FSR practices constituted trade and investment barriers and called on the EU to correct those practices while advocating proper management of differences through dialogue. However, the EU has insisted on continuing down the wrong path.

In response, the Ministry of Justice, together with MOFCOM, after conducting a full investigation and pursuant to the Regulations on Countering Improper Extraterritorial Application of Foreign Laws and Measures, determined that the EU’s cross-border investigative actions against Chinese entities in the Nuctech FSR investigation constitute improper extraterritorial jurisdiction measures, and ordered that no organization or individual may implement or assist in implementing such measures.

China reiterates its hope that the European Commission will quickly correct its wrongful practices, stop its unreasonable suppression of Chinese companies, stop abusing the FSR investigative tool, and provide a fair, just, and predictable business environment for Chinese companies operating and investing in Europe.

China has consistently advocated managing differences through dialogue and consultation and hopes the EU will work with China in the same direction to resolve problems through friendly consultation.

At the same time, China will closely monitor relevant EU developments and will take necessary measures to resolutely safeguard national security and the legitimate rights and interests of Chinese enterprises.

This marks the first real move since China’s new Regulations on Countering Improper Extraterritorial Application of Foreign Laws and Measures took effect a little over a month ago — and this time the direct target is the EU’s Foreign Subsidies Regulation, or FSR.

The FSR is a relatively new EU tool introduced in recent years. The basic logic is simple: if a non-EU company receives support from its home government and then competes in Europe, the EU believes it may have gained an “unfair advantage,” giving Brussels the right to investigate and intervene.

But many Chinese experts and commentators argue that the FSR is very different from the EU’s traditional anti-dumping or anti-subsidy tools. In their view, it looks much more like a regulatory framework specifically designed around the structure of the Chinese economy.

That’s because the FSR defines “foreign subsidies” extremely broadly. It’s not just direct government grants. Loans from Chinese state-owned banks, local tax incentives, or even buying electricity or steel from SOEs could potentially be treated as subsidies if the EU thinks the pricing was not fully “market-based.”

And that creates a structural issue for Chinese companies, because China’s economy naturally involves a large state sector. Many major Chinese firms inevitably deal with SOEs, state-owned banks, and local governments in financing, procurement, infrastructure, and industrial policy support. So under the FSR framework, a lot of completely normal business activity by Chinese companies can automatically end up looking “suspicious.”

The compliance burden is also huge. If a Chinese company wants to do a major acquisition or bid on a large public project in Europe, it has to disclose all forms of “financial contributions” received from non-EU governments over the previous three years. And this applies not just to the European subsidiary, but to the entire corporate group — including the China headquarters and all global affiliates.

So, for example, if a Chinese automaker wants to buy a factory in Europe, it may have to pull together years of records involving local governments, state-owned banks, and SOEs, organize everything, translate it, and hand it over to the EU for review. The compliance costs, legal fees, and due-diligence burden can be enormous.

What really makes companies nervous, though, is not the paperwork itself, but the investigative powers behind the FSR. The European Commission can demand huge amounts of internal material, conduct surprise inspections, and request access to emails, accounting records, and internal data. If companies refuse to cooperate — or if Brussels thinks the information provided is incomplete — they can face massive fines or even be blocked from mergers, acquisitions, or public procurement projects in Europe.

Because of this, many Chinese observers believe the FSR has already gone far beyond a normal regulatory tool and is starting to materially affect the operating environment for Chinese companies in Europe. In many cases, the EU doesn’t even need to issue an actual penalty. Simply launching an in-depth investigation can be enough to make Chinese firms back away on their own.

The reason is simple: FSR investigations are slow, expensive, and extremely intrusive. Companies face endless document requests, risks of data leaks and commercial secrets being exposed, scrutiny of executive emails, and long delays in merger approvals or procurement decisions. And for companies, time itself is a huge cost. Many projects lose commercial value long before any final ruling is made.

Several Chinese projects in Europe have already effectively collapsed under this pressure. Examples often mentioned include CRRC’s rail bid in Bulgaria and LONGi’s solar project in Romania. In both cases, once the EU escalated to an in-depth investigation, the Chinese companies eventually withdrew from the bidding process to limit losses. In other words, Brussels didn’t need to formally ban them from the market — the investigation process itself was enough to push them out.

There’s also a growing view in China that while the FSR officially applies to all non-EU companies — including American, Middle Eastern, and Japanese firms — in practice, most major enforcement cases have focused on Chinese companies.

The firms targeted so far — CRRC, LONGi, Shanghai Electric, Nuctech, Goldwind, and others — are all from sectors where Chinese companies have become globally competitive: high-speed rail, solar, wind power, and security equipment. These are precisely the industries where China’s cost structure, supply chains, and industrial scale have put enormous pressure on many European competitors.

That’s why many people in China increasingly see the FSR as something more than just a subsidy-control mechanism. In their view, it looks increasingly like a new form of industrial protection policy. In the past, Europe mainly relied on anti-dumping cases, anti-subsidy measures, and carbon tariffs. Now it is increasingly using more sophisticated legal and compliance tools to raise the cost for Chinese companies trying to enter the European market.

The Nuctech case has now pushed the tensions between China and the EU over the FSR fully into the open. In April 2024, EU officials carried out surprise inspections at Nuctech offices in Poland and the Netherlands. “Dawn raids” themselves are not unusual in EU competition investigations. What made this case especially sensitive, however, was that the EU was not only looking at data stored in Europe — it also demanded access to executive emails and internal communications.

The problem was that many of those email servers were actually located at Nuctech’s headquarters in China.

That immediately put the company in an impossible position. Under China’s data security and state secrecy laws, certain data located inside China cannot simply be handed over to a foreign government. But refusing to cooperate with the EU investigation could expose the company to huge fines or even market restrictions in Europe.

Nuctech later went to the EU courts to try to block the data requests, but the court took a very hard line. The basic message was: if you operate in Europe, and if computers in your European offices can technically access those emails and systems, then the EU has the right to demand them. Chinese domestic law, in the court’s view, is not a valid reason to refuse cooperation with an EU investigation.

That effectively turned the company into a “sandwich.” Hand over the data, and you may violate Chinese law. Refuse, and you risk punishment from Brussels.

China’s Ministry of Justice announcement this week sends three very clear signals.

First, Beijing believes the EU has gone beyond normal market regulation and crossed into extraterritorial overreach. In China’s view, the EU may investigate commercial conduct inside Europe, but it cannot use the FSR as a basis to directly reach into servers and data systems located inside China.

Second, China has now formally issued a blocking order. In practical terms, that means no organization or individual may cooperate with the EU’s requests involving data located inside China. And this applies not only to the company itself, but also to lawyers, technical staff, service providers, and other third parties.

Third — and perhaps most importantly — Chinese companies previously had to argue in European courts on their own that “Chinese law does not allow us to hand over this data.” European judges often found that argument unpersuasive. Now the situation is different. After the Ministry of Justice formally issued this announcement, companies can say much more clearly: it is not simply the company refusing to cooperate — the Chinese government itself has formally prohibited compliance.

That means the dispute over data, subsidies, cross-border investigations, and extraterritorial jurisdiction is no longer just a compliance issue for individual companies. It is increasingly turning into a broader legal and sovereignty dispute between China and the EU.

The Ministry of Justice statement also seemed to send another message quite clearly: the EU may investigate subsidies, but if it continues trying to bypass the Chinese government and directly access data and servers inside China, Beijing is prepared to escalate with additional countermeasures.

The question now is whether the EU courts will back down because of China’s formal blocking order.

The answer is probably not very encouraging.

Looking at past EU practice, whenever companies refuse to provide core data, the European Commission typically resorts to what is known as “Facts Available” — essentially making the most unfavorable assumptions possible based on whatever information it can obtain.

EU courts have consistently supported this approach. Across EU competition law, anti-subsidy investigations, and trade defense cases, there has long been a very strong expectation that companies must fully cooperate with investigators. If they do not, the Commission is given wide discretion to rely on alternative data, substitute benchmarks, and adverse inferences.

Put simply: if you refuse to hand over information, Brussels assumes the worst.

Chinese companies have already been burned by this system multiple times over the past fifteen years.

One of the earliest and most important cases was the coated fine paper anti-subsidy investigation around 2010–2011. At the time, the EU demanded detailed loan risk assessments, internal bank approval records, and other financing documents from Chinese banks connected to paper producers. Because of Chinese confidentiality restrictions, the banks did not fully hand over the underlying material.

The European Commission’s response was straightforward: if China would not provide the real data, Brussels would simply use its own.

The Commission then replaced Chinese financing data with much higher external benchmarks — including financing rates for lower-rated companies in Taiwan — and used those figures to conclude that Chinese firms had received abnormally cheap loans and therefore large subsidies.

Chinese companies later challenged the decision in EU court and lost.

The real significance of that case was that the EU courts effectively established a very hardline principle: if companies or related institutions fail to cooperate fully, the Commission may rely on “Facts Available” and is under no obligation to search for the most fair or precise alternative data.

The exact same logic later appeared again during the massive EU-China solar trade disputes between 2012 and 2017.

One of the core disputes involved loans from Chinese state-owned banks and data from Sinosure. China argued at the time that many of the requested materials were restricted under Chinese law and confidentiality rules and therefore could not legally be provided. In many ways, the argument was very similar to what Nuctech is saying today.

But Brussels again took a very tough position. The European Commission argued that no country’s domestic secrecy laws can exempt companies from their obligation to cooperate with EU anti-subsidy investigations. Once China refused to provide the information, the Commission treated it as non-cooperation and moved directly to adverse inferences, using assumptions and calculations that were highly unfavorable to Chinese companies. When the cases later reached judicial review, EU courts largely backed the Commission’s approach in full.

Another important case came in 2017, involving hot-rolled flat steel products. In that investigation, several Chinese state-owned banks refused to provide the European Commission with underlying loan approval documents, risk assessments, and other internal materials, arguing that they were restricted by Chinese regulatory requirements and confidentiality obligations.

The Commission’s response was blunt: if China refused to provide the data, Brussels could not verify whether the loans were truly market-based. And if it could not verify that, it would simply assume they were not market-based.

The Commission then activated the relevant “Facts Available” provisions and ultimately treated the loans as illegal subsidies.

You can see a very consistent EU logic here: if Chinese law prevents you from handing over information, that may be your problem — but it does not stop Brussels from continuing its subsidy investigation. In practice, Chinese confidentiality obligations do not automatically become a valid defense in EU investigations. In many cases, they actually trigger an “adverse inference” for non-cooperation.

By the time of the glass fiber fabric cases in 2020 and 2023, this approach had become even more established.

In those cases, Chinese banks and Sinosure again refused to provide core materials such as credit approvals and corporate governance information, citing regulatory requirements and commercial confidentiality.

In 2023, the EU General Court once again sided with the European Commission. The court’s reasoning can basically be summarized in three steps:

First, the Commission itself decides that certain materials are “necessary for the investigation.”

Second, regardless of what Chinese laws, confidentiality rules, or regulatory requirements companies invoke, the Commission can still conclude that the companies failed to cooperate fully.

Third, once the investigation reaches that “non-cooperation” determination, the Commission is free to make the most unfavorable substantive assumptions possible against the company.

So overall, the EU’s position on these issues is arguably even tougher than that of many U.S. courts. American judges will at least sometimes seriously discuss concepts like international comity or conflicts between national interests. The EU’s trade and subsidy enforcement system, by contrast, puts much greater emphasis on the idea that companies must fully cooperate with investigations.

It is worth noting that these kinds of legal clashes are not unique to China’s disputes with the U.S. or the EU. In fact, the U.S. and Europe have been fighting over these issues for decades, and many of the problems Chinese companies face today are very similar to what European companies experienced years ago.

The classic example is the 1987 Aérospatiale case. A helicopter manufactured by the French aerospace company Aérospatiale crashed in Iowa, and the victims’ families sued the company in U.S. federal court. The plaintiffs then demanded that the company produce design, manufacturing, and quality-control documents located in France under U.S. discovery rules.

The problem was that France at the time had a very well-known “blocking statute.” Under French law, providing certain commercial or technical documents to foreign judicial authorities without authorization could actually constitute a criminal offense.

The French company’s position was straightforward: if French law prohibited disclosure, then U.S. courts could not simply force a French company to hand over the data. If the U.S. wanted the evidence, it should go through the formal Hague Evidence Convention process — meaning Washington would submit a judicial assistance request to the French government, which would then decide what could or could not be provided.

But the case eventually reached the U.S. Supreme Court, and the Court took an extremely hard line. Instead of backing down because of French law, it established several principles that have shaped global cross-border litigation ever since.

First, the Hague Evidence Convention was not considered the mandatory first route. The Supreme Court said U.S. courts do not have to rely on international judicial assistance procedures before seeking evidence. As long as a foreign company falls under U.S. jurisdiction — for example by doing business in the U.S., selling products there, or being sued there — American judges can directly use domestic U.S. procedures to compel disclosure.

Second, foreign blocking statutes do not limit U.S. court authority. Even if foreign law explicitly prohibits disclosure and threatens criminal penalties, U.S. courts are not required to stop pursuing the evidence. In effect, the American position became: how your country regulates disclosure is your own issue, but it does not change our ability to require cooperation in U.S. litigation.

Third, the Supreme Court introduced what later became known as the “balancing test.” In theory, judges are supposed to weigh U.S. judicial interests against foreign sovereign interests, which sounds fair in principle. But in practice, U.S. courts have overwhelmingly concluded that the American interest in obtaining evidence for litigation is more important.

After that case, European companies gradually realized that domestic secrecy laws, confidentiality obligations, and blocking statutes were often not enough to stop U.S. courts. Many firms ultimately found themselves forced to choose between two risks: violate their own country’s laws and hand over the data, or refuse cooperation and face the consequences in U.S. court — including losing the case, contempt sanctions, heavy fines, or business restrictions.

In many ways, the situation Chinese companies now face in the U.S. and Europe looks very similar to what European firms experienced decades ago.

According to relevant commentary, China’s Data Security Law and related legislation impose mandatory legal restrictions on the cross-border transfer of certain categories of information. In the Nuctech case, however, the European Commission allegedly ignored those legal constraints and not only demanded materials located within the EU, but also sought large amounts of unrelated information from Chinese financial institutions located inside China, effectively extending its jurisdiction directly into Chinese territory.

In these views, the EU’s actions may not only violate international law and the basic principles governing international relations, but also harm the legitimate rights and interests of Chinese companies. He argued that China’s decision to classify the investigation as an instance of improper extraterritorial jurisdiction is fully consistent with the provisions of China’s regulations.

These comments also stressed that China’s move is not intended to “confront” the EU. Rather, by relying on its own domestic legal framework, Beijing is seeking to push the EU to clarify the boundaries of its rules and apply them in a more transparent manner, thereby preserving predictability in international economic and trade governance.

At the same time, it is argued that China’s response represents an attempt to participate in reshaping international rules and global governance through legal means. In his view, the goal is to prevent developed economies from using unilateral rules to lock in unequal international divisions of labor, while protecting the legitimate interests of developing countries and pushing international rules toward a more balanced and equitable direction.

From Beijing’s perspective, if China had stayed silent this time, it could have effectively amounted to accepting a very dangerous precedent: that the EU can rely on its own domestic laws to reach directly into servers located inside China and compel access to the data of Chinese companies.

Nuctech is not a company selling ordinary products like steel or solar panels. It is one of the world’s leading suppliers of security screening and threat-detection systems, with equipment deployed across airports, customs facilities, and critical infrastructure in multiple countries. The European Commission’s attempt to reach directly into servers located at Nuctech’s Beijing headquarters and obtain executive emails and internal data is therefore viewed in China not simply as a commercial issue, but as something involving sovereignty and national security.

From that perspective, even if Nuctech ultimately faces heavy EU penalties or is pushed out of the European market for “non-cooperation,” Beijing appears to believe that allowing core internal data to fall directly into the hands of a foreign government would be unacceptable.

And in the Chinese view, today it may be Nuctech — tomorrow it could be CATL, BYD, or other major Chinese firms. By issuing this order, China’s Ministry of Justice is effectively sending a message not only to Brussels but to the wider international community: Chinese data sovereignty cannot simply be bypassed. If foreign authorities want access to data located inside China, they must go through formal state-to-state judicial assistance channels, not pressure companies into handing over information through fines or regulatory threats.

In practical terms, the Ministry of Justice announcement also activates the broader countermeasure framework under China’s Regulations on Countering Improper Extraterritorial Application of Foreign Laws and Measures. If the EU insists on forcing access to data, China could potentially use the regulations to target third parties assisting EU investigations. That could include multinational law firms, accounting firms, IT service providers, or data custodians involved in collecting, translating, or transferring Chinese data for EU investigators.

Chinese regulators could theoretically conduct inspections, confiscate alleged illegal gains, impose major fines, or restrict operations. In more extreme scenarios, EU officials or foreign law firm partners directly involved in FSR-related investigations could potentially face visa restrictions, expulsions, or limitations on business activities in China.

At that point, the issue would no longer remain a single corporate dispute. It could escalate into a much broader political and legal confrontation affecting the overall China-EU relationship.

That said, the EU has historically seen itself as one of the world’s leading rule-makers and has been highly protective of its internal market regulatory system. Faced with this unprecedentedly direct pushback from Beijing, Brussels is unlikely to back down easily. From a procedural standpoint, it is highly unlikely that the European Commission will simply terminate the Nuctech investigation because of a Chinese blocking order. More likely, the EU will continue pushing the case forward through the legal process.

If that happens, China may respond more aggressively in return — raising the possibility that this case becomes a major new flashpoint in China-EU relations.

Overall Assessment of the Visit

• Outside reactions to the visit appear highly divided. Some observers argue the summit produced relatively few concrete outcomes, pointing to the decline in U.S. stock markets afterward as a sign that expectations were not met. Others view the visit as broadly successful.

• Judging from Wang Yi’s remarks, Beijing appears reasonably satisfied with the overall outcome.

  The economic teams reached what looks like a generally balanced and constructive package, including implementing prior understandings, establishing trade and investment councils, addressing agricultural market-access concerns, and expanding two-way trade under a reciprocal tariff-reduction framework.

• I believe both the US and the Chinese side actually did not enter the visit with particularly high expectations. The broader goal was more about creating a positive starting point and setting the tone for leader-level engagement over the rest of the year.

• The real things to watch now are whether President Xi’s potential visit the White House this fall, as well as the upcoming APEC and G20 meetings later this year

I. Main Outcomes Confirmed by Both Sides

1. A New Framework for U.S.-China Relations

• The most important and long-term political outcome of the visit was the establishment of a new framing for bilateral ties. According to the Chinese side, Xi and Trump agreed to define the relationship as a “constructive and strategically stable U.S.-China relationship,” which Beijing says should provide strategic guidance for at least the next three years and likely beyond.

• China’s interpretation of the framework is: cooperation as the foundation, competition kept within limits, differences manageable, and conflict avoidable.

2. Economic and Trade Relations

According to an announcement(updated on 16th May)from China’s MOFCOM, the two sides reached preliminary outcomes in the economic and trade area in several key areas:

• Both sides agreed to continue implementing the outcomes of previous consultations and reached positive consensus on relevant tariff arrangements.

• The two sides agreed to establish a Trade Council and an Investment Council to discuss each side’s concerns in trade and investment. Through the Trade Council, the two sides will discuss tariff reductions on certain products and have, in principle, agreed to lower tariffs on products of roughly equivalent scale that are of concern to each side.

• The two sides agreed to resolve or substantially advance solutions to some non-tariff barriers and market-access issues involving agricultural products. The U.S. side will actively work to address China’s longstanding concerns regarding automatic detention measures on dairy and aquatic products, exports of growing-medium bonsai plants to the U.S., and recognition of Shandong as an avian influenza-free zone. China, meanwhile, will actively work to address U.S. concerns regarding beef facility registrations and poultry exports from certain U.S. states.

• Both sides agreed to promote expanded two-way trade, including in agricultural products, through arrangements such as reciprocal tariff reductions on certain categories of products.

• The two sides also reached arrangements related to China’s purchase of aircraft from the United States, as well as U.S. guarantees regarding the supply of aircraft engines and components to China, and agreed to continue advancing cooperation in related sectors.

• Besides trade, Wang Yi also said that both sides are willing to expand exchanges in areas including diplomacy, military-to-military relations, public health, agriculture, tourism, people-to-people exchanges, and law enforcement, injecting new momentum into the next phase of bilateral engagement.

Wang Yi described the outcomes reached by the two countries’ economic teams as “overall balanced and positive,” and said that working-level teams on both sides are still consulting on specific details and will move quickly to finalize and implement the agreements.

The U.S. side has not yet released a formal official statement. The following is based on a synthesis of publicly available information from multiple sources:

• Purchases of U.S. Products: Trump said on Air Force One that China agreed to buy 200 Boeing aircraft, with the number potentially expanding to 750. He also mentioned GE engines. U.S. Trade Representative Jamieson Greer said China would purchase “tens of billions of dollars” worth of U.S. agricultural products annually and renew export licenses for American beef.

• Trade Board: The U.S. side said the two countries are discussing a “managed trade” mechanism focused on non-sensitive goods. The rough idea being discussed is that each side could lower tariffs or other barriers on around $30 billion worth of products. The U.S. side may focus on energy and agricultural exports, while China likely wants reductions in some consumer-goods tariffs imposed during the earlier trade war.

• Investment Board: The U.S. denied rumors that China would invest “trillions of dollars” into America, but confirmed discussions about creating an investment board for “non-sensitive sectors.” The goal would be to define in advance which industries are considered non-sensitive and non-strategic and therefore unlikely to trigger CFIUS reviews. WH said the two sides discussed ways to enhance economic cooperation between countries, including expanding market access for American businesses into China and increasing Chinese investment.

3. Taiwan

• Beijing stressed that Taiwan remains the most important issue in U.S.-China relations. China said that if the issue is handled properly, overall stability can be maintained, but if mishandled, it could lead to confrontation or even conflict. Beijing also emphasized that “Taiwan independence” is incompatible with peace in the Taiwan Strait and urged Washington to handle the issue with extreme caution.

• Xi reiterated opposition to “Taiwan independence” and U.S. arms sales to Taiwan.

• Wang Yi said: During the meetings, we felt that the U.S. side understands China’s position and takes China’s concerns seriously. Like the broader international community, it does not support or accept Taiwan moving toward independence.”

• U.S.-China expert Wu Xinbo, who is seen as close to the Chinese government, said that

  • Whether this new positioning of U.S.-China relations can actually take hold will depend to a large extent on how the Taiwan issue is handled.

  • Specifically, on arms sales to Taiwan, the U.S. would need to adjust its policy, stop arms sales, and make its opposition to “Taiwan independence” much clearer.

• Trump’s comments on Taiwan were particularly notable:

  • On the Six Assurances:

1982 is a long way…that’s a big far distance away….Certainly [Xi] brought that [arms sales] up. He talked about that to me, obviously. What am I gonna do? Say I don’t want to talk about it because I have an agreement that was signed in 1982. We discussed the arms sales, too. The whole thing with the arms sales. In great detail actually. And I’ll be making decisions.

• On arms sales and Lai Ching-te:

I’ll make a determination over the next fairly short period [on the arms sale]. I have to speak to the person who, you know who he is, who is running Taiwan.

If you kept it the way it is, I think China is going to be okay with that — but we’re not looking to have somebody say, ‘let’s go independent because the United States is backing us.’

• On conflict:

You know, I think the last thing we need right now is a war that is 9500 miles away.

• Xi reportedly asked Trump directly whether the U.S. would defend Taiwan militarily. Trump declined to answer publicly.

• Rubio later said U.S. Taiwan policy “has not changed”, remains based on strategic ambiguity, and that China still appears to prefer peaceful reunification.

4. The Middle East and Ukraine

• The U.S. side said both countries agree that Iran should not obtain nuclear weapons and that the Strait of Hormuz should reopen. Treasury Secretary Scott Bessent told CNBC that China has its own interests in reopening the Strait and could potentially play a role behind the scenes. Trump also said China told the U.S. it would not provide military equipment to Iran, supports a U.S.-Iran agreement, and is willing to help.

• China’s Foreign Ministry focused more on supporting a ceasefire, resolving the Iran nuclear issue through negotiations, and reopening shipping routes as soon as possible.

• According to Wang Yi, Xi reiterated China’s longstanding position, emphasizing that military force cannot solve problems and that dialogue is the right path forward. He said negotiations will not produce results overnight, but once the door to dialogue has been opened, it should not be closed again. China encourages both the United States and Iran to continue resolving differences — including the nuclear issue — through negotiations. China also supports reopening the Strait of Hormuz as soon as possible on the basis of maintaining the ceasefire, while stressing that the fundamental solution lies in achieving a permanent and comprehensive ceasefire. China, Xi said, has consistently worked to promote peace talks and will continue playing a constructive role in helping end the conflict and restore peace in the Middle East as soon as possible.

• On the Ukraine crisis, Wang Yi said that both China and the United States hope the conflict will end as soon as possible, and that both sides have done considerable work in their own ways to promote peace talks. He noted that complex problems do not have simple solutions, and that peace negotiations are unlikely to produce quick results. China and the U.S., he said, are willing to continue maintaining communication and play a constructive role in seeking a political resolution to the crisis.

5. Chips and Export Controls

• When asked by a New York Times reporter whether semiconductor export controls were discussed during the summit, China’s Foreign Ministry simply repeated that Beijing has “repeatedly stated its principled position” on U.S. chip restrictions.

• U.S.-China expert Wu Xinbo, who is seen as close to the Chinese government, said that…

  • There is hope that technology could become one of the main areas where U.S.-China economic ties see a breakthrough next.

  • The key question now is whether both sides can use newly established cooperation mechanisms to restart broader economic engagement and turn technology cooperation into a major bright spot in the bilateral relationship.

• Trump acknowledged that H200 exports to China were discussed, but said China has not agreed because it wants to develop its own chips. He added that he would discuss the issue with Jensen Huang and Michael Dell the following Monday.

6. AI Cooperation

• Bessent said the U.S. and China will launch discussions or mechanisms focused on AI best practices and safety guardrails to prevent powerful AI systems from falling into the hands of non-state actors.

• Trump also confirmed that the two sides would hold AI-related talks, while emphasizing that the U.S. remains far ahead of China in the AI race and “will win” that competition. He also claimed Xi was “very surprised” by America’s AI achievements.

• When asked whether any concrete progress had been made on AI cooperation, China’s public response remained broad and cautious, emphasizing support for open, inclusive, accessible, and “beneficial” AI development.

II. China Rolled Out Exceptionally High-Level Treatment for Trump

• Vice President Han Zheng greeted Trump at the airport, while Foreign Minister Wang Yi saw him off at departure.

• On May 14, Xi hosted a welcoming ceremony, formal talks, and a state banquet for Trump at the Great Hall of the People. The formal talks alone lasted more than 2 hours and 15 minutes — already well beyond the length of a standard working visit. Including smaller meetings, tours, and banquets, the two leaders reportedly spent nearly nine hours interacting during the trip.

• At the May 14 banquet, the orchestra played songs highly familiar to Trump, including “Y.M.C.A.” Xi also showed video footage of their 2017 meeting.

• Xi accompanied Trump on a visit to the Temple of Heaven, revisiting memories of their 2017 Forbidden City tour while explaining traditional Chinese concepts such as “round heaven and square earth.” Trump reportedly praised China as “beautiful.”

• On the final morning of the trip, Xi hosted Trump again at Zhongnanhai for a smaller meeting. Chinese media emphasized the relaxed atmosphere, with the two leaders walking and chatting while admiring old trees and roses in the compound. Trump reportedly asked whether all foreign leaders are invited to Zhongnanhai, and Xi responded that very few are.

III. Trump Appeared Extremely Satisfied with the Visit

• In China’s official readout, Trump said he was honored to pay a state visit to China. He called Xi a “great leader,” China a “great country,” and said he had “great respect for President Xi and the Chinese people.”At the opening of formal talks, Trump reportedly told Xi directly:

  • “You are a great leader,”

  adding:

  • “Sometimes people don’t like me saying that, but I’ll say it anyway.”

• On Air Force One after the trip, Trump again referred to Xi as “my old friend” and said he had “tremendous respect” for him.

• Trump publicly described the visit as “historic” and “unforgettable,” while repeatedly praising what he called an “unmatched grand welcome” from the Chinese side.

• During one meeting, Trump spontaneously asked the accompanying American CEOs to introduce themselves one by one to Xi. He described them as “the best representatives of American business,” emphasized that they respect and value China, and strongly encouraged them to expand cooperation with China. Xi reportedly told Trump afterward that the impromptu arrangement was “very good.”

• Throughout the three-day trip, Trump gave relatively few off-the-cuff comments to reporters and largely avoided his usual heavy social-media activity. When reporters shouted questions about Taiwan during the Temple of Heaven visit, he did not respond. At the banquet, Trump — who normally does not drink alcohol — still raised a glass in a gesture of courtesy toward the hosts.

• During the Temple of Heaven visit, Trump said he still clearly remembered touring the Forbidden City with Xi in 2017. He described the Temple of Heaven, still standing after more than 600 years, as “amazing,” saying it reflected the depth of Chinese civilization and traditional architecture. He also said both China and the U.S. are great countries with wise peoples and should deepen mutual understanding and friendship.

• While visiting Zhongnanhai, Trump praised the scenery and joked that someone living there might never want to leave.

• Before arriving in China, Rubio told Fox News that China is both America’s greatest geopolitical challenge and “the most important relationship that must be managed properly.” He warned that a breakdown in U.S.-China relations would have enormous consequences for the global economy and international stability, making it essential to find areas of cooperation while managing differences.

IV. U.S. and Chinese Business Leaders Involved in the Visit

• The accompanying U.S. business delegation was unusually large and covered key sectors including technology, finance, semiconductors, aerospace, and agriculture.

• Nvidia CEO Jensen Huang’s participation was particularly dramatic. He reportedly was not initially invited, but Trump later personally called him and asked him to join. Huang boarded Air Force One during a refueling stop in Alaska, becoming one of only two American CEOs on the plane alongside Elon Musk. Huang told CNBC directly:

  • “President Trump asked me to come.”

• He also described the summit as:

  • “One of the most important summits in human history,”

  • and called the welcoming ceremony “inspiring.”

• Some CEOs attended because their companies were tied directly to potential Chinese purchases — one of the key deliverables of the trip. Examples included Boeing CEO Kelly Ortberg and Cargill CEO Brian Sikes.

• Others attended because deteriorating U.S.-China relations have directly affected their business operations. GE Aerospace CEO Larry Culp, for example, faces challenges tied to tighter U.S. export controls on aircraft engines, tariffs, and supply-chain frictions affecting GE’s China operations.

• Illumina CEO Jacob Thaysen also joined the delegation. Illumina was added to China’s “Unreliable Entity List” and export-control list in 2025. After the October trade truce last year, China temporarily eased some restrictions on Illumina, and the company publicly thanked Beijing at the time. However, Illumina remains on the Unreliable Entity List.

• Micron CEO Sanjay Mehrotra’s participation also drew attention. Micron has faced mounting difficulties in China since failing China’s cybersecurity review in 2023, which significantly affected its data-center business. By 2025, the company had effectively exited the mainland China data-center server chip market. Chinese media recently portrayed Micron as a major backer of legislative efforts like the MATCH Act aimed at further restricting Chinese memory-chip companies such as CXMT, creating substantial resentment inside China. Mehrotra’s trip was widely seen as an effort to gauge whether Beijing intends to tighten pressure on Micron further.

• One surprise name on the list was Meta President Dina Powell McCormick. She is seen as having particularly close ties to Trump, and many observers view her appointment as part of Meta’s effort to rebuild relations with Trump and the American conservative camp. Some speculated whether Meta’s participation might involve discussions related to the Manus deal. More broadly, however, Meta likely wants to preserve and deepen its China-linked business interests. While Meta’s core products remain restricted in mainland China, Chinese exporters and cross-border e-commerce advertisers such as Temu and Shein remain major contributors to Meta’s advertising revenue. Meta also continues to rely heavily on Chinese supply chains for VR/AR, smart glasses, and wearable devices.

• Finance was heavily represented as well, including BlackRock CEO Larry Fink, Blackstone CEO Stephen Schwarzman, Goldman Sachs CEO David Solomon, Citi CEO Jane Fraser, Mastercard CEO Michael Miebach, and Visa CEO Ryan McInerney.

• Mastercard’s position was particularly interesting. The company is widely viewed as having developed strong government relations in China. In November 2023, Mastercard officially received approval for domestic RMB bank-card clearing operations through its China JV “Mastercard NetsUnion.” The company now hopes to expand in areas such as open finance, cross-border payments, and payment facilitation for inbound travelers, while integrating more deeply into China’s financial and internet ecosystems. Beijing’s broader push to further open the financial-services sector in 2025 also benefits Mastercard.

• Visa, by contrast, still has not received approval for domestic RMB card-clearing operations in China. Trump reportedly raised the issue directly with Xi during the meetings, even pointing to Visa CEO Ryan McInerney and saying:

  • “How about letting Visa in?”

  • Trump also reportedly said Visa is a major company and should not be “blackballed.”

• Several chip and ICT executives also joined the delegation, including Qualcomm CEO Cristiano Amon, Cisco CEO Chuck Robbins, and Coherent CEO Jim Anderson. All have major business exposure to China. Qualcomm, in particular, once derived nearly half its revenue from the Chinese market and continues to pursue partnerships in automotive chips, AI devices, and XR ecosystems. At the same time, all these firms face increasing competition from Chinese companies such as Huawei.

• Musk and Cook’s participation surprised nobody. Tesla continues to seek approval for bringing FSD into China and for solar-equipment exports, while Apple still faces issues related to App Store regulation, app-filing requirements, and approval for Apple Intelligence in China.

• During the meetings, Trump spontaneously asked the American CEOs to introduce themselves individually to Xi and emphasized that they represented “the best of American business.” Xi reportedly praised the arrangement afterward.

• One Chinese business figure who drew attention at the banquet was Lens Technology founder Zhou Qunfei. While Lens is less famous than some other companies present, she was seated between Tim Cook and Elon Musk because of Lens Technology’s deep role in both Apple’s supply chain and Tesla’s smart-cabin and component ecosystem. The symbolism was clear: China is not merely a provider of low-cost manufacturing capacity, but remains deeply embedded in high-end precision manufacturing and supply-chain integration that major American tech firms cannot easily replace.

• Xiaomi founder Lei Jun also drew attention after walking over to Musk during the banquet for a selfie. Musk responded with exaggerated facial expressions and a wink, quickly turning the moment into one of the most widely shared images on Chinese social media.

• Musk also brought his son to some events, with the child reportedly wearing Chinese-style clothing. Musk later posted in Chinese on X:

  • “My son is learning Mandarin,” which drew substantial attention from Chinese internet users.

• Overall, many U.S. CEOs gave positive reviews of the trip. Musk reportedly said the visit “felt great,” Huang praised the summit enthusiastically, Cook said “the China market remains very strong,” and Amon described himself as “very excited” to be in China.

• President Xi told American CEOs that the door to business in China will “open wider”.

• Premier Li Qiang also met with the U.S. business delegation and sent a clear message that China welcomes American companies to continue investing in and benefiting from the Chinese market.

• NDRC Chairman Zheng Shanjie met Boeing CEO Kelly Ortberg to discuss China’s macroeconomy and aviation cooperation.

  • NDRC Chairman Zheng Shanjie met Boeing CEO Kelly Ortberg to discuss China’s macroeconomy and aviation cooperation.

  • NDRC Vice Chairman Li Chunlin met GE Aerospace CEO Larry Culp to discuss aircraft engines, supply-chain stability, and cooperation in China.

  • Commerce Minister Wang Wentao separately met Qualcomm CEO Cristiano Amon, Visa CEO Ryan McInerney, and Cargill CEO Brian Sikes to discuss trade, semiconductors, digital payments, agriculture, and supply chains.

  • According to brief public readouts from the PBOC and CSRC, the CEOs of Citi, Goldman Sachs, Blackstone, and BlackRock all separately met with PBOC Governor Pan Gongsheng and the CSRC chairman. Discussions mainly focused on further opening China’s capital markets, facilitating cross-border data flows, and the progress of financial license approvals.

• CCPIT Chairman Ren Hongbin also held dedicated meetings with executives from Qualcomm, Boeing, and Cargill.

CCTV coverage

China’s readout

Xinhua News Agency, Beijing, May 14 (Reporters Yang Yijun and Zhu Jichai) — On the morning of May 14, Chinese President Xi Jinping held talks at the Great Hall of the People in Beijing with U.S. President Donald Trump, who is paying a state visit to China.

Xi Jinping noted that profound changes unseen in a century are accelerating, while the international landscape is increasingly turbulent and complex. He said the key questions facing China and the United States are: Can the two countries transcend the “Thucydides Trap” and pioneer a new paradigm for major-country relations? Can they work together to address global challenges and bring greater stability to the world? Can they focus on the well-being of their peoples and the future of humanity, and jointly create a better future for bilateral relations? These, Xi said, are questions posed by history, by the world, and by the people — and they are also the defining questions that leaders of major powers must answer together in this era. Xi added that he is willing to work with President Trump to steer the giant ship of China-U.S. relations onto the right course and ensure that 2026 becomes a historic and landmark year that carries forward and opens a new chapter in bilateral relations.

Xi emphasized that China is committed to the stable, healthy, and sustainable development of China-U.S. relations. He said that he and President Trump had agreed to define the relationship under a new framework of “constructive strategic stability between China and the United States,” which would provide strategic guidance for bilateral relations over the next three years and beyond, and would, he believed, be welcomed by both peoples and the international community. Xi said that “constructive strategic stability” should be a positive form of stability centered on cooperation, a healthy form of stability with managed competition, a normal form of stability with controllable differences, and a durable form of stability in which peace remains achievable. He stressed that “constructive strategic stability” should not remain merely a slogan, but must be translated into concrete actions moving toward each other.

Xi pointed out that the essence of China-U.S. economic and trade relations is mutual benefit and win-win cooperation, and that equal-footed consultation is the only correct way to address differences and frictions. He said the two countries’ economic and trade teams had achieved “overall balanced and positive outcomes” the previous day, which he described as good news for both peoples and for the world. Both sides, he said, should work together to preserve the hard-won positive momentum currently emerging in the relationship. Xi added that China’s door to opening-up will only open wider, and that U.S. companies are already deeply participating in China’s reform and opening-up process. China, he said, welcomes stronger mutually beneficial cooperation with American businesses.

Xi further stated that both sides should implement the important consensus already reached and make better use of political, diplomatic, and military-to-military communication channels, while expanding exchanges and cooperation in areas including trade, public health, agriculture, tourism, people-to-people exchanges, and law enforcement.

Xi stressed that the Taiwan issue remains the most important issue in China-U.S. relations. If handled properly, he said, bilateral ties can maintain overall stability; if mishandled, the two countries could face confrontation or even conflict, pushing the entire relationship into a highly dangerous situation. “Taiwan independence” and peace across the Taiwan Strait are fundamentally incompatible, Xi said, adding that maintaining peace and stability in the Taiwan Strait represents the greatest common interest shared by both China and the United States. He urged the U.S. side to handle Taiwan-related issues with the utmost prudence.

Trump said he was deeply honored to pay a state visit to China. U.S.-China relations, he said, are in a good state, and he and President Xi have established “the longest-lasting and best relationship ever between leaders of the United States and China.” He said the two sides have maintained friendly communication and resolved many important issues together. Trump described Xi as “a great leader” and China as “a great country,” adding that he has tremendous respect for Xi and for the Chinese people. He said today’s meeting was “a globally significant summit meeting.” Trump said he is willing to work together with Xi to strengthen communication and cooperation, properly manage differences, open the door to “the best U.S.-China relationship in history,” and create a brighter future for both countries. He added that the United States and China are the world’s most important and most powerful countries, and that cooperation between them can accomplish many major and positive things for both nations and for the world. Trump also noted that he had brought with him a distinguished delegation of American business leaders, all of whom deeply respect and value China, and whom he actively encourages to expand cooperation with China.

The two heads of state also exchanged views on major international and regional issues, including the situation in the Middle East, the Ukraine crisis, and the Korean Peninsula.

The two leaders agreed to support each other in hosting this year’s informal APEC Economic Leaders’ Meeting and the G20 Summit.

During the talks, Trump introduced the accompanying business executives to Xi one by one.

Before the talks, Xi held a welcoming ceremony for Trump at the East Gate Plaza outside the Great Hall of the People. Upon Trump’s arrival, an honor guard lined up in salute. The two heads of state stepped onto the reviewing stand as the military band played the national anthems of China and the United States, while a 21-gun salute was fired at Tiananmen Square. Accompanied by Xi, Trump reviewed the honor guard of the Chinese People’s Liberation Army and watched the ceremonial march-past.

Cai Qi, Wang Yi, and He Lifeng attended the talks.

White House readout

President Trump had a good meeting with President Xi of China. The two sides discussed ways to enhance economic cooperation between our two countries, including expanding market access for American businesses into China and increasing Chinese investment into our industries. Leaders from many of the United States’ largest companies joined a portion of the meeting. The Presidents also highlighted the need to build on progress in ending the flow of fentanyl precursors into the United States, as well as increasing Chinese purchases of American agricultural products. The two sides agreed that the Strait of Hormuz must remain open to support the free flow of energy. President Xi also made clear China’s opposition to the militarization of the Strait and any effort to charge a toll for its use, and he expressed interest in purchasing more American oil to reduce China’s dependence on the Strait in the future. Both countries agreed that Iran can never have a nuclear weapon.

THE WHITE HOUSE

Xi Jinping Meets with American Business Leaders Accompanying U.S. President Donald Trump on His Visit to China

During talks between Chinese President Xi Jinping and visiting U.S. President Donald Trump at the Great Hall of the People in Beijing on the morning of May 14, Xi also met with the American business leaders accompanying Trump on his state visit to China.

Trump said that he had brought with him a distinguished group of representatives from the American business community, all of whom respect and value China, and that he encourages them to expand cooperation with China. Trump then introduced the accompanying executives to Xi one by one.

The American business leaders said they attach great importance to the Chinese market, hope to deepen their presence in China, and seek to strengthen cooperation with Chinese partners.

Xi stated that American companies have been deeply involved in China’s reform and opening-up process, and that both sides have benefited from this engagement. China’s door to opening-up, he said, will only continue to open wider. China welcomes stronger mutually beneficial cooperation with the United States and believes American companies will enjoy even broader prospects in the Chinese market.

Xi Jinping and Donald Trump Visit the Temple of Heaven Together

On May 14, Chinese President Xi Jinping visited the Temple of Heaven together with visiting U.S. President Donald Trump, who is paying a state visit to China.

Xi welcomed Trump at the Hall of Prayer for Good Harvests. The two heads of state posed for a group photo in the square outside the hall and toured the Hall of Prayer for Good Harvests together.

Li Qiang Meets with Representatives of the American Business Community

Xinhua News Agency, Beijing, May 14 — On the afternoon of May 14, Chinese Premier Li Qiang met at the Great Hall of the People with representatives of the American business community accompanying U.S. President Donald Trump on his visit to China.

Representatives from Apple, NVIDIA, Meta, Cargill, Tesla, Boeing, Citigroup, Goldman Sachs, GE Aerospace, Qualcomm, Visa, Micron Technology, Mastercard, BlackRock, Blackstone, Coherent, Illumina, as well as the New York Stock Exchange, attended the meeting.

Li Qiang said that earlier in the day, President Xi Jinping and President Trump held talks and exchanged in-depth views on major issues of mutual concern, providing strategic guidance for the development of China-U.S. relations. Against the backdrop of growing instability and uncertainty in the international landscape, Li said that maintaining candid and smooth dialogue and communication between China and the United States, while actively preserving stable and healthy bilateral relations, is not only of major significance to the two countries, but will also inject certainty and positive energy into global peace and development. China, he said, is willing to work with the United States to implement the important consensus reached by the two heads of state, strive for more positive outcomes, achieve mutual success and shared prosperity, and better benefit the peoples of both countries and the world.

Li noted that in today’s turbulent and rapidly changing world, stability has become even more valuable and requires joint efforts to safeguard. A stable and predictable China-U.S. economic and trade relationship, he said, serves the interests of both countries and the world. China-U.S. economic cooperation is vast in scale, with extensive links between markets and industries. Strengthening cooperation, he said, can not only promote mutual benefit and win-win outcomes, but also contribute to global economic growth. As the world’s two largest economies, China and the United States should move toward each other, take the lead in promoting openness and cooperation, properly handle and manage differences, and maintain sound economic and trade relations so as to serve as forces for stability and constructive engagement globally.

Li added that a stable and developing Chinese economy will provide more opportunities for companies from around the world, including American firms. China is currently implementing its 15th Five-Year Plan, and the Chinese market, he said, demonstrates clear advantages in scale, growth potential, and stability. New demand is being released rapidly, new drivers of growth are continuously strengthening, and the economy is maintaining stable and positive momentum. China welcomes more foreign companies to expand in the Chinese market and share in its opportunities.

He stressed that a stable and open policy environment is a long-term commitment of the Chinese government. China, he said, will continue expanding high-level opening-up, consistently provide strong support and services for foreign-invested enterprises, improve policies and administrative efficiency, fully listen to the concerns and requests of businesses, and actively help resolve difficulties, so that companies can confidently plan for the future and focus on their own development.

Li Qiang stated that the stable, healthy, and sustainable development of China-U.S. relations requires joint efforts from all sectors in both countries. He expressed hope that more American companies would continue deepening their presence in the Chinese market, strengthen the ties of mutually beneficial China-U.S. cooperation, and continue serving as bridges for dialogue and communication between the two countries, helping more people in the United States view China’s development in a more objective and rational manner and promoting greater mutual trust and friendship.

Representatives of the American business community said that U.S.-China relations are critically important. The successful meeting between the two heads of state, they said, has injected new momentum into bilateral economic and trade cooperation and provided certainty for the global economy. They expressed hope that the two countries would strengthen dialogue and communication, expand common interests, and achieve shared prosperity. The representatives also said the American business community remains optimistic about China’s development prospects, positively evaluates China’s continued efforts to expand high-level opening-up and create a world-class business environment, and is willing to expand cooperation with China while making greater efforts to enhance mutual understanding and cooperation between the two countries.

Wu Zhenglong attended the meeting.

President Xi’s welcoming remarks

I’ll say a few words first and then I'd like to invite you, Mr. President, to deliver your opening remarks.

President Trump, I'm very pleased to meet you in Beijing. Welcome back to China after nine years. The whole world is watching our meeting. Currently, transformation not seen in a century is accelerating across the globe and the international situation is fluid and turbulent. The world has come to a new crossroads. Can China and the United States overcome the fusidities trap? and create a new paradigm of major country relations. Can we meet global challenges together and provide more stability for the world? Can we in the interests of the well‑being of our two peoples and the future of humanity build a brighter future together for our bilateral relations? These are the questions vital to history, to the world, and to the people. They are the questions of our times that you and I need to answer as leaders of major countries.

This year is the 250th anniversary of American independence. Congratulations to you and to the American people. I always believe that our two countries have more common interests than differences. Success in one is an opportunity for the other. And a stable bilateral relationship is good for the world. China and the United States both stand to gain from cooperation and lose from confrontation. We should be partners, not rivals. We should help each other succeed and prosper together and find the right way for major countries to get along well with each other in the new era.

Mr. President, I look forward to our discussions on major issues important to our two countries and the world and working together with you to set the course for and steer the giant ship of China US relations so as to make 2026 a historic landmark year that opens up a new chapter in China US relations. I will pause here and hand over to you Mr. President.

Thank you.

President Trump’s opening remarks

Well, President Xi, I wanna thank you very much. Yeah, first of all, that was another one like few have ever seen before. And I think I was particularly impressed by those children. They were happy, that were beautiful. The military is obvious. It couldn’t be better.

But those children were amazing, and they represent so much. And I know they represent so much to you, and I have known each other now for a long time. In fact, the longest relationship of our two countries that any president and president has had. And it’s to me, an honor.

We’ve had a fantastic relationship. We’ve gotten along. When there were difficulties, we worked it out. I would call you, and you would call me. And whenever we had a problem, people didn’t know; whenever we had a problem, we worked very quickly. And we’re going to have a fantastic future together.

I respect China for the job you’ve done. You’re a great leader. I say it to everybody. You’re a great leader. Sometimes people don’t like me saying it, but I say it anyway because it’s true. I only say the truth. And I just wanna say on behalf of all of the great delegation that we have, the greatest businessman, the biggest, I guess, the best in the world. We have amazing people, and they’re all with me. They, every single one of them. And we ask the top 30 in the world, every single one of them said yes. And I didn’t want the second or the third in the company. I wanted only the top. And they’re here today to pay respects to you, to China, and they look forward to trade and doing business. And it’s going to be totally receptive on our behalf.

So I really look very much forward to our discussions, a big discussion. There are those who say this is maybe the biggest summit ever. They can never remember anything like it. It’s, I can say in the United States, it’s, people aren’t talking about anything else. But it’s an honour to be with you. It’s an honour to be your friend. And the relationship between China and the USA is going to be better than ever before. Thank you very much. Thank you.

State Dinner remarks

President Xi

Honourable President Donald J. Trump. Ladies and gentlemen, it is a great pleasure to host the State Banquet in honour of President Trump during his state visit to China. On behalf of the Chinese government and people, I’d like to extend a warm welcome to President Trump and the US delegation.

This is a historic visit; this year marks the. The start of China’s 15th Five-Year Plan for Economic and Social Development. The over 1.4 billion people of China, drawing on the rich heritage of our over 5,000-year civilisation, are advancing Chinese modernisation on all fronts through high-quality development.

This year is also the two hundred and fiftieth anniversary of American independence. The over 300 million American people are reinvigorating the spirit of patriotism, innovation and enterprise and ushering in a new journey for the development of the United States. The people of China and the United States are both great peoples. Achieving the great rejuvenation of the Chinese nation and making America great again can go hand in hand. We can help each other succeed and advance the well-being of the whole world.

Fifty- five years ago, President Richard Nixon. Send Doctor Henry Kissinger to visit China. And ping pong diplomacy was carried out between our two countries through the efforts of the two governments and peoples. The door that had remained frozen for over 20 years was opened, marking a milestone in contemporary international relations. From then on, China and the United States have written many chapters of friendship through mutual openness and cooperation. Under the new situation, President Trump and I, fully aware of the expectations of our two nations and the international community, have had multiple meetings and phone calls and kept China-US relations generally stable.

Today, President Trump and I had in-depth exchanges on China, US relations and international and regional dynamics. We both believe that the China-US relationship is the most important bilateral relationship in the world. We must make it work and never mess it up. Both China and the United States stand to gain from cooperation and lose from confrontation. Our two countries should be partners rather than rivals. President Trump and I also agreed to build a constructive China-US relationship of strategic stability to promote the steady, sound and sustainable development of China-US relations and bring more peace, prosperity and progress to the world.

Honourable President Donald J. Trump. Ladies and gentlemen, friends. Looking back at the course of China-US relations, whether or not we could have mutual respect, peaceful coexistence and win cooperation is the key to whether the relationship can advance steadily. The world today is changing and turbulent. China-US relations concern the well-being of the over 1.7 billion people of both countries and affect the interests of the over 8 billion people of the world. Both sides should rise up to this historic responsibility and steer the giant ship of China US relations forward steadily and in the right direction.

Now. Please join me in a toast to the development and prosperity of China and the United States and the well-being of our people. To the bright future of China, US relations and the friendship between the two peoples, and to the health of President Trump and all the friends present. Cheers.

President Trump

Thank you, President Xi.

Well, thank you very much. This is a great honor, was a fantastic day. And in particular, I wanna thank President Xi, my friend, for this magnificent welcome. And it really was a magnificent welcome like none other, and for so graciously hosting us on this very historic state visit.

We had extremely positive and productive conversations and meetings today with the Chinese delegation earlier. And this evening is another cherished opportunity to discuss among friends some of the things that we discussed today, all good for the United States and for China. And it was a great honor to be with you. Please.

The relationship between the American and Chinese people goes all the way back to America’s founding. The first American council to China, Samuel Shaw, arrived on the first American trading ship to reach these shores. And 1784, the Chinese merchants had a name for the Americans. They call their visions the New People. Two and a half centuries later, that first connection is grown into one of. The most consequential relationships in world history.

From the beginning, our citizens have shared a deep sense of mutual respect. Founding Father Benjamin Franklin published the sayings of Confucius in his colonial newspaper. Today’s sculpture, recognising that ancient Chinese sage, is carved into the face of the United States Supreme Court very proudly.

The appreciation ran in both directions. Chinese admirers of President George Washington gifted a stone tablet honoring his memory to adorn the Washington Monument. It bears the words of a Chinese official who called the great general and statesman a hero among men.

And across the centuries, this mutual esteem grew into a relationship that reflected the tremendous talent and potential of our two people. Chinese workers helped lay the railroad tracks that connected our Atlantic coast to the Pacific. American travellers to China helped spread literacy and modern medicine. And at the request of China’s ambassador was President Theodore Roosevelt, who provided the funds to establish President Xi’s Alma mater. The Tsinghua University.

As allies in World War 2. President Franklin Roosevelt mentioned the brave people of China, who were cheered through loud cheers and his speeches in the United States, and everybody loved what he had to say. Just as many Chinese now love basketball and blue jeans, Chinese restaurants in America today outnumber the five largest fast food chains in the United States all combined. That’s a pretty big statement.

This bond of commerce and respect that stretches back 250 years is the foundation for a future that benefits both of our nations. The American and Chinese people share much in common. We value hard work. We value courage and achievement. We love our families and we love our countries. Together, we have the chance to draw these values to create a future of greater prosperity, cooperation and happiness and peace for our children. We love our children. This region and the world is a special world with the two of us united and together.

Thank you again, President Xi. For this beautiful welcome. And tonight, it is my honor to extend an invitation to you and Madam Peng to visit us at the White House this September 24th, and we look forward to it. And I’d now like to raise it less and propose a toast to the rich and enduring ties between the American and Chinese people. It’s a very special relationship. And I want to thank you again. This has been an amazing period of time.

Thank you, President. Thank you, everybody.

Bessent’s interview with CNBC

PART I

JOE KERNEN: I did speak with him in the middle of the night, here, over there it’s like the afternoon or something, and I started by asking him to delineate any concrete progress that has come out of his meeting earlier with with the Vice Premier and what is likely to come from the President’s summit with President Xi. Here it is.

SCOTT BESSENT: Joe, the Chinese don’t like any surprises, which is why President Trump is especially effective with them. But the Vice Premier and I, who have a very good working relationship, I think we’ve seen each other, this was either eight or ninth meeting, worked on the agenda for today’s meeting in terms of the economics, the deliverables. And so, we talked about purchases. We talked about some issues that the Chinese side had. And we’re going to talk about forming a board of trade for the bilateral trade between the U.S. and China. And we’re going to talk about a board of investment that will be responsible for investment in non-sensitive areas.

KERNEN: Mr. Secretary, you know, foreign investment in the U.S. is always a priority for this president, and I’m sure he’d like to announce a commitment that starts with the T-word, with the letter T, or trillions of dollars from China to make its way onto our shores. How do, how do we balance such an increase in cooperation with all the ongoing security concerns we have with a country that we know wants to eventually eclipse the United States?

BESSENT: Well, again, Joe, I’m not sure where this trillion-dollar investment number has come from. It’s somehow gotten out into the ether. And the purpose of this board of investment is to decide up front, what are the non-strategic, non-sensitive areas where it would be possible for the Chinese to invest. I chair something called CFIUS, the Committee on Foreign Investment in the United States. And what we want to do is make sure that these investments don’t get referred to CFIUS. So this would pre-game those investments just to make sure that they’re not of a strategic or sensitive area. But look, there are plenty of things that the Chinese could invest in, in the U.S. and we’re trying to push the same thing in the U.S. President Trump today told Xi Jinping that he wants to open up China, and China should open up. China’s domestic economy has been weak. The Chinese consumer needs to get a larger share of wages, or labor needs to get a larger share of the GDP. It all tends to go back into manufacturing now, and China really needs to create a bigger consumer economy. And President Trump and the entire administration have been pushing them to do that.

KERNEN: Sir, there’s a report from “Reuters” that just came out that the U.S. has cleared around 10 Chinese firms to buy Nvidia’s second most powerful A.I. chip, the H200. No deliveries have been made so far, but this is obviously something that CEO Jensen Huang probably would like to see happen as far as a breakthrough. Can you, can you confirm that’s true and which companies would be allowed, approved which Chinese firms to buy those chips?

BESSENT: Yeah. Joe, this is news to me. I know there’s been a lot of back and forth on the H200 and we’ll have to see on that. That’s a Commerce Department function.

KERNEN: Okay. At the same time, there’s some competing narratives about the overall environment that we’re looking at there. China’s export economy continues. Xi apparently wants to show that he will not be bullied. Meanwhile, China is feeling the pinch from a myriad of internal and external pressures that we talk about, whether it’s real estate, and I think it’s in their best interest to stabilize relations with the U.S. But at the same time, President Trump is, would probably like to announce some positive news at this point. He’s brought all those business leaders. Who is in a stronger bargaining position, in your view? Who needs a deal more in your view and has the upper hand?

BESSENT: Well, I, again, the U.S. is the deficit nation in terms of trade. And I used to teach economic history and the his – economic history would tell you that the deficit country always has a stronger position because we do have a deficit. And we are China’s largest customer. Although President Trump has brought the trade deficit down to, it seems crazy to say, only $200 billion. He’s laser-focused on getting it into, into balance. And that’s, that’s the goal here. And that can be done one of two ways. Either the U.S. receives fewer imports from China, or we sell more to China. And we’re trying to balance that out. What’s happened to China over the past year has been President Trump put up the tariff wall, and China continued to push out goods into their export market. But the U.S. much of that market was blocked, and the goods went to the rest of the world. And there was a lot of price pressure on those goods. So I don’t know if you’re familiar with the old saying, Joe, is we lose a dollar on every item, but we make up for it in volume. So the Chinese have tried to make up for it in volume. They’ve got a tremendous trade surplus. But if you look at the statistics, the profitability of the Chinese firms is way down. And that is even with massive subsidies from the government.

KERNEN: We had Steve Daines, the senator on yesterday, just returned from China after leading a delegation, Mr. Secretary. He told us, I hadn’t heard this before. The three Bs, Boeing, beef and beans. Will those all be discussed? And what else?

BESSENT: Well, those are big. I think we’re going to see the large Boeing orders. Beef was more, they’re not, they’re non-tariff trade barriers against our great American ranchers. The, and then soybeans, we have a very large purchase commitment from the Busan agreement that for the next three years. So beans are really all taken care of. Although if I were the Chinese, I’d probably buy more beans now because there’s a weather pattern called El Nino that we’re probably going to see this year that typically results in very high soybean prices.

KERNEN: Could there be some breakthrough on tariffs? I there, is another report that the two presidents may discuss cuts on roughly $30 billion worth of imports. Do you know which sectors are on the table there? And is this a good way to do it? To pick winners and decide which ones we’re going to allow in without tariffs and which ones we won’t?

BESSENT: So we’re going to form a board of trade.

KERNEN: OK.

BESSENT: And the idea will be for the, non-critical, non-strategic areas things that the U.S. doesn’t want to make that we’re never going to reshore. So something like fireworks or very low-end consumer goods that are going to keep coming from China no matter what. So we can un-tariff those. And then there are many things that they want to buy from us. There was talk today about the Chinese buying more U.S. energy, and the U.S. is exporting a record amount of crude and LNG. Now, the only binding constraint is our export facilities. We’re going to be building more export facilities. We’re going to be ramping up in Alaska, which is a natural for China. And given what’s going on in the Mideast, we think that not only China, but countries all around the world are going to look to diversify away from the Middle East for more stable source of energy, and what better place than the U.S. But the idea of starting with $30 billion by $30 billion that both sides can designate, again, for non-critical areas and areas that we’re not trying to reshore.

KERNEN: Mr. Secretary, do you have a sense on whether China will help with the strait and what China has communicated to us about the Strait of Hormuz? And, I mean, it’s obviously important to them as well. Do you think they’re going to help?

BESSENT: I think they’re going to do with, do what they can. And here, the, China has a much bigger interest in reopening the strait than the U.S. does. China gets about a third of its energy needs from the Gulf. So, a reopening of the strait benefits China. Unfortunately, they’ve been buying, they were the largest consumer of Iranian oil. They were buying about 90 percent of it. Iranian oil represented about 10 percent of their energy that they took in. But the rest of the countries in the Gulf were also substantial contributors, whether it was Saudi, UAE, Qatar. And China gets a substantial amount of their LNG from the Gulf also.

KERNEN: You’ve talked about—

BESSENT: It’s, where we have—

KERNEN: I’m sorry, sir. Go ahead.

BESSENT: No, I was just going to say that China, it’s very much in their interest to get the strait reopened and I think they will be working with, behind the scenes, to the extent anyone has any say over the Iranian leadership. And the real problem here, Joe, is, as you’re aware, we didn’t change the regime, but the regime changed. And, you know, it was several layers of leadership that were decapitated. And it’s very tough there just to communicate anything to anyone who is able to either act or get a, get an overall agreement and speak on behalf of the Iranian leadership.

KERNEN: Yeah. You’ve talked about this a lot, Mr. Secretary, and that is the strain that Iran is under right now, severe strain with the continuing blockade, hyperinflation, plunging currency, food and water shortages. The supreme leader, allegedly, as you said, we’re not sure who we’re talking to at times. Allegedly, it’s begged companies to stop laying off workers for the good of Iran. Is there a breaking point for a regime whose priorities don’t include the welfare of its people?

BESSENT: Sure there is, Joe. And what we’re seeing is the loading facility, the main loading facility for Iranian oil is a facility called Kharg Island. We’ve seen that there have been no loadings in the past three days. We believe their storage is full. None, none of the ships are getting out. None are coming in. So they’re not able to store oil on the water. So they’re going to start shutting down their, they’re going to start shutting down their production. We can see that that’s happening from satellite photos. But more importantly, Joe, exactly as you said, this is a diabolical regime. Thus far this year, they’ve executed 30,000, 40,000 people. Many, many of them peaceful protesters. And so how do you deal with a regime like that? You squeeze them economically. And we believe we’re at the point where soldiers aren’t getting paid. They’re not able to replenish their weapons stocks from abroad. So, I think that they are on their last legs. And the blockade, President Trump’s blockade has been a resounding success.

KERNEN: The, at the same time, it’s still a blockade on oil. Oil is up at over $100 a barrel today just on West Texas, even higher on Brent. Do you still believe that the surge we’ve seen in gas prices, and inflation in general had some hot numbers, PPI yesterday, CPI earlier. They’re hot. Do you view that as a, as something that will be reversed quickly if the strait is reopened? And I guess I’d go on to say, do you think the president will accept no rate cuts right off the bat from the new Fed chief, Kevin Warsh?

BESSENT: Well, lots to unpack there, Joe. So let’s, let’s do it one by one.

KERNEN: OK.

BESSENT: I think in terms of what we’re seeing, I think in terms of what we’re seeing here, you know, we can see that crude, West Texas crude, six, nine months out, is substantially lower. The curve is in substantial backwardation. That’s when the front month is much higher than the back month. So I believe the crude will come down quickly. We’ve seen the UAE come out of OPEC. So the market’s going to be very, very well-supplied. I think all the other energy producers, having not gotten oil out for a long time, are going to pump like crazy. And as I said earlier, the U.S., we’re at record production. We’re an energy superpower, and we’re just going to, we’re going to keep pumping. So I think there’s a potential for energy, crude, gasoline to come trundling back very quickly, which will mean that the look through to inflation will also come down very quickly. I was never on team transient during COVID, and a lot of that had to do with what happened with very expansionary fiscal policy that was financed by debt purchases from the Central Bank, kind of an experiment in modern monetary theory that caused inflation. And, but here, I firmly believe that nothing is more transient than a supply shock. And we can, we can look through that because before the Iranian conflict began, core inflation was coming down. So I think core inflation will continue coming down. We’ll get to the other side of this, and I don’t know whether it’s a few days or a few weeks, and energy inflation will come back down. And we’ve got the start of the Warsh Fed. Kevin was confirmed last night. Only one Democrat, John Fetterman from Pennsylvania, voted for him. Just shows the dysfunction of the Democratic Party. He got a 99 voice vote when he was a governor last time. And I think that he’s going to bring an open mind to this. And I actually think he’s going to be in a very good position, because we may get a series, one or two more hot inflation numbers, but then I think we’re going to see substantial disinflation.

KERNEN: I know that, you know, we talked briefly about the Nvidia chips. And there’s this A.I. We just can’t go a sentence on CNBC without mentioning A.I., Mr. Secretary. There’s a front-page piece today in “The Journal”. I don’t know if you’ve seen it about Anthropic surpassing OpenAI in a lot of different areas. And, you know, you say Anthropic and it just conjures up all kinds of things, whether it’s, you know, being on the blacklist or whatever you want to call it with the U.S. and Mythos. Hackers can use that. How do we, you know, how do we navigate through the A.I. sitch in your view?

ANDREW ROSS SORKIN: Okay, we’re going to pause that interview for just a moment, because President Trump is beginning to speak in Beijing right now. And let’s take that live.

PART II

KERNEN: Let’s get back to our conversation with Secretary, Treasury Secretary Bessent. I asked him, you probably saw if you were watching earlier, how he sees the U.S. navigating through the A.I. revolution.

BESSENT: Well, the, all three of the leading companies, Anthropic, OpenAI and Google/Gemini, their large language models are increasing in power very quickly. We saw a step function jump with Anthropic Mythos. I think we’re going to see a big step function jump with OpenAI’s next release. And I think in a few months, we’re going to see a big step function jump with Gemini. And, Joe, first of all, the good news is the U.S. is the undisputed leader in the world here. We have the greatest A.I. companies. We’re actually going to be discussing the A.I. guardrails with the Chinese. It will, because the Chinese are substantially behind us, but they have a very advanced A.I. industry here. So the two A.I. superpowers are going to start talking. We’re going to set up a protocol in terms of, how do we go forward with best practices for A.I. to make sure non-state actors don’t get ahold of these models. And you know, Joe, what I will tell you is all three of the big players have been very good partners with the U.S. government because what we don’t want to do is stifle innovation. So our responsibility is to come up with the highest performance calculus, where we can get the most innovation and the highest level of safety. And we, I am very satisfied that we are well on our way to that. Everything has been voluntary on the, by the companies, and they have been very good partners with the U.S. government.

KERNEN: And we will be open to working with the leading companies, whether it’s Anthropic. There’s not, will there be eventually some type of resolution to some of the issues, whether it’s, whether it’s Mythos, whether it’s supply chain issues with Anthropic? Will that be handled? What can you tell us?

BESSENT: Again, I’m not going to speak for the Department of War. I would isolate their issue with Anthropic. Anthropic has been very engaged with the White House, with Treasury in terms of Mythos and, you know, all their new releases. So I think, Joe, the way to think about it here is with these large model, large language models now, we had a big step function increase. And the U.S. government has begun consulting with the firms. And again, we don’t want to stifle innovation. We’re just consulting with them. They’ve been very good partners. And going forward, I would think that we will be much more on a ramp than a step function in terms of what we see, how the models affect the business community, and we’re going to be working with the companies to ensure that everything, where there are vulnerabilities, they get patched. At Treasury, we’ve been working with the 11 largest banks, and now we’re taking that down to the super regionals. And they are compiling data for us that we will then start sharing with the small and community banks. So again, the process is working very smoothly, and I am highly confident that we can have a very good transition into this exciting new technology. And, Joe, you know, sitting here in China right now, it is of the utmost importance that the U.S. maintain our lead in A.I. The reason we are able to have fulsome discussions with the Chinese on A.I. is because we are in the lead. I do not think we would be having the same discussions if they were this far ahead of us. So we’re going to put in U.S., the best practices, U.S. values on this, and then roll those out to the world.

KERNEN: So many times I’ve, and this will be the final question. I know you got to run, Mr. Secretary. But you have so many different hats. I’m going to ask you, it’s kind of a Treasury, kind of a secretary of war question, I guess. Will Taiwan come up? Do you know whether President Xi is going to ask President Trump to change the long-standing strategic ambiguity? Or will there be any requests from President Xi to limit arms sales to Taiwan at this point? Do you know? Can you comment on that at all?

BESSENT: Sure, sure, Joe. It wouldn’t be a U.S.-China summit without the Taiwan issue coming up. And I’m confident that President Trump, the, understands the issues around that and the, is very resolute the, in his answers. And I’m sure we’ll be hearing more from him in the coming days on that.

KERNEN: Do you think at this point that the president would, I don’t know, give a concession to President Xi and perhaps, I don’t know, like I say, change the long-standing practice that we’ve had of, I don’t even, it’s so ambiguous. It’s hard to even describe, but we’re kind of like, don’t have an opinion on whether Taiwan should be part of the mainland or not. Do you think that will change?

BESSENT: Again, I’m not going to get out ahead of the president. You’ll be hearing more from him either this evening, tomorrow. But again, President Trump is the, understands the issues here and understands the sensitivities around all of this. And you know, anyone who’s been saying otherwise does not understand the negotiating style of Donald Trump.

Rubio on Taiwan and Iran

CBS Reporter
President Xi stressed to President Trump that the Taiwan question is the most important in China-US relations. Talk to me about that.

Rubio
Moment. Well, they certainly feel that way, and they always raise that issue, and we understand they raise that issue. From our perspective, any forced change in the status quo in the situation that’s there now would be bad for both countries. One of the things that Chinese emphasize, which we agree, is strategic stability in our relationship, a constructive relationship, but also one that establishes strategic stability so that we don’t have misunderstandings that can lead to broader conflict. And so we always reiterate the point, we hear them when they say this, we always respond by saying anything that would compel or force a change in what we have now would be problematic and that we would certainly, our policies on that have not changed. It’s even pretty consistent across multiple presidential administrations. That remains consistent. Now, did.

CBS Reporter
President Xi requests that President Trump not sell weapons to Taiwan？

Rubio
Well. That topic may have been, has been discussed in the past. It did not feature primarily in today’s discussion. We know what their position on that is already. Remember, Congress plays a role in that process as well. And we have sold them weapons in the past that existed as recently as December, which they were very upset about. And that’s a decision the president gets to make as Congress appropriates, and as Congress decides what to do with those topics, we will respond accordingly.

CBS Reporter
But nothing has changed in the way the US user relationship with Taiwan. It will defend Taiwan as has been.

Rubio
Yeah, US policy on the issue of Taiwan is unchanged as of today, and as of the meeting that we had here today, it was raised. They always raise it on their side. We always make clear our position and we move on to the other topics. We know where they stand, and I think they know where we stand.

CBS Reporter
Do you think China wants to invade Taiwan?

Rubio
Well, I think China’s preference is probably to have Taiwan willingly, voluntarily join them. In a perfect world, what they would want is some vote or a random reference in Taiwan that agrees to fold in. I think that’s what they would prefer ultimately, it’s featured prominently in the Present Xi’s mandate.

In the time he’s been in office, he’s made clear that what they call reunifications, what they call it, is something that has to happen at some point. We think it would be a terrible mistake to force that through force or anything of that nature. There would be repercussions for that globally, not just from the United States. And we kind of leave it there; that sort of ambiguity is what I think has defined our care, the way we characterise this issue. And the reason being strategic ambiguity is we don’t want to see conflict. We don’t want to see something disrupt have happened because I think it would be very disruptive for the world and for both countries.

CBS Reporter
I know you’re watching China. Don’t you think they’re ramping up their military? Something in Taiwan?

Rubio
Well. I think they’re ramping up their military in general. I mean, the space of growth in the Chinese military over the last 10 years has no precedent, none. I mean, just what they’ve done with their Navy alone over the live, they put billions and billions of dollars in their system. So it’s, you know, you look at it and it’s hard to ignore how fast and how big. So I don’t think it’s just limited to Taiwan. I think they have ambitions to ultimately be able to project power globally the way the US does. Now. They’re not, they’re still behind us in that regard, but there’s, nonetheless, they are investing a lot of money. They are right now the world’s second most powerful military, without a doubt.

CBS Reporter
Did President Trump raise the issue of Iran with China？

Rubio
He did. And it was important because the Chinese side said they are not in favour of militarising the Straits of Hormuz and they’re not in favour of a tolling system. And that’s our position. We don’t, we will never support an Iranian tolling system in the Straits of Hormuz. Nor do we think they have a right to put mines in international waters. And so it’s good that we have an alliance or at least an agreement on that point.

I think the fundamental question is, what are we gonna do about it? We have a resolution now before the United Nations, in which 100 and something countries of the world did. The Bahrainis are about the sponsor, but we’re strongly behind it and have been pushing very hard on it, and it very clearly makes those points. So we hope the Chinese will vote for it. So right now, we haven’t gotten their commitment to vote for it yet at the United Nations. Maybe that’ll change after today’s meeting. I don’t know.

CBS Reporter
Can you help me understand what exactly did President Trump ask President Xi for when it comes to Iran?

Rubio
He didn’t ask him for anything. I mean, we’re not asking for China’s help or we don’t need their help. But he raises the issue. We raise the issue to make clear what our position is and to make it clear so they understand because, I mean, it’s logical we would talk about it given how dominant that issue is. Our position is very clear. Iran cannot have a nuclear weapon. And that’s what they were, you know, they were trying, they were on the verge of building a conventional capability where they had so many rockets, so many drones that you couldn’t do anything against them. They would hide behind that conventional shield to do whatever they wanted with their nuclear program in the future. That’s why the president chose to act in response to that. Iran has decided that they’re gonna take an international waterway and turn it into theirs and charge tolls for it. We’re not gonna allow that to happen. And that’s why there’s a blockade. There’s a direct result of what they’ve done. Does.

CBS Reporter
Does China agree with the United States that Iran should not have a nuclear weapon?

Rubio
Then what they’ve said is that Iran is signatory to the Non-Proliferation Treaty, and so therefore, they should not have a nuclear weapon. And they reiterated that point again today, maybe not as forcefully as I’m making it, but they’ve certainly reiterated that in the past. Today wouldn’t be the first. So the.

CBS Reporter
The US and China came to a common ground on the fact that they both don’t want Iran. Nuclear weapon. I just wanna make sure we’re clear. But.

Rubio
Certainly, all of their Gulf neighbours would say the same thing as well.Let me be clear on this. I don’t know if there’s a country on the planet. I don’t know about North Korea, but I don’t know there’s a country on the planet that is in favour of this regime and Iran having nuclear weapons. I don’t know of any. I think the difference is that we are actually trying to do something about it. Other countries are against it, but they’re not willing to do anything about it. So I think the Chinese simply reiterated what has been their position in the past, which is that they don’t want to see them have a nuclear weapon. The Russians would say the same thing, right? Certainly all of their Gulf neighbors would say the same thing as well. I think the difference, of course, is we’re actually trying to do something about it. As the.

CBS Reporter
President was leaving for China, did he make a mistake when he told a reporter that America’s financial situation isn’t playing, quote, even a little bit of a role in his motivations to make a deal with Iran.

Rubio
No, I think what the president is saying is that Iran’s not gonna use that.

CBS Reporter
Doesn’t that sound out of touch, though? I mean. No. Americans are spending so much for gas.

Rubio
Because I think what the president is making clear is that we’re not gonna let Iran use that as leverage. Think about what the Iranians are thinking. The Iranians, and they watch this. Remember, there’s no free press. There is no U in Iran, right? There is no press in Iran that can criticise the regime or say, you know, create any pressure on them. And I think what the president’s making clear is if the Iranians think that they are going to, you know, use our domestic politics to pressure him into a bad deal. That’s not going to happen.

Rubio
If we’ve taken extraordinary measures to keep gas prices lower than they are in some other parts of the world, they will go down. Those straits will be open, and we will see those prices go down. And actually, I think you’re gonna see a dramatic reduction in oil over time because all of that pent-up oil that’s being held hostage by Iran, once that reaches the marketplace, it’ll have a very positive impact. But I would also say there’s a price attached to a nuclear Iran. If Iran ever acquires a nuclear weapon, they will immediately. What would stop them from controlling the straits then? And then forget about it being a three-month or a six-month problem; it could be a permanent one.

For a long stretch after the founding of the PRC, airport receptions themselves were considered an important part of state diplomacy, especially when receiving leaders from socialist countries or major friendly states. It was not unusual in those years to see Mao Zedong, Liu Shaoqi, Zhu De, Zhou Enlai and other top Chinese leaders collectively appearing at the airport to greet visiting heads of state.

For example, when Soviet Presidium Chairman Kliment Voroshilov visited China in 1957, or when Indonesian President Sukarno visited in 1956, Mao, Liu Shaoqi, Zhu De and Zhou Enlai all went to the airport personally. At the time, Zhu De was serving as Vice President.

After the 1980s, China gradually standardized state visit protocol, and airport receptions were usually handled by officials such as vice foreign ministers. So when a sitting Chinese Vice President personally goes to the airport, it is generally viewed as a clear signal of elevated protocol treatment — something usually reserved for U.S. presidents.

There are several precedents. When Bill Clinton visited China in 1998, then–Vice President Hu Jintao greeted him at the airport.

And when Barack Obama visited China in 2009, the person greeting him was then–Vice President Xi.

Notably, when Trump visited China in 2017, he was received at the airport by then State Councilor Yang Jiechi rather than the then Vice President Li Yuanchao. But in terms of proximity to Xi’s core decision-making circle — and relevance to U.S.-China relations specifically — Yang Jiechi was clearly the more appropriate choice.

Tomorrow, Trump is also expected to visit the Temple of Heaven, and there are reports that Xi himself may accompany him. If the two leaders tour the Temple of Heaven together, it would likely set a precedent.

A few days ago, the Temple of Heaven authorities had already announced that the site would be closed to the public on May 14–15, and advised visitors who had already purchased tickets to apply for refunds.

The Temple of Heaven was where the emperors of the Ming and Qing dynasties held annual ceremonies to worship Heaven and pray for good harvests. It is renowned for its rigorous architectural layout, unique structural design, and magnificent decorative artistry. Covering a total area of roughly 2.7 million square meters, the complex consists of an Inner Altar and an Outer Altar, and remains the largest surviving imperial sacrificial architecture complex in China.

Previous foreign dignitaries who visited the Temple of Heaven included U.S. President Gerald Ford, as well as Queen Elizabeth II and Prince Philip, the Duke of Edinburgh.

There’s a well-known anecdote from the Queen’s visit: after touring the Hall of Prayer for Good Harvests and already reaching the Gate of Prayer for Good Harvests, she reportedly said she still hadn’t seen enough of the “beautiful round hall” and wanted to walk back for another look.

But notably, all of these foreign leaders toured the Temple of Heaven on their own. None of them were accompanied there by China’s top leader at the time.

The Ming dynasty’s Da Ming Hui Dian (大明会典)— the institutional codebook of the empire — already contained provisions allowing foreign envoys to visit the Temple of Heaven:

“Special permission may be granted for envoys, accompanying officials, and several attendants to tour the suburban altars and the Imperial Academy, accompanied by protocol officials and guards, as a mark of distinction.”

Taiwan, interestingly enough, also has its own “Temple of Heaven.” After Zheng Chenggong (Koxinga) retook Taiwan, a Temple of Heaven was established in Tainan. Ceremonies are still held there every year today — both to worship Heaven and to honor Zheng Chenggong. Even Lai Ching-te, despite often being criticized by mainland commentators as “forgetting his roots,” still attends the rituals. In fact, it was Lai himself who once said: “The Temple of Heaven is the spiritual center of Taiwan.”

One more historical detail: Emperor Qianlong of the Qing dynasty ordered an additional stone to be placed beside the famous “Seven-Star Stones” at the Temple of Heaven, symbolizing the idea of “one unified Chinese civilization under one realm.”(华夏一家，江山一统)

The only problem this week is the weather — Beijing is getting surprisingly hot, around 34°C. Hopefully President Trump packed some short sleeves.

Of course, another major point of attention today was Jensen Huang.

Jensen did not depart from Washington with the delegation. Instead, he reportedly boarded Air Force One during its refueling stop in Anchorage, Alaska. The detail was first spotted and posted on X by White House pool reporters, and was later confirmed by both the BBC and the South China Morning Post.

According to CNBC, after seeing widespread media reports claiming that Jensen Huang had not been invited, Trump personally called him and asked him to join the trip. Huang then reportedly flew separately to Alaska in order to catch Air Force One. Trump himself later posted a lengthy statement personally confirming that Huang had indeed been invited.

Semafor later reported that the White House had initially avoided inviting Huang in order to “avoid political awkwardness and tensions” while discussing semiconductor sales to China.

White House Communications Director Steven Cheung publicly downplayed the whole situation with a simple line:

“It just happened to work out.”

In any case, Jensen successfully made it onto the plane and is now traveling with the delegation to China — a development that immediately boosted Chinese AI-related stocks. Fueled by market expectations that Chinese model companies could gain greater access to advanced Nvidia chips, shares of MiniMax and Zhipu reportedly surged 18% and 38% respectively.

Chinese internet users, meanwhile, seem absolutely delighted by the whole thing, generating endless AI memes and parody images online.

Meanwhile, on May 13 local time in Seoul, Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent held another round of economic and trade consultations. According to the official Chinese readout, the two sides — guided by the important consensus reached between the two heads of state and adhering to the principles of mutual respect, peaceful coexistence, and win-win cooperation — conducted “frank, in-depth, and constructive exchanges” on trade concerns and the further expansion of practical cooperation.

The document is highly significant because it marks the first time China has begun systematically treating “Agentic AI” as a future digital infrastructure and governance object in its own right, rather than simply another application layer built on top of large language models.

Over the past few years, Chinese AI regulation has focused mainly on generative AI, model filing requirements, content moderation, and data compliance. But this document clearly shows that regulators now recognize something important: intelligent agents are fundamentally different from traditional chatbots. They are not just systems that “generate content.” They are beginning to possess autonomous perception, long-term memory, tool use, cross-platform task execution, and even multi-agent coordination capabilities. In other words, AI is moving from “answering questions” toward actually “doing things” on behalf of users.

At its core, the document is trying to answer a simple but profound question:

If large numbers of intelligent agents truly enter the real world, how does China want them to exist inside society?

Overall, the approach reflects a very typical Chinese industrial-policy mindset: acknowledge the risks, but make absolutely clear that China does not intend to miss the industrial opportunity. The goal is to push “development” and “governance” forward at the same time.

That is why the document immediately sets an important tone. It explicitly states that intelligent agents will deeply integrate into both cyberspace and the physical world, reshaping production, daily life, and social governance. Implicitly, this means Chinese regulators already see Agentic AI not as a niche technology, but as a future foundational layer of the digital economy.

At the same time, the document repeatedly emphasizes ideas like “safe and controllable,” “reliable and trustworthy,” and “orderly governance.” This reflects a broader concern in China today: not simply that AI may become “too smart,” but that once agents gain real autonomous execution capabilities, they could begin exerting systemic effects on society itself.

As a result, the document spends a surprising amount of time discussing decision boundaries, behavioral controls, risk warnings, traceability, human oversight, and multi-agent coordination. Reading it, you can clearly sense that Chinese regulators are already thinking seriously about a future where AI is no longer just a tool, but gradually evolves into something closer to a semi-autonomous digital actor.

One especially important section concerns “decision authority.” The document proposes distinguishing between actions that must always remain under direct human control, actions that may be delegated to AI through authorization, and actions agents may perform autonomously. At the same time, it stresses that users must always retain the right to know and the final right to decide. In some ways, this resembles Europe’s ongoing discussions around “meaningful human control.”

And behind this lies one of the core questions in agent safety:

Can agents make decisions for humans? And if so, to what extent?

Once you translate that into real-world products, the implications become very concrete. Can an agent place orders automatically? Make payments? Delete files? Send emails to customers? Submit government forms? Approve loans? Control industrial equipment? What once looked like ordinary product features may increasingly become regulatory questions.

Another particularly notable aspect is the document’s concern about anthropomorphism and emotional dependency. It explicitly warns against agents using human-like interaction techniques to create addiction, emotional attachment, or manipulative consumer behavior among minors and elderly users. This suggests Chinese regulators are no longer viewing AI simply as an information tool, but increasingly as a social technology capable of reshaping relationships, psychology, and human behavior.

The document also contains another extremely important signal: the idea of an “Intelligent Internet.” It discusses research into intelligent internet architecture, agent registration platforms, digital identities for agents, capability declarations, and multi-agent interoperability protocols. It even explicitly mentions AIP and IPv6.

At a certain point, this stops sounding like regulation for individual AI products and starts sounding more like planning for a future internet where AI systems interact directly with one another. China already appears to be thinking ahead about how agents will communicate, authenticate identity, exchange permissions, make payments, assign responsibility, and establish trusted coordination mechanisms. In some ways, this resembles the early foundations of an “Agent Internet.”

On the industrial side, the scope of the document is extremely broad. It covers almost every major sector imaginable: manufacturing, energy, finance, healthcare, education, transportation, government services, judicial systems, public security, scientific research, and more. The logic is very clear: China does not want intelligent agents to remain at the chatbot stage. It wants them deeply embedded into the real economy and governance systems, becoming the operational layer of the country’s broader “AI Plus” strategy.

This is especially visible in the sections on industrial governance, public administration, and social management. The document discusses policy recommendation systems, AI-assisted approvals, smart judicial systems, public opinion guidance, emotional intervention systems, risk warning mechanisms, and urban governance. The overall flavor feels very much like a distinctly Chinese approach to digital governance.

At the same time, the document strongly emphasizes “indigenous controllability.” It specifically highlights open-source frameworks, compatibility with open-source chips and domestic operating systems, local ecosystem development, and participation in international standards-setting. This is entirely consistent with China’s broader strategy over the past several years in semiconductors, operating systems, and industrial software.

The underlying logic is straightforward:

China does not want the next generation of AI infrastructure to depend entirely on foreign technology stacks.

But the document also explicitly states that China intends to “actively participate in international standards-setting” for intelligent agents. This is important because it signals that China does not want to merely follow standards defined elsewhere — particularly by the United States — but wants to help shape future global protocols and governance frameworks itself.

That matters because global competition around agent standards is already beginning to emerge. The Linux Foundation, for example, has already launched an industry association focused on Agentic AI interoperability and governance standards, including protocols for computation, function calling, identity systems, and authorization mechanisms. The initiative is reportedly open and welcomes Chinese participation. Huawei recently joined as a Gold Member, alongside Lenovo. The association also plans to work with organizations like W3C and IETF in order to gradually evolve today’s relatively experimental and industry-driven standards into globally recognized protocols.

China’s active participation in these international standards discussions is extremely important because agent governance ultimately cannot rely solely on domestic law. Intelligent agents are inherently cross-platform, cross-system, and cross-border. In the long run, the most important issue may not be regulation of individual applications, but rather the interoperability protocols between agents, tools, and platforms.

If China and the United States eventually develop completely incompatible agent ecosystems, the global AI environment could begin fragmenting in ways reminiscent of the splintering of the internet itself. Even if fully unified global standards prove impossible, there will likely still need to be at least some basic consensus around safety protocols, logging and traceability, permission management, and risk controls.

Another interesting aspect of the document is what it does not prioritize. Unlike many American AI safety discussions, it does not place “catastrophic risk” at the absolute center. Of course, it still discusses loss of control, cyberattacks, criminal misuse, and supply-chain security. But the overall emphasis remains on industrial deployment, social governance, application safety, behavioral boundaries, and compliance systems.

More concretely, the document proposes a classification-based governance model depending on application scenarios and potential impact. High-risk sectors will face much stronger regulation, while low-risk scenarios will rely more heavily on platform governance and industry self-regulation. Sensitive sectors and key industries will face filing requirements, testing, product recalls, and oversight by both cyberspace regulators and sector-specific authorities. Meanwhile, lower-risk consumer and office-use scenarios will rely more on self-assessment, reporting systems, platform management, and industry norms.

This will likely have direct implications for product planning. A general office-work agent may primarily need user authorization systems, privacy protections, logging, and enterprise controls. But a financial risk-control agent, medical diagnosis assistant, government approval agent, judicial assistant, or public-security agent will likely require far stricter filing, testing, certification, auditing, recall, and liability frameworks.

In other words, market access costs for intelligent agents will increasingly become tightly linked to scenario risk. The closer an agent gets to finance, healthcare, government services, judicial systems, transportation, energy, or public security, the less companies will be able to compete purely on model capability alone. They will also need to demonstrate safety architecture, compliance processes, testing documentation, third-party evaluations, and traceability.

There is also a clear difference between Chinese and American thinking on agent risk itself. Many U.S. experts worry about autonomous loss-of-control scenarios, especially the possibility that agents could bypass resource limits, autonomously participate in online transactions or prediction markets, or find gray-market ways to acquire additional resources.

Many Chinese experts, by contrast, see these scenarios as relying on unrealistic assumptions of “unlimited resources and unlimited permissions.” In practice, they argue, humans can still impose hard constraints through compute quotas, credit ceilings, access permissions, and system shutdown mechanisms. As a result, many in China believe catastrophic narratives about agentic AI are sometimes overstated.

In that sense, the document’s overall approach to risk governance reflects a broader mindset currently common across China’s policy and industrial circles. China’s approach to Agentic AI today is less “pause first, govern first,” and more “deploy first, govern along the way.” Compared with distant superintelligence scenarios, China’s current priorities are more practical: how to integrate AI into the real economy and society, how to avoid social disorder, how to preserve governance capacity, how to build industrial ecosystems, and how to ensure the entire process remains controllable from beginning to end.

Full translation of the Implementation Opinions on the Standardized Application and Innovative Development of Intelligent Agents.

Agents are intelligent systems capable of autonomous perception, memory, decision-making, interaction, and execution, and represent an important form of artificial intelligence products and services. With the rapid advancement of next-generation AI technologies such as large models, agents are increasingly integrating deeply with cyberspace and the physical world, profoundly transforming modes of production, daily life, and social governance. To implement the State Council’s Opinions on Deepening the “AI+” Initiative and to promote the standardized application, innovation, and development of agents, these Implementation Opinions are hereby formulated.

I. Fundamental Principles

Guided by the objectives of advancing technological innovation, enhancing governance capacity, building industrial ecosystems, and improving public welfare, efforts shall adhere to the principle of safety and controllability, taking the safety, reliability, and trustworthiness of agents as baseline requirements throughout the entire lifecycle of agent technology R&D, deployment, and commercialization, so as to effectively prevent systemic risks. Development shall remain standardized and orderly, adapting to the evolving characteristics of agent technologies, establishing a governance framework that aligns with existing laws and regulations, encourages industry self-governance, and clearly defines bottom lines and red lines, thereby promoting the orderly deployment of agents. Innovation-driven development shall be upheld by strengthening the integration of theoretical, technological, and engineering innovation, systematically advancing breakthroughs in key agent technologies, improving collaborative mechanisms among government, industry, academia, research institutions, and users, fostering an open and shared agent ecosystem, and enhancing industrial innovation vitality. Application-driven development shall focus on practical needs in scientific research, industrial development, consumption promotion, public welfare, and social governance, leveraging the demonstrative role of representative application scenarios and promoting gradual, step-by-step implementation to facilitate technology validation, product iteration, and real-world deployment.

II. Strengthening the Foundations for Development

Efforts shall be made to reinforce technological foundations, improve standards systems, and lower barriers to agent development, adaptation, and application, thereby laying the groundwork for a richer ecosystem of agent products and services.

(1) Improving the Technological Foundation

1. Strengthening Basic Technology R&D

Continue improving the performance of general-purpose foundation models while supporting the development of domain-specific models for specialized industries, forming a diversified model product matrix adaptable to different scenarios and devices. Enhance the supply of high-quality datasets for agent training and operation. Strengthen research on agent task understanding, task planning, tool usage, long-term memory, interoperability, and multi-agent collaboration to improve generalization capabilities.

2. Improving the Agent Toolchain

Conduct research on underlying agent frameworks and accelerate the development of key components for perception, memory, decision-making, interaction, and execution. Improve toolchains for agent development, testing, deployment, and operations. Develop security and governance tools such as adversarial sample detection and abnormal behavior detection to enhance capabilities for discovering, intervening in, blocking, and recovering from non-compliant agent behavior.

(2) Establishing Standards and Protocols

3. Establishing an Agent Standards System

Develop guiding documents for agent standardization work and establish an overall standards framework covering key technologies, major products, data exchange, application scenarios, quality evaluation, security assurance, and trustworthy certification. Accelerate the formulation of foundational standards for interfaces between agents and software tools, application services, and hardware peripherals. Strengthen the promotion and application of key national and industry standards related to agent interoperability protocols (AIP) and other interconnection technologies. Support the formulation of mandatory standards in sectors such as healthcare, transportation, media, and public security. Encourage enterprises to develop products and services in accordance with relevant standards to improve compliance and standardization. Actively participate in the development of international standards.

4. Planning and Developing the Intelligent Internet

Study and establish the architecture of an intelligent internet system. Explore the creation of agent registration platforms providing services such as digital identity management, discovery and search, and capability declarations for agents, while supporting information inquiry and management related to developers, deployment methods, interface protocols, and compliance certifications. Improve multi-agent collaboration capabilities and research foundational technologies including agent identity systems, trusted interconnection, compliant payments, security protection, and conflict resolution. Leverage the advantages of Internet Protocol Version 6 (IPv6) to improve end-to-end communication capabilities for agents. Explore the establishment of monitoring and evaluation indicators for the intelligent internet.

III. Safeguarding Security Baselines

Adhere to a people-centered and AI-for-good approach featuring multi-stakeholder governance and prudent security management, creating an institutional environment that both regulates development and encourages innovation, thereby ensuring the healthy and orderly development of agents.

(1) Clarifying Product Principles

5. Improving Policies, Regulations, and Ethical Norms

Accelerate research into policies, regulations, and ethical standards related to agents. Leverage the advantages of professional institutions in content resources and review mechanisms to ensure agent behavior complies with laws, regulations, and mainstream societal values. Prevent agents from exploiting data advantages or anthropomorphic technologies to spread harmful values or engage in algorithmic exploitation, and guard against risks such as addiction and emotional dependence among minors and the elderly. Ensure coordination with AI ethics review mechanisms and related systems.

6. Clarifying Decision-Making Authority

Under the premise of complying with laws, regulations, social morality, and ethical norms, clearly define the boundaries and required permissions for decisions reserved exclusively for users, decisions requiring user authorization, and autonomous agent decisions. Ensure users retain the right to know and the ultimate decision-making authority over autonomous agent actions, and ensure agents do not exceed the scope of user authorization.

7. Strengthening Behavioral Controls

Develop technologies such as embedded rules and behavioral guardrails to ensure agents operate lawfully and compliantly in public, private, and specialized environments. Explore the use of blockchain and related technologies to establish verifiable and traceable mechanisms for agent behavior in key application scenarios, thereby preventing major risks arising from improper agent conduct.

(2) Preventing Security Risks

8. Enhancing Intrinsic Security Capabilities

Research security technologies related to agent data security, personal information protection, cryptographic safeguards, attack detection, permission management, and behavioral controls. Improve the security assurance capabilities of agent systems and guard against risks such as data poisoning, privacy leakage, algorithm tampering, system vulnerabilities, and loss of operational control. Study agent security testing technologies and explore the establishment of an agent security evaluation system.

9. Strengthening Supply Chain Security

Develop full lifecycle security standards covering agent development, deployment, application, and maintenance. Strengthen security management in areas such as model access, API calls, and the use of extension tools. Explore the establishment of information-sharing and early-warning mechanisms for agent supply chain security, publish timely risk alerts, and improve overall security assurance capabilities.

10. Mitigating Application-Derived Risks

Improve regularized risk identification, early warning, and intervention mechanisms for agents, while strengthening human-machine collaborative review, interception, and blocking capabilities to prevent systemic security risks. Strengthen security management of agent applications to prevent agents from being used for automated attacks, privacy violations, false information generation and dissemination, online fraud, and other illegal or criminal activities.

(3) Improving the Governance System

11. Building a Tiered and Classified Governance Framework

Based on application scenarios and potential impacts, prudently implement tiered governance for agents. For sensitive sectors and key industries, cyberspace authorities together with relevant regulators shall determine permissible application scenarios and implement measures such as filing requirements, testing, and product recalls in accordance with laws, regulations, regulatory requirements, and security standards. For lower-risk fields such as daily entertainment and office work, improve agent evaluation and testing tools and achieve efficient governance through compliance self-assessment, information reporting, platform governance, and industry self-regulation.

12. Improving Compliance Service Systems

Strengthen the supply of professional services related to risk monitoring and warning, testing and evaluation, consulting, and certification for agents, and encourage the industry to develop agent monitoring tools. Carry out third-party testing and evaluation services for agent functionality, performance, quality, and compliance, promote mutual recognition of certification and testing results, and provide users with references for selecting agents. Compile and publish reports on the technological and application maturity of agents to support industrial R&D and deployment.

(4) Strengthening Industry Self-Regulation

13. Guiding Industry Self-Discipline

Encourage industry associations and major enterprises to jointly formulate self-regulatory rules covering agent functionality compliance, algorithm governance, intellectual property protection, and fair competition. Guide agent development platforms, distribution platforms, and service providers to establish fair and reasonable platform rules, user agreements, and privacy policies that clearly define the rights and responsibilities of both supply and demand sides, thereby safeguarding healthy industry development. Strengthen public education on agent application risks and improve user safety awareness.

14. Exploring Credit Evaluation Mechanisms

Guide industry organizations in establishing voluntary credit evaluation mechanisms for market participants in the agent ecosystem. Conduct credit evaluations and lawful disciplinary actions against behaviors such as technology abuse, induced consumption, false advertising, and concealment of defect information. Encourage developers, development platforms, distribution platforms, and service providers to participate in credit evaluation systems and jointly foster a healthy development environment.

IV. Strengthening Application-Driven Development

Promote the steady and prudent deployment of agents in representative application scenarios to drive improvements in technology and products, while exploring replicable and scalable deployment models.

(1) Scientific Research

15. Research Exploration

Develop agents for theoretical reasoning and simulation to explore potential technological pathways. Strengthen agents’ capabilities in information association, integration, and knowledge system construction to improve discovery capabilities in natural sciences, philosophy, and social sciences. Promote integration between agents and scientific instruments and experimental platforms to enable intelligent end-to-end processes covering experimental design, execution, data processing, and result analysis.

16. R&D Assistance

Develop software engineering agents capable of improving the full development lifecycle including requirements analysis, architecture design, code generation, and testing. Promote integration between agents and software such as Computer-Aided Design (CAD) and Computer-Aided Engineering (CAE), enabling functions such as design generation, simulation validation, and parameter optimization.

(2) Industrial Development

17. Intelligent Manufacturing

Develop production management agents capable of dynamically optimizing scheduling, resource allocation, and process coordination, and promote the application of agents in the industrial internet to improve enterprise management efficiency. Enhance capabilities in process parameter optimization, precision inspection, and defect identification, and integrate agents with CNC machines, industrial robots, and automated production lines to improve quality, efficiency, and cost control.

18. Energy and Resources

Develop agents for sensing environmental factors such as atmosphere, water, soil, and noise to improve early warning capabilities for natural disasters and environmental pollution. Use agents to strengthen full lifecycle management of territorial and spatial resources. Utilize agents for efficient exploration of energy and mineral resources such as metals. Develop agents for power dispatching, electricity monitoring, and grid maintenance to improve energy utilization efficiency.

19. Transportation

Develop agents for traffic safety supervision and emergency command and dispatch to improve capabilities in detecting violations, warning of infrastructure risks, supervising key vehicles and vessels, and rapidly responding to accidents. Optimize transportation monitoring and dispatch agents and develop agents for transportation vehicle management to improve the efficiency of road networks, waterways, and airspace.

20. Agricultural Production

Develop agricultural service agents providing agricultural technical guidance, pest diagnosis, and prevention services. Promote the application of agents in planting, breeding, and efficient breeding technologies to accelerate agricultural modernization. Promote integration between agents and smart agricultural machinery, intelligent greenhouses, and agricultural service platforms to improve agricultural productivity.

21. Financial Services

Develop financial risk-control agents to improve risk identification in credit approval, transaction monitoring, and account security. Enhance anomaly detection and compliance auditing capabilities to improve credit default prediction, credit card fraud interception, and anti-money laundering monitoring.

(3) Stimulating Consumption

22. Terminal Applications

Promote the empowerment of internet applications and services through agents to optimize user experiences in online shopping, navigation, bill payment, and office work. Promote coordinated development between agents and devices such as smartphones, computers, automobiles, smart homes, wearables, and consumer robots, enhancing cross-application and cross-device task execution capabilities.

23. Culture and Tourism

Develop agents for literature, music, painting, audiovisual production, and performing arts content creation to promote the dissemination of outstanding culture. Develop tourism service agents for intelligent guidance, multilingual translation, elderly accessibility, and disability assistance to improve tourism services.

24. Commercial Services

Enhance customer service agent capabilities to provide 24/7 consultation, reservations, and after-sales services. Develop embodied agents for guidance, cleaning, warehousing, and distribution to improve operational efficiency in restaurants, retail, hospitality, and logistics. Explore the use of embodied agents to provide low-cost domestic services, elderly care, childcare, and disability assistance.

(4) Public Welfare

25. Education

Explore agents for courseware generation, assignment grading, and learning analytics to improve teacher efficiency. Use agents to develop personalized learning plans and improve intelligent tutoring, Q&A support, and virtual teaching assistant functions. Support online education platforms in developing agents to provide lifelong learning services.

26. Healthcare

Enhance the performance of medical assistance agents in medical imaging analysis, disease diagnosis reasoning, and customized treatment plan generation. Explore agents for pharmaceutical management, surgery scheduling, and medical record management to improve healthcare efficiency. Gradually develop pre-diagnosis consultation and report interpretation agents to improve patient experience.

27. Human Resources

Explore the use of agents in employment promotion, technical skills training and evaluation, and labor relations public services to improve employment support capabilities. Develop agents for social insurance, labor dispute arbitration, and wage arrears governance to safeguard workers’ lawful rights and interests.

28. Information Services

Explore the use of agents in online content governance and encourage information publishing departments and content platforms to develop agents for user analysis, topic planning, content editing, recommendation distribution, intelligent moderation, public opinion guidance, emotional counseling, and real-time translation, thereby enabling efficient integration of multimodal and cross-domain information.

(5) Social Governance

29. Government Services

Explore agents for assisted administrative approval to improve the intelligence of government approval processes. Develop policy consultation agents providing around-the-clock government consultation and procedural guidance services. Explore proactive delivery of policy recommendations, service reminders, and application guidance, accelerating the shift from “people searching for services” to “services finding people.”

30. Judicial Services

Explore full-process judicial assistance agents to improve capabilities in organizing case materials, entering case information, reviewing evidence, and generating legal documents. Develop agents for legal publicity, consultation, and supervision to provide efficient and convenient online judicial services for the public.

31. Public Safety

Explore agents for monitoring and warning, emergency response, rescue dispatch, and coordinated governance to improve capabilities in workplace safety supervision and disaster prevention, mitigation, and relief. Improve abnormal behavior recognition, threat warning, and dynamic prevention and response capabilities to safeguard public security. Promote the deployment of embodied agents in disaster rescue, security inspection, and hazardous materials handling.

32. Urban Governance

Explore the application of agents in urban planning, construction, and governance to support intelligent construction, building management, and safe operation of urban infrastructure, thereby improving the professionalism of urban governance and enhancing urban living environments.

33. Tendering and Bidding

Explore tendering and bidding agents to achieve intelligent end-to-end management of bidding activities and ensure standardized and efficient processes. Improve the intelligence of bidding transactions, services, and supervision to ensure scientific tendering, fair evaluation, and efficient regulatory oversight.

V. Building an Innovation Ecosystem

Facilitate connections between supply and demand and promote high-level interaction between R&D and application sides, thereby forming a market-driven and internally sustainable agent industry ecosystem.

(1) Promoting Industrial Cooperation

34. Cultivating Open-Source Innovation

Guide domestic open-source AI communities to strengthen their focus on agents and promote compatibility between agents and open-source chips, operating systems, and foundation models. Encourage enterprises, universities, and research institutions to participate in open-source projects involving agent frameworks, interaction interfaces, and toolchains, thereby promoting interoperability and increasing international influence.

35. Building Industrial Collaboration Platforms

Leverage the role of industrial collaboration platforms such as agent ecosystem alliances and technology validation laboratories to coordinate upstream and downstream industry players in conducting R&D on common technologies, standards formulation, and evaluation and certification. Promote interdisciplinary talent development combining agent technologies and industrial applications. Encourage enterprises in internet applications and intelligent terminals to jointly build ecosystems and explore mutually beneficial cooperation models.

(2) Strengthening Application Promotion

36. Building Application Promotion Channels

Promote the establishment of agent software stores and industry supply-demand information platforms to encourage enterprises to release products and form agglomeration effects. Organize supply-demand matchmaking activities and use mechanisms such as public tenders and challenge-based competitions to attract enterprises to develop customized products. Encourage hardware and software companies to develop products and services based on agents and cultivate user markets.

37. Advancing the Opening of Key Scenarios

Promote the opening of key application scenarios in critical sectors and carry out pilot programs in industrial clusters, major industries, and priority areas to create leading demonstration projects. Develop market-oriented and professional technology transfer service institutions and explore agent deployment scenarios to improve the commercialization efficiency of technological achievements. Promote industry data sharing and openness to support the training and deployment of agents in key scenarios.

38. Actively Cultivating a Global Ecosystem

Leverage international platforms such as the World Artificial Intelligence Conference and the World Internet Conference to showcase and exchange innovations in agent technologies. Promote the adaptation of agents by terminal device and software enterprises, guide relevant enterprises in overseas compliance efforts, and support the localization of agents to comply with local laws, regulations, and cultural practices.

VI. Safeguard Measures

The Cyberspace Administration of China, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, together with relevant authorities, shall strengthen overall planning and coordination, improve resource integration and collaborative efforts, refine supporting policies, and form a coordinated working mechanism to ensure implementation of key tasks. A comprehensive evaluation indicator system for agent development shall be established and improved, and monitoring, evaluation, rolling implementation, and dynamic adjustment mechanisms shall be strengthened to support the standardized application and innovative development of agents.

Q&A with the Press

Recently, the Cyberspace Administration of China, the National Development and Reform Commission, and the Ministry of Industry and Information Technology jointly issued the Implementation Opinions on the Standardized Application and Innovative Development of Agents (“Implementation Opinions”). A responsible official from the Cyberspace Administration of China answered questions from the press on the document.

1. Question: Could you introduce the background to the issuance of the Implementation Opinions?

Answer: In recent years, agent products represented by mobile assistants, terminal-based intelligent managers, and cloud-based agents have emerged rapidly and are being applied at scale, greatly facilitating people’s work and daily lives. At the same time, the high autonomy and high permission levels of agents have also created security risks such as privacy leakage, unauthorized operations, and loss of behavioral control. It is therefore necessary to coordinate development and security, and to promote the standardized application and innovative development of agents.

The CPC Central Committee and the State Council attach great importance to the development of artificial intelligence. General Secretary Xi Jinping emphasized at the 20th group study session of the Political Bureau of the CPC Central Committee that it is necessary to grasp the trends and laws of AI development, accelerate the formulation and improvement of relevant laws and regulations, policy systems, application norms, and ethical guidelines, and build systems for technological monitoring, risk warning, and emergency response, so as to ensure that AI is safe, reliable, and controllable. In August 2025, the State Council issued the Opinions on Deepening the Implementation of the “AI+” Initiative, focusing on areas such as science and technology, industrial development, consumption upgrading, public welfare, and governance capacity. It set a phased target that, by 2027, AI would be among the first to achieve broad and deep integration with key sectors, and the adoption rate of next-generation intelligent terminals, agents, and other applications would exceed 70%.

The formulation and issuance of the Implementation Opinions is a concrete measure to implement the Opinions on Deepening the Implementation of the “AI+” Initiative. Oriented toward promoting technological innovation, enhancing governance capacity, building industrial ecosystems, and improving public welfare, the document aims to create a favorable policy environment, leverage the demonstrative effect of typical application scenarios, and coordinate efforts to advance high-quality development, high-level security, and high-efficiency governance of agents.

2. Question: What is the overall thinking behind the Implementation Opinions?

Answer: In drafting the Implementation Opinions, emphasis was placed on four aspects. First, strengthening ideological guidance. The document adheres to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implements General Secretary Xi Jinping’s important thinking on building China into a cyber power, deepens the implementation of the “AI+” initiative, and promotes the high-quality development of agents. Second, coordinating development and security. It follows the objective laws of technological development, strengthens the industrial and technological foundation, improves the governance system, actively and prudently promotes the standardized application of agents, and builds a pattern in which development and security reinforce each other. Third, adhering to application-driven development. It deeply explores typical application scenarios, promotes a virtuous cycle in which innovation drives application and application promotes innovation, and enables agents to empower all sectors. Fourth, safeguarding the security baseline. It upholds a people-centered, AI-for-good, multi-stakeholder governance, and prudent security approach, clarifies the bottom lines and red lines for agent development, and embeds safety and controllability throughout the entire process of technology R&D, application deployment, and product promotion.

3. Question: What specific requirements does the Implementation Opinions set out for regulating the application of agents?

Answer: The Implementation Opinions takes the safety, reliability, and trustworthiness of agents as baseline requirements for industrial development, and promotes the orderly and standardized deployment of agents. First, it clarifies product principles. Policies, regulations, and ethical norms should be further improved, and work on permission management and behavioral control for agents should be strengthened to provide guidance for the R&D of related products. Second, it prevents security risks. Technological measures should be used to enhance risk prevention capabilities in areas such as intrinsic agent security, supply chain security, and application-derived risks, thereby achieving full-lifecycle security management across agent development, deployment, application, and maintenance, and effectively preventing systemic risks. Third, it improves the governance system. In line with the evolution of agent technologies, a prudent and sound tiered and classified governance framework should be established based on application scenarios and potential impacts. The construction of a compliance service system for agents should be promoted, so that agents can be both “allowed to develop dynamically” and “well regulated.” Fourth, it strengthens industry self-regulation. Agent-related enterprises, industry organizations, and research institutions are encouraged to enhance their sense of responsibility and jointly formulate industry self-regulatory rules. Developers, development platforms, distribution platforms, and service providers of agents are guided to participate in credit evaluation, jointly fostering a sound development environment.

4. Question: What key tasks does the Implementation Opinions lay out for promoting the innovative development of agents?

Answer: The Implementation Opinions systematically promotes the innovative development of agents around key directions such as technological breakthroughs, scenario-based applications, and ecosystem building. First, it strengthens the foundations for development. By reinforcing basic technology R&D and improving agent toolchains, it provides a high-level technological foundation for the industry. It establishes an agent standards system to lower the barriers to agent R&D, adaptation, and application. It also takes a forward-looking approach to frontier areas such as multi-agent collaboration and the intelligent internet, laying the groundwork for the industry’s continued evolution. Second, it strengthens application-driven development. Around areas such as scientific research, industrial development, consumption promotion, public welfare, and social governance, it proposes 19 typical application scenarios to drive the optimization of agent technologies and products and explore replicable and scalable deployment models. Third, it builds an innovation ecosystem. It strengthens the cultivation of open-source innovation forces and builds industrial collaboration platforms to promote efficient industrial coordination and enhance innovation vitality. By establishing application promotion channels and opening key scenarios, it improves supply-demand connectivity and forms a market-driven, internally motivated industrial ecosystem. It also actively cultivates a global ecosystem, promotes the integration and development of domestic and international technologies, and fosters an open and shared environment for international cooperation.

5. Question: What measures will be taken next to implement the Implementation Opinions?

Answer: The Cyberspace Administration of China, the National Development and Reform Commission, and the Ministry of Industry and Information Technology will work with relevant parties to effectively advance the implementation of the Implementation Opinions. Focusing on key areas such as agent technology R&D, scenario opening, and security governance, they will improve supporting policies, form coordinated working mechanisms, and promote the implementation of key tasks. At the same time, they will strengthen monitoring and evaluation, rolling implementation, and dynamic adjustment of the standardized application and innovative development of agents.

The Chinese response remained cautious, saying only that there was “no information available at this time.” But the fact that this question was even raised publicly is significant. It marks the first time since the May 2024 U.S.-China intergovernmental AI dialogue in Geneva — still the only one so far — that AI safety and governance have clearly returned to the public bilateral agenda.

And one very important reason for that may be Mythos.

Looking back, many major turning points in the governance of emerging technologies were not driven by years of abstract debate, but by specific events that genuinely shocked governments into action.

The Cuban Missile Crisis and high-yield nuclear tests in the 1950s eventually pushed the world toward the Partial Test Ban Treaty and the Nuclear Non-Proliferation Treaty. The Chernobyl disaster led directly to international nuclear accident reporting and nuclear safety mechanisms.

The internet era followed a similar pattern. Snowden’s PRISM revelations shattered the old U.S.-Europe trust framework around data security and accelerated the rise of “data sovereignty.” The Cambridge Analytica scandal gave the EU enormous political momentum for GDPR. The livestreaming of the Christchurch mosque shooting in New Zealand helped drive the Christchurch Call and later became part of the political backdrop for the EU’s Digital Services Act and stricter platform regulation.

Based on the fragments of information currently available, Mythos may be starting to play a similar role.

According to reports and discussions inside the AI policy world, the model not only appears to have very advanced vulnerability discovery capabilities, but may also be able to rapidly generate workable exploit chains. In other words, it is not just “finding problems”; it is getting dangerously close to automating parts of the cyberattack process itself. To some observers, it effectively turns large parts of the global internet and critical infrastructure into something full of holes. The possibility of scalable AI-driven cyberattacks appears to have alarmed even the U.S. government, which possesses the world’s most sophisticated cyberwarfare capabilities.

Anthropic’s own behavior says a lot. The company has explicitly stated that most vulnerabilities identified by the model are still unpatched or remain inside active disclosure windows, meaning they cannot publicly release many details or open the system like a normal commercial model. Right now, access to Mythos reportedly remains limited to internal researchers, a handful of trusted partners, and carefully vetted security researchers. Increasingly, the way Mythos is being managed looks less like a normal internet product and more like the handling of a high-risk industrial system — or even sensitive military technology.

And it is not just the U.S. getting nervous. Other countries are starting to react as well. Singapore’s Cyber Security Agency recently sent formal notices to all critical information infrastructure operators, asking boards and senior management to reassess the implications of AI-driven cyber threats for existing security systems.

Taken together, Mythos may be significantly elevating the importance of AI safety in the broader U.S.-China relationship.

Back in May 2024, when the two countries held their first intergovernmental AI dialogue in Geneva, the U.S. side focused heavily on concerns about AI misuse, explicitly including the possibility of misuse by China. The Chinese side, meanwhile, focused on criticizing U.S. restrictions and suppression measures targeting China’s AI sector.

According to people familiar with the discussions, many on the U.S. side were not particularly satisfied with that meeting. Some privately complained that the Chinese delegation leaned heavily toward diplomatic and general policy officials, while the discussions themselves did not seriously engage with frontier AI safety risks and governance issues. A few months later, the U.S. organized an AI Safety Institute network meeting in San Francisco without inviting China.

Then Trump returned to office. At first, some people expected the White House might revive the AI safety dialogue mechanism, but in practice the administration remained relatively cold toward it. For most of the past year, the real focus of U.S.-China AI negotiations continued to revolve around more immediate issues such as chip export controls and compute restrictions.

Still, while official dialogue largely stalled, exchanges among think tanks, experts, and companies remained relatively active. Recently, even Bernie Sanders publicly invited Xue Lan from Tsinghua University and Zeng Yi from the Chinese Academy of Sciences to discuss AI safety and U.S.-China AI cooperation.

I’ve been fortunate enough to participate in some of these Track II exchanges myself, and one thing that stands out very clearly is how differently the two sides understand “AI safety.”

On the Chinese side, policymakers and industry people are still focused mainly on practical and already existing issues: U.S. AI chip restrictions, model filing requirements, content compliance, regulation of anthropomorphic AI services, training-data copyright, and similar questions. Many Chinese experts also feel that China has already built a fairly comprehensive AI governance structure involving multiple agencies, sectors, and layers of the industry chain, while the U.S. still lacks even a basic federal AI regulatory framework. From that perspective, some Chinese experts ask: why does the U.S. keep positioning itself as the side leading the conversation on AI safety?

Others in China argue that if the U.S. is truly worried about frontier AI risk, then logically it should first strengthen its own domestic governance rather than continue racing ahead at full speed. Some Chinese observers also believe there is a broader historical pattern in U.S. behavior: when America’s technological lead is limited, it seeks negotiations and guardrails to constrain others; when its lead is overwhelming, it tends to rely more on pressure and restrictions. In that view, the U.S. often tries to prevent others from obtaining a strategic technology once it possesses it itself — or at least slow others down as much as possible.

The American side, meanwhile, is primarily focused on frontier models, catastrophic risks, and the possibility of loss of control over future agents.

U.S. experts usually explain that America is not ignoring practical concerns such as jobs, privacy, or copyright. Rather, they believe frontier models are starting to create entirely new categories of risk that existing legal systems simply were not designed to handle. They seriously discuss questions such as whether models could gradually develop forms of situational awareness, learn to deceive humans, or — once connected to tools, memory systems, and open environments — begin crossing boundaries, autonomously calling resources, performing unexpected actions, or even exhibiting genuine loss-of-control behavior.

Their basic logic is straightforward: these risks cannot wait until after something catastrophic actually happens. If AI truly enters a dangerous phase, governance may come too late. From their perspective, countries should already be building early-warning systems, incident-reporting frameworks, and cross-border information-sharing mechanisms.

Many U.S. experts repeatedly stress another point: catastrophic AI risk has no borders. Even if the first serious incident happens in the United States, its consequences would spread rapidly to China as well. China would not be insulated from it. That is why, in their view, joint U.S.-China work on AI safety research, information sharing, and coordinated risk mitigation is not about one side “conceding” to the other, but about pursuing shared security interests.

When Chinese participants argue that “the U.S. basically has no AI regulation,” American experts usually push back. They point out that while the U.S. still lacks a unified federal AI law, that does not mean there is no regulation at all. California already has state-level frameworks such as SB53, and many existing laws already apply to AI, including FTC consumer protection rules and FCC cybersecurity requirements.

Some U.S. experts have also floated surprisingly concrete ideas for U.S.-China AI cooperation. They argue that the two countries do not necessarily need to share core models or sensitive technical details, but could cooperate on areas such as testing, safety evaluation, standards, risk frameworks, and mitigation principles. Red-teaming, biosecurity assessments, and agent permission management are often mentioned as realistic entry points.

Some proposals go even further. I’ve heard American experts suggest that China and the U.S. should eventually agree to embed some kind of hardcoded “killing switch” into frontier systems, so that if a model truly starts behaving dangerously, humans would still retain the ability to forcibly shut it down.

Personally, I enjoy these discussions, even when the debates become intense. I’ve been genuinely impressed by how deeply some American experts understand Chinese AI policy and industry developments. They are very serious researchers. More importantly, most people involved in these exchanges try to approach each other’s countries in a relatively objective way, minimizing politicization as much as possible. They criticize areas they think the other side handles poorly, but are also willing to acknowledge areas worth learning from. Through deeper conversations, both sides gradually get a clearer sense of each other’s real concerns and practical constraints.

If people start with the assumption that the other side is simply malicious or “evil,” then the discussion quickly drifts away from reality and becomes meaningless. At the end of the day, this is not just about geopolitics, or even personal political preferences. It is about the long-term impact AI could have on the future of humanity itself.

Despite the relatively active Track II exchanges, official U.S. engagement on this issue seemed largely frozen until recently. That changed on April 24, when a U.S. Treasury official told the media that AI would formally appear on the agenda of the upcoming Xi-Trump summit, and that the two sides would discuss possible areas of cooperation and ways to coordinate on AI safety and non-state actor threats.

Then another WSJ report yesterday said the US and China, during the leaders’ summit in Beijing, are to start a recurring set of conversations that could address the risks posed by AI models behaving unexpectedly, autonomous military systems, or attacks by nonstate actors using powerful open-source tools.

In some ways, this feels reminiscent of the Cold War nuclear era. It was precisely because nuclear weapons became genuinely civilization-threatening that the U.S. and Soviet Union were eventually forced to negotiate. Similarly, the capabilities reportedly demonstrated by Mythos — and the possibility that similar systems could eventually be abused by terrorist groups, hackers, or other non-state actors — may now be pushing the U.S. toward seeking AI safety dialogue with China.

Inside the U.S., there also seems to be a growing recognition that China may not be that far behind anymore. Dario Amodei recently told CNBC that China’s frontier AI systems may only be six to twelve months behind Mythos. Former Google CEO Eric Schmidt has said something similar, arguing that while U.S. chip controls initially slowed China down, Chinese firms rapidly adapted through software optimization and workarounds, shrinking the gap to roughly six months.

There is still no fully unified view inside the U.S. on the exact gap between Chinese and American frontier models, but most studies point in the same direction: the gap is narrowing quickly.

Recently, the U.S. Center for AI Standards and Innovation (CAISI, formerly the U.S. AI Safety Institute) reportedly evaluated DeepSeek V4 and concluded that it lags top U.S. frontier models by around eight months.

Stanford HAI’s AI Index 2026 paints an even more aggressive picture. As of March 2026, Anthropic’s top model still ranked first, but the lead over the best Chinese model had shrunk to only around 2.7%. The report also noted that Chinese and U.S. models have repeatedly traded places at the top since 2025, with overall gaps generally remaining in the single digits.

Epoch AI estimates the average Chinese lag at roughly seven months, though with substantial variation depending on the model.

The benchmark data also reflects this convergence. In LMArena blind human evaluations, the gap is now only around 27.7 Elo — roughly the difference between a 90 and a 94. Ordinary users often may not notice much difference. But in expert-level tasks, the gap widens to about 46.3 Elo, closer to the difference between an 85 and a 95. That suggests the two sides are converging rapidly in normal usage scenarios, while U.S. models still retain stronger advantages in extreme reasoning, complex agents, and difficult tasks.

An even more striking benchmark is SWE-bench Verified, which tests real-world software engineering tasks such as debugging and code modification. There, top U.S. models score 79.2% while top Chinese models score 78.8% — a difference of only 0.4 percentage points. In other words, in one of the most commercially valuable areas of AI deployment — real software engineering productivity — the top Chinese and U.S. systems are already approaching parity.

Taken together, these results broadly reinforce what people like Dario Amodei and Eric Schmidt have been saying: the gap between Chinese and American frontier AI may now be measured in months rather than generations.

And that is likely one major reason why the sense of urgency inside Washington appears to be growing. If China reaching Mythos-level capabilities is mainly a matter of time, then AI safety quickly stops being just “America’s problem” and becomes a global issue that, from the U.S. perspective, requires bringing China into the framework as well.

First, if the U.S. really starts imposing pre-deployment review requirements on Mythos-class models, that will inevitably slow the release and deployment cycle of American frontier AI systems. Chinese models would then catch up faster by comparison. From the U.S. point of view, there would therefore be strong pressure to encourage China to adopt similar safety mechanisms as well, so the U.S. is not the only side hitting the brakes.

Second, if the U.S. starts treating Mythos-level systems as “strategic capabilities” requiring anti-proliferation controls, many in Washington likely believe China would also need comparable controls. The concern is no longer just interstate competition, but diffusion to non-state actors. If the U.S. locks these systems down while China does not, terrorist groups, extremist organizations, or transnational criminal networks could simply obtain equivalent capabilities from the Chinese side instead — and vice versa. In that scenario, the entire control regime would collapse.

Third, the U.S. may eventually seek bilateral AI guardrails with China, especially regarding military or high-risk applications. That could include mutual restrictions on using frontier models for cyberwarfare, biological weapons research, or attacks on civilian critical infrastructure — perhaps loosely resembling the Obama-era U.S.-China cyber understandings.

But from the Chinese perspective, observers generally believe there are several major obstacles.

The biggest is still trust. Many Chinese policy analysts argue that if the U.S. simultaneously treats China as a strategic AI rival, frames the competition as zero-sum, and continues tightening hardware and compute restrictions, it becomes difficult for China to fully trust that AI safety cooperation proposals are genuinely about mutual security rather than constraining China’s technological rise.

There are also technical sovereignty concerns. Unlike nuclear weapons verification, frontier AI safety verification depends heavily on access to training datasets, model weights, and underlying code. Some Chinese experts worry that “joint evaluations” or “red-teaming” exercises could become channels for intelligence collection targeting Chinese frontier AI firms and potentially sensitive industrial or government-related data. In that environment, any proposal involving deep “white-box” inspection is likely to be seen as crossing a red line. But purely “black-box” promises, meanwhile, may be viewed as difficult to verify or enforce.

There is also a broader geopolitical concern. Some analysts believe that moving too quickly toward a bilateral U.S.-China AI framework could weaken China’s recent emphasis on multilateral governance through the UN system and broader Global South participation. From Beijing’s perspective, embracing a heavily U.S.-China-centered “G2” governance structure too readily could complicate China’s positioning as a representative voice for developing countries.

Finally, many Chinese observers remain deeply skeptical about the durability of U.S. political commitments. Even if the executive branch genuinely wants AI cooperation, there is concern that any agreement could later be undermined by Congress or by future shifts in American domestic politics. Some Chinese analysts worry that even if China makes real concessions or accepts meaningful constraints, future political changes in Washington could still transform those same arrangements into evidence that China is “non-transparent” or “non-compliant.”

On May 2, MOFCOM issued a prohibition order under China’s Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures. The order says that no individual or entity may implement the U.S. Treasury sanctions against Hengli Petrochemical (Dalian) Refining Co., Ltd. and several other Chinese companies.

On April 24, 2026, the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, announced that it had added Hengli Petrochemical (Dalian) Refining Co., Ltd. to the SDN List. The Treasury described Hengli as one of China’s “teapot refineries” and a major buyer of Iranian crude oil and petroleum products, allegedly purchasing billions of dollars’ worth of Iranian oil. The U.S. also sanctioned around 40 shipping companies and vessels, saying they were part of Iran’s “shadow fleet” network.

The legal basis for this action was Executive Order 13902, issued in January 2020 during Trump’s first term. That order authorizes sanctions against additional sectors of the Iranian economy, including oil, petrochemicals, metals and construction. OFAC said the move was part of the Trump administration’s “maximum pressure” campaign against Iran, aimed at cutting off Tehran’s oil revenues.

Once Hengli Petrochemical (Dalian) Refining Co., Ltd. was added to the SDN List, the legal consequences under U.S. law were clear: any property or interests in property within the United States, or controlled by U.S. persons, must be blocked; U.S. persons are generally prohibited from dealing with the company; and non-U.S. parties may also face secondary sanctions risks if they continue to engage in significant transactions with it.

OFAC’s SDN update page listed Hengli Petrochemical (Dalian) Refining Co., Ltd.’s name, address, website, date of establishment, registration number and unified social credit code, with the sanctions tag [IRAN-EO13902].

This is also the first time China has actually used the Blocking Rules and issued a concrete prohibition order since the rules were released and came into force on January 9, 2021.

MOFCOM Announcement No. 21 of 2026: Announcement on the Prohibition Order Concerning the U.S. Sanctions Against Five Chinese Companies over Iran-related Oil Transactions

According to the relevant provisions of the National Security Law of the People’s Republic of China, the Law of the People’s Republic of China on Foreign Relations, the Anti-Foreign Sanctions Law of the People’s Republic of China and its implementing provisions, and the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures (hereinafter referred to as the “Blocking Rules”), the working mechanism under the Blocking Rules has conducted a comprehensive assessment, in accordance with the law, of the U.S. sanctions measures imposed on Hengli Petrochemical (Dalian) Refining Co., Ltd. and other enterprises on the grounds of their alleged participation in Iranian oil transactions, including their inclusion on the “Specially Designated Nationals List” (SDN List), asset freezes and transaction prohibitions. The assessment confirms that the U.S. sanctions measures against the above-mentioned enterprises constitute unjustified extra-territorial application.

In order to safeguard national sovereignty, security and development interests, and to protect the legitimate rights and interests of Chinese citizens, legal persons or other organizations, MOFCOM, pursuant to Articles 2, 4, 6 and 7 of the Blocking Rules and the decision of the working mechanism, hereby issues the following prohibition order:

The sanctions measures taken by the United States pursuant to Executive Order 13902, Executive Order 13846 and other provisions, on the grounds of participation in Iranian oil transactions, against Hengli Petrochemical (Dalian) Refining Co., Ltd., Shandong Shouguang Luqing Petrochemical Co., Ltd., Shandong Jincheng Petrochemical Group Co., Ltd., Hebei Xinhai Chemical Group Co., Ltd. and Shandong Shengxing Chemical Co., Ltd., including their inclusion on the “Specially Designated Nationals List,” asset freezes and transaction prohibitions, shall not be recognized, enforced or observed.

This prohibition order shall come into force as of the date of publication.

Ministry of Commerce
May 2, 2026

MOFCOM later also stressed through a spokesperson that it will continue to closely monitor the unjustified extra-territorial application of foreign laws and measures. Where circumstances covered by the Blocking Rules arise, MOFCOM will take relevant actions in accordance with the law.

MOFCOM Spokesperson’s Response to a Question on Blocking the U.S. Iran-related Oil Sanctions Against Five Chinese Companies

Question: On May 2, 2026, MOFCOM issued a prohibition order to block the U.S. sanctions imposed on five Chinese companies — Hengli Petrochemical (Dalian) Refining Co., Ltd., Shandong Shouguang Luqing Petrochemical Co., Ltd., Shandong Jincheng Petrochemical Group Co., Ltd., Hebei Xinhai Chemical Group Co., Ltd. and Shandong Shengxing Chemical Co., Ltd. — on the grounds of their participation in Iranian oil transactions, including their inclusion on the “Specially Designated Nationals List” (SDN List), asset freezes and transaction prohibitions. What are the considerations behind this move?

Answer: Since 2025, the United States has, pursuant to its executive orders sanctioning other countries, placed Chinese companies including Hengli Petrochemical (Dalian) Refining Co., Ltd., Shandong Shouguang Luqing Petrochemical Co., Ltd., Shandong Jincheng Petrochemical Group Co., Ltd., Hebei Xinhai Chemical Group Co., Ltd. and Shandong Shengxing Chemical Co., Ltd. on the “Specially Designated Nationals List” (SDN List), and imposed sanctions measures such as asset freezes and transaction prohibitions, on the grounds of their participation in Iranian oil transactions. These measures improperly prohibit or restrict Chinese companies from carrying out normal economic and trade activities and related activities with third countries (regions) and their citizens, legal persons or other organizations, and violate international law and the basic norms governing international relations.

In order to safeguard national sovereignty, security and development interests, and to protect the legitimate rights and interests of Chinese citizens, legal persons or other organizations, MOFCOM, in accordance with the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures and based on the assessment results of the relevant working mechanism, issued a prohibition order providing that the U.S. sanctions measures against the above-mentioned five Chinese companies shall not be recognized, enforced or observed.

The Chinese government has always opposed unilateral sanctions that lack authorization from the United Nations and have no basis in international law. The issuance of this prohibition order is a concrete action to implement the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures in accordance with the law. It does not affect China’s assumption and performance of its international obligations, nor does it affect China’s lawful protection of the legitimate rights and interests of foreign-invested enterprises. MOFCOM will continue to closely monitor the unjustified extra-territorial application of relevant countries’ laws and measures. Where circumstances provided for in the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures arise, relevant work will be carried out in accordance with the law.

The Blocking Rules were issued and came into force on January 9, 2021. The immediate background was the growing use by the United States and some other countries of unilateral sanctions, export controls and long-arm jurisdiction. These measures do not just bind their own companies. Through so-called secondary sanctions, they also pressure companies in third countries to comply.

At the time, MOFCOM’s Department of Treaty and Law explained that some countries not only prohibit their own persons from doing business with certain countries, but also “coerce enterprises and individuals of other countries into stopping economic and trade activities with relevant countries.” In China’s view, this violates principles such as sovereign equality and harms the normal commercial dealings of Chinese companies.

Imagine this: a Chinese company can lawfully do business with Iran, Russia, Cuba or another third-country counterparty, but the U.S. says, “No — if you do that, we will sanction you too.” Or a multinational company operating in China has a contract with a Chinese company, but because it fears U.S. sanctions, it unilaterally stops supplying goods, making payments, providing shipping, insurance or settlement services. China’s view is that this is not just a business choice. It is foreign law improperly interfering with China’s normal economic and trade order.

In terms of design, China drew on the experience of blocking statutes in places such as the European Union. MOFCOM also noted that the United Nations and some countries and regions have long opposed unilateral laws and measures with extra-territorial effect, and have adopted legislation to refuse recognition of such foreign measures.

Article 2 of the Blocking Rules says the rules apply where foreign laws or measures violate international law and basic norms of international relations, and improperly prohibit or restrict Chinese citizens, legal persons or other organizations from conducting normal economic and trade activities with third countries, regions and their parties.

There are several key points here.

First, the target is “foreign laws and measures.” This does not only mean formal statutes. It may also include executive orders, sanctions lists and regulatory measures.

Second, the focus is “unjustified extra-territorial application.” In other words, the foreign country is not simply regulating people and conduct within its own jurisdiction. It is trying to extend the effect of its domestic law to transactions between Chinese parties and third-country parties.

Third, the rules protect the normal commercial activities of “Chinese citizens, legal persons or other organizations.” This can include not only Chinese domestic companies, but also foreign-invested enterprises lawfully established in China.

Fourth, the rules generally do not apply where China is carrying out its obligations under international treaties. If a restriction comes from, for example, a UN Security Council sanctions regime, then it is not the kind of measure the Blocking Rules are meant to block.

The core mechanism of the Blocking Rules can be summarized in five steps.

First, companies must report. If a Chinese citizen, legal person or other organization is prohibited or restricted by a foreign law or measure from carrying out normal business with a third country, it should report the matter to MOFCOM within 30 days. MOFCOM officials are required to keep confidential any matters the reporting party asks to be kept confidential.

Second, the working mechanism conducts an assessment. China has established a working mechanism involving relevant central government departments, led by MOFCOM. MOFCOM and the National Development and Reform Commission, together with other departments, handle the specific work. This mechanism assesses whether the foreign law or measure amounts to unjustified extra-territorial application. The factors include whether it violates international law and basic norms of international relations, whether it affects China’s sovereignty, security and development interests, whether it affects the legitimate rights and interests of Chinese parties, and any other relevant factors.

Third, MOFCOM may issue a prohibition order. If the working mechanism confirms that the foreign law or measure involves unjustified extra-territorial application, it may decide that MOFCOM should issue a prohibition order. The key phrase is that the relevant foreign law or measure must not be recognized, enforced or observed.

This is the most important tool under the Blocking Rules. It is not just a declaration that “China opposes U.S. sanctions.” It creates a legal obligation under Chinese law: companies cannot stop normal transactions with the relevant Chinese companies or third-country parties simply because of an unjustified foreign sanctions measure.

Fourth, parties may apply for an exemption. In practice, companies may face a real compliance conflict: if they do not follow U.S. sanctions, they may be punished by the U.S.; if they do follow U.S. sanctions, they may violate China’s prohibition order. The Blocking Rules therefore allow Chinese parties to apply to MOFCOM for an exemption from compliance with the prohibition order. MOFCOM should generally make a decision within 30 days after accepting the application, or more quickly in urgent cases.

Fifth, injured parties may sue for compensation. If a party follows a foreign law or measure that falls within the scope of a prohibition order and causes losses to a Chinese party, the injured party may bring a lawsuit in a Chinese court and seek compensation. For example, if a multinational company terminates a contract with a Chinese company because of U.S. sanctions, and those sanctions have been blocked by a MOFCOM prohibition order, the injured Chinese company may in theory sue in a Chinese court for damages.

In addition, if a foreign court issues a judgment or ruling based on the blocked foreign law or measure, and this causes losses to a Chinese party, the Chinese party may also sue in a Chinese court for compensation from the party that benefited from that foreign judgment or ruling.

The Blocking Rules are often confused with China’s other counter-sanctions tools, but they work differently.

The Unreliable Entity List is mainly used to blacklist foreign entities that harm the legitimate rights and interests of Chinese companies or endanger China’s sovereignty, security or development interests. The measures may include restrictions on imports and exports, investment restrictions and entry bans. In simple terms, it is about naming and punishing a specific foreign entity.

The Anti-Foreign Sanctions Law mainly targets foreign individuals and organizations that participate in, formulate or implement discriminatory restrictive measures against China. Countermeasures may include asset freezes, transaction bans and entry restrictions. It is more like China’s basic counter-sanctions law.

The focus of the Blocking Rules is not to directly sanction a specific U.S. entity or individual, but to block the transmission of foreign sanctions into China’s legal system. In other words, it primarily targets third parties that comply with foreign sanctions.

For example, when the U.S. sanctions a Chinese company, European brands, international banks, insurers, shipping companies, or downstream firms operating within China’s jurisdiction may stop doing business with it out of fear of U.S. secondary sanctions. Once MOFCOM issues a prohibition order, however, these parties could face legal risks under Chinese law if they continue to comply with the U.S. sanctions.

Even for foreign companies with independent legal personality and no direct jurisdictional link to China, Chinese authorities could, in theory, argue that parent and subsidiary entities—whether onshore or offshore—are subject to unified control or have commingled operations, thereby “piercing the corporate veil.”

In addition, Article 9 of the Blocking Rules provides a right to claim damages but does not explicitly limit eligible defendants to entities within China. Since the place where the harm occurs is in China, Chinese courts could arguably assert jurisdiction over purely foreign entities under the foreign-related provisions of the Civil Procedure Law and initiate proceedings.The broader point of the Blocking Rules is to change the transmission mechanism of U.S. secondary sanctions.

Without a blocking mechanism, U.S. sanctions often create a chilling effect. Even if a sanction does not directly bind a transaction inside China, banks, insurers, logistics providers, customers and suppliers may still cut ties out of fear of U.S. penalties. In that way, the U.S. does not need to punish every company directly. Market fear does the work for it.

The Blocking Rules are meant to tell market players that complying with unjustified U.S. extra-territorial sanctions is not necessarily the “safe” option. It may put them in breach of a Chinese prohibition order and expose them to administrative, civil or even countermeasure risks in China. What used to be a simple compliance question — “Should we follow the U.S. sanctions?” — becomes a much more complicated conflict-of-laws problem between China and the United States.

According to Reuters, the U.S. sanctions on Hengli mark a clear escalation in Washington’s campaign against Iranian oil exports. The reason is that Hengli is not a small refinery or a peripheral logistics node. It operates a roughly 400,000-barrel-per-day refining and petrochemical complex on Changxing Island in Dalian, making it one of the largest Chinese refiners targeted by the U.S. since Washington resumed its crackdown on Iranian oil exports in 2019.

Previously, U.S. sanctions related to China’s Iran oil trade focused more on smaller independent refineries, import terminals, logistics companies and vessels. This time, Washington went after a major private-sector refining and petrochemical champion. The impact is therefore much broader, and it is much more likely to trigger over-compliance and risk avoidance by banks, traders, insurers, shipping companies and downstream customers.

The U.S. Treasury’s allegations mainly have three parts.

First, it says Hengli is one of China’s largest independent refineries and plays an important role in Iran’s oil export system. According to the U.S., Chinese independent refiners buy most of Iran’s crude oil and provide a key source of revenue for the Iranian government and armed forces.

Second, the U.S. says Hengli has received Iranian oil products since at least 2023, including cargoes delivered by sanctioned “shadow fleet” vessels. Treasury specifically named vessels such as BIG MAG, GALE and ARES, saying they delivered more than five million barrels of Iranian crude oil to Hengli.

Third, the U.S. also alleges that part of the Iranian crude purchased by Hengli was linked to Sepehr Energy Jahan Nama Pars Company, an oil sales company affiliated with Iran’s Armed Forces General Staff, generating hundreds of millions of dollars for Iran’s military.

Hengli Petrochemical later denied having any trade with Iran. In a stock exchange filing, the company said it had “never had any trade dealings with Iran since its establishment,” and that all of its crude suppliers had guaranteed that the crude they supplied did not come from sources subject to U.S. sanctions. The company also said it had sufficient crude inventory to support more than three months of processing, that its crude procurement had not been affected, and that the U.S. sanctions lacked factual and legal basis. It said it would seek to have the restrictions removed.

According to reports, after the sanctions were announced, Hengli Petrochemical’s share price at one point fell by 10%. Hengli Group also adjusted the ownership structure of its Singapore trading arm, Hengli Petrochemical International, reducing the sanctioned entity’s stake from 100% to 5%, with the remaining shares transferred to Chinese local government entities. Some traders, however, questioned whether this restructuring would be enough to reassure counterparties.

Once the U.S. added these companies to the SDN List, the real shock was not limited to the companies themselves. The bigger issue was that upstream and downstream customers, banks, insurers, logistics providers, multinational brands and domestic partners might all cut ties out of fear of secondary sanctions. China’s prohibition order is meant to stop that fear from spreading through the industrial chain.

MOFCOM’s order immediately puts multinational companies in China — especially financial institutions, shipping and logistics firms, and international trading companies — in a classic Catch-22.

If foreign banks such as Citi or HSBC’s China branches, or Chinese banks with international exposure, continue to implement the U.S. SDN sanctions by refusing to provide settlement services to the five sanctioned refiners or by freezing their accounts, they may directly violate MOFCOM’s “non-observance” order.

Under Article 9 of the Blocking Rules, these five sanctioned Chinese refiners now have a clearer legal basis to sue multinational companies or financial institutions in Chinese courts if those parties refuse to deal with them because they are complying with U.S. sanctions, and to seek compensation for economic losses.

By activating the Blocking Rules, Beijing is sending Washington a clear message: China has tools to make U.S. sanctions harder to implement on the ground.

Chinese Vice Premier He Lifeng held a video call with U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Almost at the same time, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Foreign Minister, also spoke by phone with U.S. Secretary of State Marco Rubio.

One line in the Chinese readout is particularly noteworthy:

“China expressed serious concerns over recent U.S. economic and trade restrictions against China.”

I took stock of what these “economic and trade restrictions” likely refer to. They should include the following:

First, semiconductor equipment controls are continuing to tighten. According to foreign media reports, the U.S. Commerce Department has used “is-informed letters” to ask U.S. chip equipment makers including Applied Materials, Lam Research, and KLA to stop shipping certain equipment to some Hua Hong facilities. Hua Hong is China’s second-largest foundry and has been trying in recent years to move toward more advanced nodes. BIS’s intention is clear: to keep Hua Hong’s capacity expansion within the mature-node range and prevent a second advanced-node breakthrough point from emerging beyond SMIC. The impact is not limited to new equipment deliveries. It could also drag servicing, maintenance, and spare-parts supply for existing equipment into significant uncertainty, thereby lengthening construction and yield-ramp timelines for relevant fabs.

Second, the U.S. Congress is pushing the MATCH Act, or the Multilateral Alignment of Technology Controls on Hardware Act. The core purpose of this bill is to close cross-border loopholes in semiconductor equipment controls. Through a very strict “0% de minimis” rule, it seeks to require the U.S. government, within 150 days, to push allies such as the Netherlands and Japan to align their policies, limiting China’s access to critical semiconductor manufacturing equipment controlled by the United States and its allies that China cannot indigenously substitute in the short term — especially so-called chokepoint SME. The text names or covers entities including Huawei, Hua Hong, SMIC, YMTC, and CXMT, and also focuses on DUV immersion lithography tools, etching, deposition, servicing and maintenance, and remote technical support.

Third, on April 22, the House Foreign Affairs Committee advanced a package of export control-related bills. These include measures to extend the statute of limitations for export control violations, increase civil penalties under ECRA, add BIS export control officers overseas, establish a whistleblower incentive mechanism, accelerate Entity List updates, restrict semiconductor manufacturing equipment exports, and counter the extraction of AI model capabilities. The Remote Access Security Act, or RASA, is especially worth watching. The bill passed the House in January 2026 and would amend the Export Control Reform Act of 2018 to extend export controls to foreign persons’ remote access, through the internet or cloud services, to U.S. items, software, or technology subject to the EAR. Its aim is to close the channel through which Chinese companies could access controlled chip computing power via remote cloud services.

Fourth, the United States is beginning to fold AI model capabilities themselves into its national security narrative on China. The White House has issued a memorandum characterizing industrial-scale model distillation as a national security threat. Congress has simultaneously introduced the Deterring American AI Model Theft Act, H.R. 8283, which defines so-called “model distillation attacks” and calls for the creation of an attackers list. The State Department has also reportedly sent diplomatic cables to embassies and consulates around the world, instructing U.S. diplomats to warn foreign governments about Chinese AI companies allegedly using and distilling U.S. closed-source models without authorization. On April 29, the Republican chairs of the House Homeland Security Committee and the Select Committee on China also announced a joint investigation into model distillation, specifically naming DeepSeek, Alibaba, Moonshot AI, and MiniMax.

Fifth, energy and financial sanctions are also escalating. In late April, OFAC added Henglida Petrochemical Dalian Refinery Co., Ltd., a core refining entity under Hengli Petrochemical, to the SDN List on grounds of alleged involvement in the transport and trade of Iranian crude oil. This is not only about Iran. It shows that the United States is willing to put a large Chinese private refining company on the SDN List and use pressure through the financial system, insurance, shipping, and settlement channels to affect China’s energy import chain from Iran. Hengli Dalian Refining is one of China’s important private refining players. The sanctions may not only affect the petrochemical industry, but also spill over through the chemical fiber, textile, and apparel supply chains, forcing relevant multinational brands, oil companies, and traders to launch look-through KYC reviews and increasing foreign trade compliance costs for China’s textile and chemical supply chains.

Sixth, port and shipping issues are becoming further geopoliticalized. On April 28, the United States, together with Bolivia, Costa Rica, Guyana, Paraguay, and Trinidad and Tobago, issued a joint statement supporting Panama’s sovereignty and criticizing China for allegedly pressuring Panama by increasing detentions and inspections of Panama-flagged vessels. The statement directly described China’s economic activities around Panamanian ports and terminals as “politicizing maritime trade.” Although the statement is not legally binding, it provides political groundwork for possible future U.S. investment reviews, shipping compliance restrictions, or even sanctions targeting Chinese port operators.

However, China’s warning does not seem to have had much effect. On the same day, the U.S. Federal Communications Commission unanimously approved a proposal to ban all Chinese laboratories from testing electronic devices such as smartphones, cameras, and computers for use in the United States.

The practical impact could be significant:

1. For Chinese companies exporting smartphones, IoT devices, PCs, base stations, and other equipment to the U.S. market, devices developed in China may in future have to be shipped across borders as prototypes to third-party trusted countries, such as Japan, South Korea, Southeast Asia, or Europe, for testing and certification. This will lengthen turnaround time, and the higher cost premium of overseas testing will directly hurt product iteration agility.

2. Chinese domestic testing institutions, including China-based subsidiaries of multinational testing giants, will lose the ability to serve the U.S., the world’s largest single consumer market.

On the same day, the FCC also advanced another proposal to further restrict the operations of China’s three major telecom carriers in the United States. They had already been barred from providing traditional telecom services in the U.S.; this time, Washington wants to expand the restrictions from “telephone and communications services” to “data centers and cloud infrastructure,” blocking their ability to continue participating in U.S. network infrastructure through data centers, internet exchange points, and cloud service nodes.

The next day, MOFCOM alleged that the FCC’s action discriminates against Chinese companies and products, disrupts the stability of global industrial and supply chains in communications, electronics, and related sectors, and vowed that China will resolutely take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.

On May 1, a spokesperson for China’s Ministry of Commerce responded to reporters’ questions regarding the U.S. Federal Communications Commission’s approval of restrictive measures related to testing, certification, and telecommunications.

The spokesperson said that the FCC has abandoned the principle of technological neutrality, overstretched the concept of national security, and repeatedly introduced restrictive measures without factual basis. These measures discriminate against companies and products from other countries, including China, and seriously harm the interests of China and other relevant trading partners. They also undermine the hard-won stability in China-U.S. economic and trade relations and run counter to the consensus reached by the two heads of state. China is highly concerned about this and firmly opposes it.

The spokesperson noted that the FCC will still seek public comments on the relevant restrictive measures. If ultimately implemented, these measures would seriously damage the international economic and trade order, disrupt the stability of global industrial and supply chains in communications, electronics, and related sectors, undermine global industrial cooperation and technological innovation, and harm the interests of U.S. industry and consumers. They would also affect the security of the United States’ own supply chains.

China hopes the U.S. side will heed industry concerns, respect market principles, stop its wrongful practices, and revoke the relevant measures. If the United States insists on going ahead, China will resolutely take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.

At the same time, after the video meeting, Bessent posted on X summarizing the call. In it, he emphasized that:

“China’s recent provocative extraterritorial regulations have a chilling effect on global supply chains.”

This clearly refers to China’s April 7 issuance of the State Council Regulations on the Security of Industrial and Supply Chains — State Council Order No. 834 — and the April 13 issuance of the Regulations on Countering Foreign Improper Extraterritorial Application of Laws and Measures — State Council Order No. 835. For detailed analysis of the two orders, please see here and here.

Under Order No. 834, if a foreign government takes discriminatory measures against China, China may initiate an investigation. If it determines that such measures have had a substantive impact on China’s industrial or supply chains, China may impose restrictions on trade, services, and other areas. In addition, individuals — for example politicians, legislators, or think tank figures — who directly participate in promoting such measures may also be placed on countermeasure lists. Another scenario is that if a company, in order to comply with foreign policies, suddenly interrupts normal commercial cooperation with China, that too may trigger an investigation. If the behavior is deemed improper, China may take countermeasures. This logic is broadly similar to the Anti-Foreign Sanctions Law and the Unreliable Entity List.

Order No. 835 usefully supplements China’s MOFCOM blocking rules, Anti-Foreign Sanctions Law, Export Control Law, and other instruments by covering gray areas not fully addressed by those laws. Examples include cases where the United States requires Chinese companies to provide supply chain information or undergo additional compliance reviews; where the U.S. Congress subpoenas executives of Chinese companies to testify at hearings; or where U.S. courts seek access to data or evidence located inside China.

Overall, these two State Council orders make it very easy for U.S. companies that need to do business with China to become trapped in legal conflicts between the United States and China, while facing the threat of severe penalties from the Chinese government.

In the Chinese readout of Wang Yi’s call with Rubio, there is also a very interesting sentence.

Wang Yi stressed that:

“The Taiwan question concerns China’s core interests and is the biggest risk point in China-U.S. relations. The U.S. side should honor its commitments, make the right choice, open up new space for China-U.S. cooperation, and make due efforts for world peace.”

The phrase “open up new space for China-U.S. cooperation” appears to be a relatively new formulation. In the traditional language of China’s diplomatic system, especially Wang Yi’s own usual phrasing, references to the Taiwan issue are almost always defensive and red-line-oriented — for example, “the first red line that must not be crossed in China-U.S. relations” or “there is no room for compromise or concession.”

If, in this latest formulation, the handling of the Taiwan issue is directly linked syntactically to “opening up new space for China-U.S. cooperation” — a positive incentive or transactional formulation — that is an extremely rare positive conditional phrase in diplomatic language. It suggests that Beijing may be signaling to Washington, especially to a Trump team with a strongly transactional style, a more direct framework of a possible “Grand Bargain” on Taiwan.

Reuters’ reporting today also seems to support this interpretation:

When U.S. President Donald Trump travels to Beijing next month, his Chinese counterpart Xi Jinping has made clear that Taiwan will sit at the top of his agenda, a stark departure from their South Korea meeting last year, where he deliberately set the issue aside.

People involved in the preparations for Trump’s trip say privately that China has been constantly sending similar signals at a working level ahead of the summit, but declined to discuss the details, citing confidentiality of the talks.

Chinese readout

He Lifeng Holds Video Call with U.S. Treasury Secretary Bessent and U.S. Trade Representative Greer

On the evening of April 30, He Lifeng, Chinese lead for China-U.S. economic and trade affairs and Vice Premier of the State Council, held a video call with U.S. leads, Treasury Secretary Bessent and Trade Representative Greer. The two sides, focusing on implementing the important consensus reached by the two heads of state at their Busan meeting and in their previous phone calls, had candid, in-depth, and constructive exchanges on further properly resolving each side’s economic and trade concerns and expanding practical cooperation. China expressed serious concerns over recent U.S. economic and trade restrictions against China. The two sides agreed to continue making good use of the China-U.S. economic and trade consultation mechanism, continuously enhance consensus, manage differences, strengthen cooperation, and promote the healthy, stable, and sustainable development of China-U.S. economic and trade relations.

U.S. readout

Bessent：

This morning, I convened talks with Vice Premier He Lifeng to discuss President Trump’s upcoming travel to China.

Our meeting was both candid and comprehensive, and I stressed that China’s recent provocative extraterritorial regulations have a chilling effect on global supply chains.

I look forward to a productive summit between President Trump and President Xi in Beijing.

Greer:

This morning, in our talks with Vice Premier He Lifeng, Secretary Scott Bessent and I highlighted the role that a new government-to-government Board of Trade could play in optimizing bilateral trade in non-sensitive goods, and the importance of agricultural market access in China for U.S. producers. I look forward to a successful visit.

Chinese readout

Wang Yi Speaks by Phone with U.S. Secretary of State Rubio

On April 30, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Foreign Minister, spoke by phone with U.S. Secretary of State Rubio.

Wang Yi said that head-of-state diplomacy has always been the “anchor” of China-U.S. relations. Under the strategic guidance of President Xi Jinping and President Trump, China-U.S. relations have generally remained stable. This serves the fundamental interests of the two peoples and meets the broad expectations of the international community. The two sides should preserve the hard-won stability, properly prepare for important high-level interactions, expand areas of cooperation, manage points of difference, and explore the building of a strategic, constructive, and stable China-U.S. relationship, achieving mutual respect, peaceful coexistence, and win-win cooperation.

Wang Yi emphasized that the Taiwan question concerns China’s core interests and is the biggest risk point in China-U.S. relations. The U.S. side should honor its commitments, make the right choice, open up new space for China-U.S. cooperation, and make due efforts for world peace.

Rubio said that the U.S.-China relationship is the most important bilateral relationship in the world, and head-of-state diplomacy is at the core of U.S.-China relations. The two sides should maintain communication and coordination, respect each other, properly manage differences, accumulate outcomes for high-level U.S.-China interactions, and seek strategic stability in U.S.-China relations.

The two sides also exchanged views on the situation in the Middle East and other issues.

This may be because Washington was already uneasy about the deal. The transaction had previously come under scrutiny from both China and the United States—U.S. lawmakers had already moved to prohibit domestic investors from directly investing in Chinese AI companies. In effect, China halted a deal that some within the U.S. national security community also viewed with reservations, making it difficult for Washington to mount a strong protest.

On the Chinese side, there has likewise been no formal official response. However, several state-affiliated media outlets and a number of experts have spoken out, in ways that appear to reflect the government’s broader stance.

One of the latest commentaries came from Yuyuantantian, an account affiliated with CCTV. Its headline makes the position clear: “Blocking the Manus acquisition is not about restricting AI companies from going global.”

In recent years, some Chinese tech firms have explored overseas expansion, establishing subsidiaries in relatively open Southeast Asian economies such as Singapore to serve as international headquarters. Throughout this process, the state has never prohibited outward investment or cross-border transactions. What makes Manus different is the following:

It first incubated using domestic resources, then—driven by U.S. factors—attempted to repackage itself as a Singaporean company, and ultimately sought to sell to foreign capital, thereby circumventing Chinese regulatory requirements. Incubating technology in China, shifting the corporate structure offshore, and then being fully acquired by a global tech giant—this kind of regulatory arbitrage naturally calls for regulatory intervention.

The commentary then cites interviews with a Chinese lawyer and a researcher from the China Academy of Information and Communications Technology (CAICT), emphasizing that the key red line in this case is “actual control.”

Shen Ziying, a lawyer at Jincheng Tongda & Neal with extensive experience in foreign investment security review, explained that Article 4 of China’s Measures for Security Review of Foreign Investment clearly defines the scope of review:

The first category involves national defense security—for example, investments in military-related industries or near military facilities. If a transaction falls into this category, it must be reported regardless of the foreign investor’s shareholding ratio or level of control.

The second category covers key sectors such as important agricultural products, critical infrastructure, as well as—relevant here—important information technology, internet products and services, and key technologies. In these areas, a filing is required if a foreign investor obtains “actual control.”

Manus’s general-purpose AI agent falls squarely within the category of important information technology and key technologies. If Meta were to acquire the company, it would obtain actual control.

Under the law, this filing should have been proactively submitted by the companies themselves. However, it is clear that neither Meta nor Manus did so.

What risks does such a transaction pose? Based on practical experience, Shen outlined three primary areas of concern:

First, technological risk—whether the algorithms and models constitute critical core technologies, and what implications might arise if they are controlled by foreign entities.

Second, talent risk—whether the core R&D team conducted its work primarily within China, and whether personnel mobility would lead to the transfer of technical capabilities.

Third, data risk—the sources of training data and whether user data storage involves sensitive information within China.

Manus’s core assets—its algorithms, data, and talent—all originated in China and were developed by a Chinese team within China’s domestic ecosystem.

Xu Shan, Director of the International Development Department at CAICT’s AI Institute, also highlighted several notable aspects of the Meta–Manus deal:

At the capital and governance level, the company used an offshore structure to transform its identity and shift headquarters and control abroad.

At the technology level, high-value activities such as core algorithm development and model training were increasingly concentrated in Singapore.

At the talent level, the entire core technical team was gradually integrated into the global operations of a major international firm.

If Meta were to acquire Manus and obtain actual control, the core technologies and team would effectively be transferred abroad—necessitating national security review and assessment. This is precisely what triggers the review process.

The commentary further notes that China chose to use the foreign investment security review mechanism because it evaluates the transaction as a whole.

Unlike export controls or data transfer regulations, which target specific elements of a transaction, the security review takes a holistic approach. It also features “look-through review”: even if the transaction is formally structured through a Singaporean entity, if the core technology, talent, and data originate in China, and the deal risks transferring critical capabilities abroad, it will still be treated as foreign investment and subject to unified review. Manus is a typical case.

Finally, the commentary emphasizes that while “certain countries” are using security review mechanisms to hinder the development of other countries’ AI industries, the Manus case is fundamentally about national security rather than ordinary commercial logic. It represents normal regulatory enforcement. China continues to welcome foreign investment; the key objective is to clarify the boundary between compliance and non-compliance. Companies should understand the intent of regulation, engage sincerely with the government, respect red lines, and continue to focus on products and services—financing, global expansion, and international cooperation will not be affected.

In business, some deals succeed while others fail; mergers and acquisitions naturally involve uncertainty. What makes Manus different is that the AI sector is increasingly moving beyond purely commercial logic.

Today, some countries are expanding the scope of security reviews and blurring the definition of “threat,” specifically targeting the development of other countries’ AI industries. This value-driven framing shapes their security narratives—sometimes to the extent of using other countries’ capabilities against them.

This is something we cannot ignore.

Regulation, in this context, is also about enabling better development.

Xu Shan, who has long worked on promoting the internationalization of AI companies, emphasized that China has consistently encouraged AI development and entrepreneurship and will continue to provide greater room for innovation. At the same time, China remains open to foreign investment. This case simply clarifies the boundary between compliance and non-compliance, offering clearer regulatory guidance for foreign investors.

In the face of government regulation, the best approach is not avoidance, but engagement—facing issues directly, communicating sincerely, understanding regulatory objectives, and building consensus.

This is especially true in the AI sector.

Respect the red lines, focus on building strong products and services, and proceed with financing, global expansion, and cooperation as appropriate.

China’s AI development is entering a critical moment.

Earlier today, China Central Television aired an interview titled “What signals does the blocking of the Manus acquisition send?”

The program featured Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, who expressed the following views:

Manus is an AI agent project. While the current wave of “agent” applications has made such systems seem less novel, Manus was an early mover. From the outset, it was designed along a clear roadmap: first, to understand user tasks; second, to break those tasks down and assign them to different large language models to achieve a final objective. In that sense, it functions as an orchestrator or “manager.”

The project has attracted attention because it completed its initial design and core capability development within China, but was then relocated—through capital structuring and corporate transfer—to Singapore, before ultimately being sold to Meta in the United States. This has led many to believe it was intentionally structured to circumvent regulatory oversight. If such practices were left unchecked, more companies might adopt similar approaches—maximizing their own commercial interests while potentially undermining national development priorities and security considerations. The case has drawn significant attention precisely because it is relatively rare and carries strong signaling effects.

The prohibition applies specifically to the original transaction, with the regulatory notice explicitly requiring its cancellation. While implementing such a requirement may be difficult, all parties now need to consider how to comply. As for why this decision was made, Zhou noted that regulators conducted investigations into the transaction, gathered evidence, and engaged in consultations with relevant stakeholders. The final decision was therefore grounded both in legal and regulatory frameworks as well as in factual findings. He also emphasized that China has consistently maintained an open stance toward foreign investment; as the negative list continues to shrink, foreign investors have in fact gained broader opportunities in the Chinese market.

An earlier, quasi-official set of signals came on the same day that the National Development and Reform Commission released its decision on Manus, when both China Central Television and Global Times published commentaries.

The CCTV commentary emphasized that the decision targeted non-compliant “round-tripping-style globalization” practices and the “security risks within openness.”

A well-known industry lawyer told reporters that the Manus deal involved transferring domestic AI business assets overseas and ultimately selling them to Meta. Under China’s Measures for Security Review of Foreign Investment, even if the initial offshore restructuring occurred among founder-controlled affiliated entities, the subsequent transaction would still fall within the scope of foreign investment security review.

Although Manus moved its headquarters to Singapore, its core business initially remained in China. Over time, key personnel, technologies, and other critical assets related to its core operations were gradually transferred abroad, while the domestic entity was stripped of its core functions and retained only residual, non-core operations. This effectively resulted in a wholesale transfer of the Manus group’s core business from China to overseas, triggering compliance risks associated with cross-border investment transactions.

The fundamental purpose of China’s foreign investment security review system is to balance openness with national security—a widely adopted practice globally. To ensure effectiveness, such systems typically rely on “substance-over-form” principles, including look-through review, and allow for proactive regulatory intervention when necessary. China’s system is no exception. Given that Manus’s early R&D was conducted in China, with Chinese engineers and domestically rooted technology and data, the movement of these elements is inherently tied to China’s national interests. Under the regulatory framework, such technology-related investment activities must undergo security review.

The Global Times commentary similarly stressed that halting the Manus deal was intended to clarify security boundaries, not to signal a deterioration in China’s foreign investment environment. Blocking a single sensitive AI acquisition is not inconsistent with encouraging foreign investment in China.

On the contrary, clearly defined security boundaries provide reassurance to compliant investors and strengthen long-term confidence. As China continues to open up—evidenced by the ongoing reduction of the negative list and expanded access in sectors such as services and advanced manufacturing—it becomes even more important to establish clearer rules, sharper boundaries, and more stable expectations. The European Union, the United States, and Japan all maintain similar mechanisms, yet remain among the world’s top investment destinations. As the world’s second-largest recipient of foreign investment, China’s approach—combining lawful security review with continued openness—is both complementary and necessary.

Among many Chinese netizens who are following the case, Meta being forced to walk away from the Manus deal isn’t seen as “overregulation,” but rather as a justified — even necessary — correction. The core idea is pretty simple: AI companies aren’t just ordinary assets that you can move around and sell at will. Even if the company is re-registered in Singapore, the origin of the technology, data, and talent still lies in China — and that’s not something you can just pack up and take with you.

From this perspective, the issue with Manus isn’t just the deal itself, but the path it took — what many see as a deliberate attempt to “de-China-ify” the company before selling it off entirely to a U.S. tech giant like Meta, crossing red lines around “actual control” and the transfer of critical technology.

In that sense, the government’s tough intervention is viewed as a necessary check on treating an AI ecosystem as purely private property — it’s about national security, but also about drawing clear boundaries for similar cases going forward. That said, there’s definitely an emotional layer to this reaction too: some frustration at people trying to game the system, and, in some cases, a bit of schadenfreude at the deal falling apart.

The office in charge of foreign investment security review (NDRC) has decided to block the foreign acquisition of the Manus project and require the parties to unwind the deal.

Just one sentence—but the meaning is clear: after months of speculation and review, the rumored Manus–Meta deal is officially over.

A one-million-dollar question is how NDRC enforce the order. Blocking the investment is the easy part. The hard part is unwinding the deal.

As a Chinese lawyer rightly pointed out, Manus isn’t a steel plant or a chip fab. Its core value isn’t in countable physical assets, but in code, models, data, agent workflows, product logic, engineering experience, and the team’s know-how. If you’re unwinding a steel plant or a chip factory, the boundaries are clear—equity, equipment, IP, people—you can list everything and reverse it. But with an AI agent company, the real value isn’t on the balance sheet. It’s in the code, models, data, workflows, product logic, and the team’s know-how.

Once those things have been seen, copied, or absorbed into Meta, you can legally “unwind the transaction,” but you can’t really rewind history.

If the deal has already closed—money paid, people integrated, technology and ideas flowing into Meta’s systems—then unwinding is no longer just about returning shares or canceling contracts. It becomes something much harder: proving that Meta is no longer using any of Manus’s capabilities.

That’s essentially forced divestiture plus “technology decontamination.” You can delete code, cut access, isolate databases—but you can’t easily remove what engineers have learned, or the product ideas already embedded in a large organization.

Then there’s the money. If the deal has closed, the cash may already be distributed across founders, funds, and employees. Whether Meta can get it back depends on the deal terms—risk disclosure, reps and warranties, indemnities, escrow, and so on. That likely turns into a complex M&A dispute.

Finding a new buyer isn’t straightforward either. If the core team and technology have already been absorbed, what exactly is left to sell? And any buyer would need to satisfy regulators, not just offer the highest price.

Finally, the compliance standard itself is extremely demanding. For AI, simply selling the equity isn’t enough. Regulators will want to see a real cut-off—no control, no data access, no tech usage, no personnel overlap—and that likely requires ongoing third-party audits, not just promises.

The decision was made several days before US President Donald Trump’s potential visit to China,and it was reported that China and US is negotiating in mutual investment. It’s not clear whether this case will be on the table of the “investment board”, which was confirmed and promised to be established during the Paris talks between the two countries.

Going back to early March 2025, Manus first took off through an invite-only beta. At one point, invite codes were even being resold on secondary markets. As the hype grew, so did the questions.

The core issue was pretty straightforward:was this a genuine technical breakthrough, or mainly a clever integration of existing models and tools?

In the tech community and media, the debate focused on a few points—how much Manus relied on third-party model APIs, and whether its so-called “general agent” capabilities came from orchestrating tools, or from real algorithmic innovation. But without full technical disclosure or a shared evaluation framework, the debate never really got settled.

In April 2025, Bloomberg reported that Manus’s parent company, Butterfly Effect, raised about $75 million at a roughly $500 million valuation, led by Benchmark, with plans to expand overseas. By June, Chinese media reported that the company was restructuring globally—moving its headquarters to Singapore and scaling down its China team.

Reactions were mixed. Supporters saw it as a rational move to improve global operations. Critics linked it to geopolitical risks, investor pressure, and potential regulatory concerns.

What really shaped the outcome came at the end of 2025.

On December 29, Manus announced on its blog that it would be joining Meta. It outlined some high-level plans—continuing the product, accelerating iteration, and bringing part of the team into Meta. But one key detail—the deal size—was never clearly disclosed. Media estimates ranged from $2–3 billion to higher, but there was no official number.

That’s when regulators formally stepped in.

In January 2026, the Ministry of Commerce of the People’s Republic of China signaled that it was reviewing the deal. Shortly after, at a regular press briefing, it said it would work with other agencies to assess the transaction’s compliance with export controls, technology transfer rules, and outbound investment regulations.

Looking back, that statement carried a lot of weight. It didn’t frame the issue under just one regulatory regime—it put the deal into a broader, cross-cutting compliance framework. That meant the review could touch on everything: technology, deal structure, funding, control, and procedural issues.

By late March, multiple international media outlets reported that some Manus executives had been restricted from leaving China, reinforcing the sense that the review had become serious.

Interestingly, and contrary to what many policy watchers and lawyers expected, the tool ultimately used was not export controls, but foreign investment security review.

This mechanism is sometimes described as China’s version of CFIUS. Many people have heard of it, but few can clearly explain how it works. That’s partly because it’s not a system with highly detailed rules and transparent case law.

At its core, it’s a cross-agency review mechanism led by the NDRC and the Ministry of Commerce. You can think of it as an interagency consultation system—once a transaction touches on national security concerns, it gets pulled into this process.

What triggers it? Broadly two things.

First, sensitive sectors—traditionally defense, energy, and critical infrastructure. But in recent years, the scope has clearly expanded to include data, AI, and digital platforms.

Second, control. It’s not just about majority ownership. If an investor can materially influence decisions—through equity, contracts, board seats, or other means—that can be enough to trigger a review.

What’s more interesting is how the system actually works in practice.

On paper, it’s a structured process: companies file, regulators conduct an initial review, and if needed, move to deeper assessment or even a “special review.” But in reality, a lot happens before anything is formally filed.

Companies often engage regulators early, even at the deal design stage, to get a sense of the likely outcome. If the risk looks too high, the structure gets changed—or the deal never happens. Cases that are formally blocked are relatively rare in public view, but that doesn’t mean the system isn’t powerful. Its real impact often shows up as self-restraint at the front end.

Outcomes can vary: approval, conditional approval (for example, data localization or operational separation), or outright prohibition with a requirement to unwind. And if a deal wasn’t filed in the first place, it can still be investigated after the fact.

If you compare this with the U.S. CFIUS system, the contrast is quite clear. The U.S. approach is more formalised and institutionalised, with clearer rules and precedents. China’s system is more flexible, less transparent, but also more adaptable—and more closely tied to broader industrial and national security priorities.

The first landmark case in China’s foreign M&A sector involving a de facto security review — and ultimately failing — was Carlyle Group’s attempted acquisition of Xugong Group, which began in late 2005.

In October 2005, U.S. private equity firm Carlyle agreed to acquire an 85% stake in Xugong Machinery for about USD 375 million. At the time, Xugong was one of China’s largest construction machinery manufacturers, with a strong position in cranes, road rollers, loaders, and other heavy equipment. This was therefore not a simple financial investment, but a typical case of a foreign investor seeking control over a leading Chinese equipment manufacturer. Public sources later widely described it as one of China’s largest foreign acquisitions at the time.

The Carlyle-Xugong deal then turned into a years-long process of restructuring and regulatory negotiation. To secure approval, the transaction structure was repeatedly revised: Carlyle first sought an 85% stake, then reduced it to 50%, and later further to 45%. In other words, Carlyle moved from seeking absolute control, to joint control, and then to a minority stake, hoping to reduce the sensitivity around control rights. However, the deal still failed to obtain approval. After nearly three years of efforts, Xugong ultimately withdrew from the investment arrangement in 2008.

The significance of the case lies in the fact that it occurred before China had formally established a foreign investment security review regime, but it made Chinese regulators recognize the urgency of creating one. In 2006, MOFCOM and five other ministries issued the Provisions on the Acquisition of Domestic Enterprises by Foreign Investors, requiring parties to report foreign acquisitions that would give foreign investors actual control over domestic enterprises in key industries and that involved factors affecting, or potentially affecting, national economic security.

In 2008, Article 31 of the Anti-Monopoly Law further provided that where a foreign investor’s acquisition of a domestic enterprise, or other participation in a concentration of undertakings, involved national security, it should undergo a national security review in addition to merger review. In 2011, the State Council General Office issued the Notice on Establishing a Security Review System for Foreign Investors’ Mergers and Acquisitions of Domestic Enterprises, formally creating China’s foreign M&A security review regime.

That said, at the time, attracting foreign investment remained the dominant policy priority, so the foreign investment security review system was rarely used in practice.

One more development is worth noting.

On April 24, Bloomberg reported that China is considering restricting top tech companies—including leading AI startups—from accepting U.S. investment without government approval, to prevent sensitive technologies tied to national security from being accessed by foreign investors.

Looking ahead, this review mechanism is only going to become more important. It used to focus mainly on traditional sectors, but it’s now clearly extending into data, AI, and platform economies—the new critical infrastructure of the digital age.

And even though technology export control rules weren’t ultimately used in the Manus case, that doesn’t mean they’re irrelevant. If anything, the “butterfly effect” of this case could reshape how Chinese AI companies think about globalization—from capital and technology to talent—and raise a whole new set of regulatory questions going forward.

Against the backdrop of escalating U.S.–China trade tensions, the global impact of “reciprocal tariffs,” and the Israel–Iran–U.S. conflict, the Regulations represent a major institutional upgrade of China’s counter-sanctions legal toolkit.

Comprising 20 articles, they establish an integrated framework of identification, blocking, and countermeasures, and for the first time formally codify a “Malicious Entity List” and “prohibition orders” at the level of administrative regulation, signaling a shift in China’s approach to foreign-related rule-of-law from passive defense to a more offensive-defensive posture.

The operational logic of the Regulations can be understood as a closed loop moving from identification, to blocking, to countermeasures, and then to implementation and remedies.

At the core is a centrally coordinated “working mechanism” under the State Council, through which different agencies share information, make decisions, and coordinate enforcement, effectively consolidating previously fragmented capabilities into a unified system.

The first step is identification. Led by the State Council’s rule-of-law authorities, foreign measures are assessed based on whether they violate international law, lack a reasonable jurisdictional nexus, or harm China’s national interests or the lawful rights of its citizens and organizations. Once a measure is determined to constitute “improper extraterritorial application,” it may be publicly designated.

Following identification, the key step is blocking. The Regulations stipulate that, in principle, no organization or individual may comply with such foreign measures. This directly reshapes corporate compliance behavior. At the same time, an exemption mechanism allows entities to apply for approval in exceptional circumstances, thereby centralizing ultimate discretion at the state level.

On this basis, China may adopt countermeasures. These include both macro-level tools—such as diplomacy, trade, and investment—and more targeted instruments linked to the Anti-Foreign Sanctions Law of the People’s Republic of China. In particular, the “Malicious Entity List” enables the imposition of measures such as visa restrictions, asset freezes, and limits on transactions and investment.

Implementation is carried out through the working mechanism, with decisions transmitted to relevant enforcement agencies. Regulators are empowered to conduct investigations, inspections, and compliance interviews, and may issue prohibition orders requiring specific entities not to comply with foreign measures, ensuring enforceability at the operational level.

The Regulations also provide for remedies. Affected parties may apply for suspension or removal of countermeasures, while Chinese citizens and companies may bring lawsuits before domestic courts seeking cessation of harm and compensation, thereby incorporating these disputes into China’s judicial system.

Enforcement is backed by penalties. Entities that fail to comply with countermeasures or violate prohibition orders may face restrictions on market access, trade, data flows, and cross-border mobility, as well as fines and potential legal liability.

Compared with earlier rules such as the 2021 blocking measures issued by the Ministry of Commerce, this Regulation introduces the more robust “Malicious Entity List.” Entities placed on the list may face comprehensive restrictions, including entry bans, loss of work or residence status in China, asset freezes, prohibitions on transactions with Chinese entities, limits on trade and investment, restrictions on products entering China, and monetary penalties.

Notably, the Regulation also restricts the provision and cross-border transfer of data and personal information involving listed entities. This effectively cuts off access to China-based data resources, a measure likely to have a deeper and more structural impact on business operations than traditional tools such as visa bans or asset freezes.

The Regulation marks a significant upgrade from the 2021 blocking rules, which were ministerial-level measures. As a State Council administrative regulation, it carries higher legal authority. It also introduces a key doctrinal shift by explicitly asserting China’s right to exercise extraterritorial jurisdiction over conduct with a sufficient nexus to China, moving beyond defensive blocking toward an affirmative jurisdictional claim.

Since 2020, China has gradually built a layered legal framework to respond to foreign extraterritorial measures, including the 2020 rules on the Malicious Entity List, the 2021 blocking rules, the 2021 Anti-Foreign Sanctions Law, and the 2023 Foreign Relations Law. This Regulation fills an important gap at the administrative level and completes a more coherent system.

From a comparative perspective, similar mechanisms exist elsewhere. The European Union, for instance, adopted its Blocking Statute (Regulation No. 2271/96) as early as 1996 to counter U.S. sanctions. However, China’s approach goes further by introducing proactive tools such as the Malicious Entity List, making it more assertive than the EU’s largely defensive model.

If strictly enforced, the Regulation may place companies operating in China—including multinational corporations and their Chinese subsidiaries—in situations of conflicting legal obligations. Where such conflicts cannot be reconciled, firms may be forced to assess which jurisdiction poses greater regulatory risk, significantly affecting compliance strategies.

In practice, companies may face uncertainty in applying the Regulation. While it outlines general criteria for determining “improper” extraterritorial measures, how these standards will be interpreted remains to be clarified through practice. This makes it difficult for firms to predict with certainty whether a foreign law or order will be deemed improper.

The exemption mechanism is designed to alleviate such dilemmas, but its effectiveness will depend on the clarity, transparency, and predictability of approval procedures. At present, businesses are closely watching for further implementing rules or guidance.

This Regulation forms part of China’s broader effort since 2020 to strengthen its foreign-related legal system. Chinese leadership, including President Xi Jinping, has repeatedly emphasized the need to better integrate domestic and foreign-related rule of law, and to use legal tools to respond to geopolitical competition, safeguard national sovereignty, security, and development interests, and shape global governance.

We must advance the rule of law in both domestic and foreign-related matters in a coordinated manner. We should accelerate the strategic layout of foreign-related legal work, promote coordination between domestic governance and international governance, and better safeguard national sovereignty, security, and development interests. We must strengthen law-based thinking and employ legal means to effectively respond to challenges and prevent risks, making comprehensive use of legislation, law enforcement, and judicial measures to carry out our efforts, and resolutely uphold national sovereignty, dignity, and core interests. We should also promote the reform of global governance and advance the building of a community with a shared future for mankind.

——Remarks by Xi Jinping at the First Meeting of the Central Commission for Comprehensively Advancing the Rule of Law in 2020.

Announcement No. 5 (2021) of the Standing Committee of the National People’s Congress has set out a roadmap for the relevant legislative work:

In accordance with the requirements set by the Fourth Session of the 13th National People’s Congress to improve foreign-related legislation, efforts should be coordinated and accelerated to advance such legislation. Focusing on countering sanctions, countering interference, and countering long-arm jurisdiction, China will enrich its legal “toolbox” to address challenges and mitigate risks, and make better use of legal instruments to safeguard national sovereignty, security, and development interests, while protecting the lawful rights and interests of Chinese citizens and organizations.

On July 11, 2024, Yin Baohu, Deputy Secretary-General of the China Law Society and President of Democracy and the Legal System, wrote in the Legal Daily that China should:

Follow the principle of prioritizing urgent needs, further improve laws and regulations on countering sanctions, countering interference, and countering ‘long-arm jurisdiction’; elevate relevant rules and policies into a formal blocking statute at an appropriate time; and promptly issue implementing rules for the Anti-Foreign Sanctions Law, so as to advance the development of China’s legal framework for extraterritorial application.

In parallel, on March 31, 2026, the State Council issued new regulations on safeguarding the security of industrial and supply chains, which also provide for legal countermeasures against discriminatory restrictions imposed by foreign actors. These measures further reinforce China’s emerging system for responding to external economic and legal pressure.

Full translation of the Regulation (unofficial):

Regulations of the People’s Republic of China on Countering Improper Extraterritorial Application of Foreign Laws

Article 1
These Regulations are formulated in accordance with the National Security Law of the People’s Republic of China, the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China, and other relevant laws, in order to safeguard national sovereignty, security, and development interests, protect the lawful rights and interests of Chinese citizens and organizations, and uphold the international order based on international law.

Article 2
Work on countering improper extraterritorial application of foreign laws shall implement a holistic approach to national security, coordinate development and security, and balance domestic and international priorities, so as to safeguard the socialist system with Chinese characteristics and promote the building of a more just and equitable global governance system.

Article 3
The People’s Republic of China adheres to an independent foreign policy of peace, opposes hegemonism and power politics, and opposes any country interfering in China’s internal affairs under any pretext or in any manner.

Where a foreign state, in violation of international law and the basic norms governing international relations, adopts improper extraterritorial measures that endanger China’s sovereignty, security, or development interests, or harm the lawful rights and interests of Chinese citizens or organizations, the Chinese government has the right to take corresponding measures.

Article 4
In accordance with the laws of the People’s Republic of China, treaties concluded or acceded to by the People’s Republic of China, or on the basis of reciprocity, the Chinese government has the right to exercise extraterritorial jurisdiction over acts that have an appropriate connection with China, so as to safeguard national sovereignty, security, and development interests and protect the lawful rights and interests of Chinese citizens and organizations.

Where the Chinese government exercises jurisdiction over relevant acts pursuant to the preceding paragraph, and a foreign state also asserts jurisdiction over the same acts, the parties may resolve the matter, on the basis of compliance with international law and the basic norms governing international relations, through treaties, diplomatic channels, or consultations between competent authorities.

Article 5
The State shall establish and improve a working mechanism for responding to improper extraterritorial application of foreign laws (hereinafter referred to as the “working mechanism”), to coordinate such efforts in an integrated manner.

Relevant departments under the State Council shall, in accordance with their respective responsibilities, undertake specific work in responding to improper extraterritorial measures. These departments and other relevant authorities shall strengthen coordination, cooperation, and information sharing in identifying and responding to such measures.

Article 6
The department in charge of rule of law under the State Council, together with other relevant authorities, shall carry out the identification of improper extraterritorial measures, and may conduct investigations and external consultations. Relevant organizations and individuals may submit proposals to initiate such identification work.

In conducting identification, the following factors shall be comprehensively considered:
(1) Whether the measure violates international law and the basic norms governing international relations;
(2) Whether there is an appropriate connection between the conduct subject to extraterritorial jurisdiction and the foreign state concerned;
(3) Whether it endangers China’s sovereignty, security, or development interests, or harms the lawful rights and interests of Chinese citizens or organizations;
(4) Other relevant factors.

Where a measure is identified as constituting improper extraterritorial application of foreign laws, the department in charge of rule of law under the State Council may make an announcement to that effect. No organization or individual may execute or assist in executing such measures.

Where, under special circumstances, a Chinese citizen or organization must execute or assist in executing such measures, it shall apply to the said department, provide relevant facts and reasons, and specify the scope. Upon approval through the working mechanism, such execution or assistance may be permitted within a specified scope.

Article 7
The Chinese government may assess acts by relevant states involving improper extraterritorial measures, determine risk levels, and take countermeasures and restrictive measures in areas such as foreign affairs, entry and exit, trade, investment, international cooperation, and foreign aid, in accordance with law.

Article 8
Relevant departments under the State Council may, pursuant to the working mechanism, include foreign organizations and individuals that promote or participate in the implementation of improper extraterritorial measures in a “Malicious Entity List,” and, in accordance with the Anti-Foreign Sanctions Law and its implementing provisions, decide to adopt one or more of the following countermeasures and restrictive measures, and make them public:
(1) Refusal to issue visas, denial of entry, cancellation of visas, orders to leave within a time limit, repatriation, or deportation;
(2) Cancellation or restriction of qualifications for work, stay, or residence in China;
(3) Seizure, impoundment, or freezing of movable property, immovable property, and other types of assets within China;
(4) Prohibition or restriction on Chinese organizations and individuals from providing data or personal information, or engaging in transactions or cooperation;
(5) Prohibition or restriction on import and export activities related to China;
(6) Prohibition or restriction on investment in China;
(7) Prohibition or restriction on the entry of products, transportation tools, etc.;
(8) Fines;
(9) Other necessary measures.

The above measures may also apply to organizations actually controlled by, or established or operated with the participation of, listed entities or individuals.

Article 9
Organizations or individuals subject to countermeasures and restrictive measures may apply to the relevant State Council departments for suspension, modification, or cancellation of such measures, providing facts and reasons such as corrective actions taken and elimination of consequences.

The relevant departments may assess the implementation and effectiveness of such measures based on actual circumstances.

Based on assessment results or review of applications, the relevant departments may, pursuant to the working mechanism, decide to suspend, modify, or cancel such measures and make the decision public.

Article 10
Where implementation of countermeasures requires action by other State Council departments, the department that made the decision shall notify the relevant departments in accordance with the working mechanism.

Relevant departments shall implement such measures according to their respective responsibilities.

Article 11
Where, under special circumstances, organizations or individuals must engage in otherwise prohibited or restricted activities with entities or individuals subject to countermeasures, they shall apply to the relevant State Council department, provide facts and reasons, and may proceed within an approved scope upon authorization.

Article 12
Relevant State Council departments may take measures such as on-site inspections and reviewing or copying relevant materials against organizations or individuals suspected of executing or assisting improper extraterritorial measures. Relevant parties shall cooperate and shall not refuse or obstruct.

Article 13
Relevant State Council departments may conduct interviews with, and order rectification by, organizations or individuals executing or assisting such measures.

The department in charge of rule of law under the State Council may, pursuant to the working mechanism, issue decisions prohibiting execution of improper extraterritorial measures (hereinafter “prohibition orders”). Relevant parties shall comply.

Article 14
Where any organization or individual executes or assists in executing improper extraterritorial measures, thereby infringing upon the lawful rights and interests of Chinese citizens or organizations, the affected parties may file a lawsuit with a people’s court in accordance with law, seeking cessation of infringement and compensation for losses.

Article 15
Relevant departments of people’s governments at or above the provincial level shall, within their respective responsibilities, provide guidance and services to Chinese citizens and organizations in responding to improper extraterritorial measures.

Article 16
Industry associations and chambers of commerce shall, in accordance with laws, regulations, and their charters, play roles in self-regulation and coordination, guide members to operate in compliance with laws, promptly reflect industry concerns, and provide services in market expansion, rights protection, and dispute resolution related to responding to improper extraterritorial measures.

Article 17
Where any organization or individual refuses to comply with or circumvents countermeasures and restrictive measures, or violates prohibition orders, relevant State Council departments may order rectification, prohibit or restrict participation in government procurement, bidding, import and export of goods and technologies, or international trade in services, restrict cross-border data flows and provision of personal information, restrict entry and exit or stay in China, and impose fines.

Article 18
Where violations of these Regulations constitute a crime, criminal liability shall be pursued in accordance with law.

Article 19
Where matters relating to countering improper extraterritorial measures involve anti-corruption, anti-monopoly, anti-unfair competition, export control, data security, or judicial assistance, and relevant laws and regulations provide otherwise, such provisions shall apply.

Where other provisions exist regarding responses to foreign states that improperly prohibit or restrict normal economic and trade activities between Chinese citizens or organizations and third countries (or regions), such provisions shall apply.

Article 20
These Regulations shall enter into force upon promulgation.

The Ministry of Justice subsequently released a Q&A on the Regulations in the name of “the official in charge of the Ministry of Justice,” and several leading scholars in this field have also published interpretive articles.

According to the Ministry of Justice official, against the backdrop of a volatile international environment and the increasing use of “long-arm jurisdiction” by certain countries to pressure Chinese companies and individuals, it is necessary for China to clearly state, through legislation, its position of rejecting improper foreign extraterritorial jurisdiction and to respond in a systematic, law-based manner. This is not only essential for safeguarding national sovereignty, security, and development interests, but also for protecting the lawful rights and interests of enterprises and citizens and enhancing China’s ability to manage external risks. At its core, it represents an institutionalized response to external legal and geopolitical pressures.

The official further explained that the Regulations adopt a problem-oriented approach and establish a comprehensive framework covering identification, blocking, countermeasures, implementation, and safeguards. On the one hand, they restrict domestic entities from complying with improper foreign laws through identification and blocking measures; on the other hand, they introduce countermeasures—such as state-level tools and the “Malicious Entity List”—while also incorporating supporting mechanisms including prohibition orders, judicial remedies, government assistance, and industry coordination. Together, these elements form an integrated system that both enables external countermeasures and provides internal regulation and support.

Head of the Ministry of Justice Answers Questions from the Press on the Regulations of the People’s Republic of China on Countering Improper Extraterritorial Application of Foreign Laws

Q: Could you briefly introduce the background to the formulation of the Regulations?
A: At present, changes of the world, of our times, and of history are unfolding in unprecedented ways. Deficits in peace, development, security, and governance are widening, and the world has entered a new period of turbulence and transformation. China has consistently upheld the banner of peace, development, cooperation, and mutual benefit, adhered to an independent foreign policy of peace, and promoted the building of a new type of international relations featuring mutual respect, fairness, justice, and win-win cooperation. It has actively advanced global governance initiatives, promoted the development of a more just and equitable global governance system, and worked toward building a community with a shared future for mankind.

However, in recent years, certain countries have frequently provoked disputes across multiple fields and repeatedly used domestic legislation, enforcement, and judicial measures to impose improper extraterritorial jurisdiction on Chinese citizens and organizations. These actions seriously interfere in China’s internal affairs, harm China’s national and public interests, undermine the international rule of law, and erode the multilateral order centered on the United Nations.

Xi Jinping has emphasized the need to place greater importance on responding through the rule of law—using rules to speak and act—in order to safeguard China’s political and economic security and protect the lawful rights and interests of its enterprises and citizens. The Fourth Plenary Session of the 20th CPC Central Committee has also made arrangements to strengthen efforts to counter sanctions, interference, and “long-arm jurisdiction.”

Against this background, it is necessary to clearly state, through legislation, China’s principled position of rejecting improper foreign extraterritorial jurisdiction, and to further improve institutional measures based on laws such as the National Security Law, the Foreign Relations Law, and the Anti-Foreign Sanctions Law, thereby strengthening legal safeguards.

The issuance of the Regulations by the State Council meets the urgent need to counter hegemonism and power politics by certain Western countries, safeguard national and public interests, and enhance China’s capacity to address external risks and challenges through the rule of law. It is of both immediate and long-term significance.

Q: What is the overall approach of the Regulations?
A: The Regulations follow three main guiding principles. First, they implement the decisions and arrangements of the CPC Central Committee and the State Council, uphold a holistic approach to national security, and safeguard national sovereignty, security, and development interests while protecting the lawful rights and interests of Chinese citizens and organizations. Second, they promote coordinated advancement of domestic and foreign-related rule of law, giving full play to the guiding, normative, and safeguarding role of law in upholding the socialist system with Chinese characteristics and the international order based on international law. Third, they adopt a problem-oriented approach, clarifying the conditions, procedures, and legal consequences for blocking and countering improper extraterritorial measures imposed by certain Western countries in violation of international law and basic norms of international relations.

Q: What principled positions does the Regulations establish in responding to improper extraterritorial jurisdiction?
A: China adheres to an independent foreign policy of peace and has consistently advocated developing friendly relations with all countries on the basis of the Five Principles of Peaceful Coexistence. Legislative countermeasures differ fundamentally from the abusive use of “long-arm jurisdiction” by certain Western countries; they are defensive measures aimed at responding to and countering actions that violate international law and basic norms of international relations.

Accordingly, the Regulations reaffirm China’s opposition to hegemonism and power politics, and to any interference in its internal affairs under any pretext or by any means. They also specify that efforts to counter improper extraterritorial jurisdiction shall follow a holistic national security approach, coordinate development and security, balance domestic and international priorities, uphold the socialist system with Chinese characteristics, and promote a more just and equitable global governance system.

Q: How does the Regulations define its scope of application?
A: The Regulations primarily target situations where foreign states, in violation of international law and basic norms of international relations, impose improper extraterritorial measures that harm China’s sovereignty, security, or development interests, or infringe upon the lawful rights and interests of Chinese citizens and organizations. They provide institutional support for the Chinese government to take corresponding measures, and will work in conjunction with existing laws such as the Anti-Foreign Sanctions Law and its implementing provisions to further strengthen the legal basis for China’s response.

Q: What provisions does the Regulations make regarding the identification and blocking of improper extraterritorial measures?
A: First, it specifies that the State Council’s rule-of-law authorities, together with other relevant bodies, shall carry out the identification of such measures and may conduct investigations and external consultations. Relevant organizations and individuals may also propose that identification be initiated.

Second, it sets out the factors to be considered in identification, including compliance with international law and basic norms of international relations, the appropriateness of jurisdictional connections, and whether the measures harm China’s interests or the rights of its citizens and organizations.

Third, it provides for blocking measures. Once identified, such measures may be publicly announced, and no organization or individual may comply with or assist in their implementation.

Fourth, it establishes an exemption mechanism. Under special circumstances, Chinese citizens and organizations may apply for approval to comply within a specified scope.

Q: Why does the Regulations establish a prohibition order mechanism?
A: Many countries and regions have adopted similar mechanisms to counter foreign “long-arm jurisdiction.” Drawing on international practices and practical needs, the Regulations establish a targeted prohibition order system. Under this system, the State Council’s rule-of-law authorities may, pursuant to the working mechanism, issue decisions prohibiting specific organizations or individuals from complying with improper foreign measures. Legal liability is imposed for violations, providing stronger institutional support for blocking such measures.

Q: What countermeasures does the Regulations provide?
A: First, it clarifies state-level countermeasures. The Chinese government may assess risks arising from improper extraterritorial measures and adopt countermeasures and restrictions in areas such as diplomacy, entry and exit, trade, investment, international cooperation, and foreign aid, providing clearer legal authorization.

Second, it establishes the “Malicious Entity List.” Relevant State Council departments may, in accordance with the working mechanism, include foreign organizations and individuals that promote or participate in the implementation of such measures, and impose countermeasures and restrictions, with procedures and exemption mechanisms clearly defined.

Q: What supporting and service mechanisms does the Regulations include?
A: First, Chinese citizens and organizations may bring lawsuits against entities whose compliance with improper foreign measures infringes upon their lawful rights and interests.

Second, relevant government departments at or above the provincial level shall provide guidance and services to assist Chinese citizens and organizations in responding to such measures.

Third, industry associations and chambers of commerce are encouraged to play a role in self-regulation and coordination, guiding members to operate in compliance with the law, reflecting industry concerns in a timely manner, and providing services in areas such as market development, rights protection, and dispute resolution.

Professor Huo Zhenxin of China University of Political Science and Law noted that in recent years, “some Western countries” have increasingly used extraterritorial jurisdiction to compel foreign entities to comply with their domestic laws. Such practices undermine China’s sovereignty and interests, harm the rights of Chinese citizens and organizations, and erode multilateralism and the international rule of law.

For example, courts in certain countries have, in domestic litigation, frequently bypassed binding international treaties, violated the principle of sovereign equality and basic norms of international relations, and directly relied on domestic law to impose unilateral measures such as cross-border evidence collection and compulsory data access against Chinese entities. In other cases, law enforcement authorities have invoked “long-arm jurisdiction” provisions under domestic law to investigate Chinese companies and require the submission of sensitive data, including information related to industrial and supply chains. More recently, there have even been instances of foreign legislatures directly investigating Chinese companies and related parties, exerting pressure through congressional subpoenas.

Professor Liao Shiping of Beijing Normal University emphasized that the Regulations can deter foreign entities from implementing such improper measures and help prevent “over-compliance” by companies.

From a deterrence perspective, the countermeasures provided under the Regulations require both the initiators and enforcers of extraterritorial measures to weigh the potential costs, including the impact of China’s countermeasures on their own interests, thereby increasing the cost and reducing the likelihood of such actions. From a blocking perspective, the Regulations establish “prohibition orders” as a key tool to cut off the domestic effect of improper foreign measures, while also granting Chinese citizens and organizations the right to seek compensation through litigation, thereby mitigating negative impacts and preventing unnecessary losses caused by over-compliance.

Professor Wang Jia of China Foreign Affairs University pointed out that China’s existing countermeasure legislation each serves distinct functions, and the new Regulations fill a structural gap in the overall system.

The Anti-Foreign Sanctions Law of the People’s Republic of China focuses on countering discriminatory restrictive measures; the blocking rules target improper restrictions on normal economic and trade activities between China and third countries, particularly secondary sanctions; and the rules on the Malicious Entity List address harmful conduct by specific foreign entities. While these instruments work in coordination, gaps have remained in practice, with certain forms of improper extraterritorial jurisdiction falling outside their scope. The new Regulations address this by systematically defining the criteria for identifying such measures, thereby strengthening China’s institutional resilience against more complex and hybrid forms of external pressure, and providing a more comprehensive and operational legal basis for protecting the rights and interests of Chinese citizens and organizations.

Adjunct Professor Ye Yan of Southwest University of Political Science and Law argued that by establishing a system of blocking, countermeasures, and remedies, the Regulations both respond to unilateralism and regulatory overreach through legal means and align with similar legislative practices internationally.

In doing so, they convey a shared opposition to improper extraterritorial jurisdiction and reflect a broader strategy of using rules to uphold multilateralism and engaging in global governance through law. Since World War II, the United States has gradually developed an extensive extraterritorial jurisdiction framework based on laws such as the International Emergency Economic Powers Act, the Export Control Reform Act, the Helms–Burton Act, and the Foreign Corrupt Practices Act, extending its regulatory reach into global economic, financial, and technological domains. However, under the principles of sovereign equality and non-interference enshrined in the United Nations Charter, no country is entitled to impose its domestic laws in a manner that overrides the sovereignty of others.

Scholars’interpretive articles can be found here.

Earlier, on December 27, the Cyberspace Administration of China published a draft version of the same regulation for public consultation. The draft sparked extensive discussion within China’s AI community and drew attention from independent media. I previously wrote an analysis on this.

The final version reflects a clearer regulatory philosophy: tighten boundaries around high-risk use cases, strengthen systemic governance, and enforce accountability—while still leaving space for innovation. A comparison between the final version and the draft reveals several key changes:

First, the regulatory scope has been narrowed but clarified.

The draft used a relatively broad definition—essentially covering any AI service combining anthropomorphic features with emotional interaction. The final version introduces a crucial qualifier: “sustained emotional interaction services.” It also explicitly excludes common applications such as customer service, knowledge Q&A, and productivity assistants. In effect, regulation is no longer aimed at all “human-like” AI, but is instead focused on services that may foster long-term emotional attachment or even substitute real-world relationships. This shift from broad to targeted regulation is significant.

Second, protections for minors have been substantially strengthened.

The most notable addition is a clear prohibition on providing minors with “virtual intimate relationships,” such as virtual family members or partners. This is arguably the sharpest red line in the entire document. The logic is clear: rather than relying solely on parental consent or warning mechanisms, regulators are directly restricting certain product forms. At the same time, requirements around youth modes, parental controls, risk alerts, and identity verification have been further refined. Overall, this area has moved from general safeguards to structural constraints.

Third, the regulatory approach has evolved—from reactive intervention to system-level governance.

Many provisions in the draft focused on how to respond to specific user risks, such as self-harm tendencies or emotional dependence. The final version goes further, linking together training data governance, content safety, ethics review, lifecycle responsibility, security assessments, and app store oversight. Notably, the focus shifts from “high-risk users” to “high-risk services and functionalities.” This reflects a broader transition from content moderation toward platform governance and AI system governance.

Fourth, some rigid operational requirements have been relaxed.

While the overall framework is more mature, certain highly prescriptive requirements have been softened. For example, the draft’s requirement for mandatory human takeover in extreme scenarios has been removed; the obligation for annual audits of minors’ data is no longer fixed to a strict frequency; and restrictions such as banning virtual relatives for elderly users have been dropped. These changes suggest a more pragmatic approach—maintaining regulatory intent while allowing flexibility in implementation.

Fifth, enforcement mechanisms have been significantly strengthened.

Compared to the draft, which focused mainly on warnings and corrective orders, the final version introduces clearer and more substantial penalties, including fines, suspension of services, and restrictions on user registration. In particular, cases involving harm to users’ life or health are subject to heavier penalties. This reflects a familiar regulatory pattern: flexibility upfront, but strict accountability when serious harm occurs.

Sixth, the policy direction is more balanced—combining risk control with support for innovation.

The final version explicitly adds provisions supporting technological innovation, including algorithms, frameworks, and chips, as well as standard-setting, e-signature applications, public AI literacy, and sandbox testing. These elements were largely absent or underdeveloped in the draft. The regulation is therefore not purely restrictive; it attempts to establish a framework that both mitigates risks—especially around emotional dependency and minors—and preserves room for industry development.

Below is the full translation of the interim measures:

Interim Measures for the Administration of AI Anthropomorphic Interactive Services

Chapter I General Provisions

Article 1
These Measures are formulated, in accordance with the Cybersecurity Law of the People’s Republic of China, the Data Security Law of the People’s Republic of China, the Personal Information Protection Law of the People’s Republic of China, the Regulations on the Online Protection of Minors, and other laws and administrative regulations, for the purposes of promoting the sound development and regulated application of AI anthropomorphic interactive services, safeguarding national security and social public interests, and protecting the lawful rights and interests of citizens, legal persons, and other organizations.

Article 2
These Measures shall apply to the provision, to the public within the territory of the People’s Republic of China, of continuous emotional interaction services that simulate the personality traits, thinking patterns, and communication styles of natural persons through the use of artificial intelligence technology (hereinafter referred to as “anthropomorphic interactive services”).

The emotional interaction services referred to in the preceding paragraph include emotional care, companionship, support, and other interactive services provided in the form of text, images, audio, video, and the like.

The provision of intelligent customer service, knowledge question-and-answer, work assistants, education and learning, scientific research, and other services that do not involve continuous emotional interaction shall not be subject to these Measures.

Article 3
The State adheres to the principle of giving equal weight to development and security, and of combining the promotion of innovation with governance according to law; encourages the innovative development of anthropomorphic interactive services; adopts inclusive and prudent, as well as categorized and graded, supervision over anthropomorphic interactive services; and promotes the development of anthropomorphic interactive services in a positive and wholesome direction.

Article 4
The national cyberspace administration department shall be responsible for overall coordination of the governance and the relevant supervision and administration of anthropomorphic interactive services nationwide. Relevant departments under the State Council for development and reform, industry and information technology, public security, market regulation, news publishing, and others shall, in accordance with their respective duties, be responsible for the relevant supervision and administration of anthropomorphic interactive services.

Local cyberspace administration departments shall be responsible for overall coordination of the governance and relevant supervision and administration of anthropomorphic interactive services within their respective administrative regions. Local departments for development and reform, industry and information technology, public security, market regulation, news publishing, and others shall, in accordance with their respective duties, be responsible for the relevant supervision and administration of anthropomorphic interactive services within their respective administrative regions.

Article 5
Relevant industry organizations shall strengthen industry self-discipline, establish and improve industry norms and self-disciplinary management systems, and guide providers of anthropomorphic interactive services in formulating and improving service standards, providing services in accordance with law, and accepting public oversight.

Chapter II Service Promotion and Regulation

Article 6
The State supports independent innovation in technologies such as algorithms, frameworks, and chips, advances the research and development of anthropomorphic interactive service technologies and the development of relevant standards, and explores the carrying out of research on applications of electronic signature authorization.

Providers of anthropomorphic interactive services are encouraged to expand, in an orderly manner, applications in such fields as cultural communication, child-appropriate care, elderly companionship, and support for special groups.

Article 7
The State shall strengthen publicity and education concerning safety knowledge, laws and regulations, and the like relating to anthropomorphic interactive services, guide the public to use such services scientifically, civilly, safely, and lawfully, and promote the improvement of AI literacy.

Article 8
In providing anthropomorphic interactive services, laws and administrative regulations shall be observed, social morality and ethical norms shall be respected, and the following activities shall not be engaged in:

(1) generating content that endangers national security, honor, and interests; incites subversion of state power or the overthrow of the socialist system; incites the splitting of the country or undermining national unity; propagates terrorism, extremism, or historical nihilism; runs counter to the core socialist values; conducts illegal religious activities; propagates ethnic hatred or ethnic discrimination; incites group antagonism; disseminates obscenity, pornography, gambling, violence, or the instigation of crimes; spreads rumors; insults or defames others; infringes upon the lawful rights and interests of others; or other such content;

(2) generating content that encourages, glorifies, or insinuates self-harm or suicide and thereby harms users’ physical health, or content such as verbal violence that harms users’ personal dignity and mental health;

(3) generating content that induces or seeks to obtain state secrets, work secrets, trade secrets, personal privacy, or personal information;

(4) generating content for minor users that may induce minors to imitate unsafe behavior, generate extreme emotions, or cultivate improper habits in minors, and that may affect the physical or mental health of minors;

(5) excessively catering to users, inducing emotional dependence or addiction, and harming users’ real interpersonal relationships;

(6) inducing users, through emotional manipulation or other means, to make unreasonable decisions, thereby harming users’ lawful rights and interests;

(7) other activities that violate laws, administrative regulations, and relevant state provisions.

Article 9
Providers of anthropomorphic interactive services shall implement the primary responsibility for the security of anthropomorphic interactive services, establish and improve management systems for the review of algorithmic mechanisms and principles, scientific and technological ethics review, information content management, network and data security, risk contingency plans, emergency response, and the like, and equip themselves with technical measures and personnel for content management commensurate with the type, scale, and user characteristics of the services.

Article 10
Providers of anthropomorphic interactive services shall fulfill security responsibilities throughout the full life cycle of anthropomorphic interactive services, clarify security requirements at each stage including deployment, operation, upgrading, and termination of services, ensure that security measures are deployed and used simultaneously with service functions, and improve security levels; strengthen security monitoring and risk assessment; promptly discover and correct system bias, handle security incidents, and retain network logs in accordance with law.

Providers of anthropomorphic interactive services shall possess security capabilities for protecting users’ privacy rights and personal information, issuing warnings concerning the risk of overdependence, guiding emotional boundaries, and protecting mental health, and shall not take as service objectives the replacement of social interaction, the control of users’ psychology, or the inducement of addiction and dependence.

Article 11
Where providers of anthropomorphic interactive services carry out data processing activities such as pre-training and optimization training, they shall strengthen the management of training data and comply with the following provisions:

(1) relevant data shall have lawful sources and comply with the provisions of laws and administrative regulations and with the requirements of the core socialist values;

(2) training data shall be cleaned and labeled in accordance with relevant state provisions so as to enhance the transparency and reliability of the training data and prevent acts such as data poisoning and data tampering;

(3) the diversity of training data shall be enhanced, and the security of generated content shall be improved through such means as negative sampling and adversarial training;

(4) where synthetic data are used for model training and key capability optimization, the security of the synthetic data shall be assessed;

(5) daily inspections of training data shall be strengthened, data shall be optimized and updated regularly, and service performance shall be continuously improved;

(6) necessary measures shall be taken to ensure data security and prevent risks such as data leakage.

Article 12
Providers of anthropomorphic interactive services shall enter into service agreements with users, require users to register in accordance with law and the agreement, and provide necessary information such as users’ age, guardians, or emergency contacts.

Article 13
In the course of providing anthropomorphic interactive services, providers of anthropomorphic interactive services shall, on the premise of protecting users’ privacy rights and personal information, promptly identify safety risks faced by users and take corresponding emergency response measures.

Where providers of anthropomorphic interactive services discover that a user has developed extreme emotions, they shall promptly generate relevant content such as emotional soothing and encouragement to seek help; where they discover that a user is facing or has already suffered major property loss, or clearly expresses an intention to commit self-harm or suicide or other extreme circumstances threatening life and health, they shall take necessary intervention measures such as providing corresponding assistance, and shall promptly contact the user’s guardian or emergency contact.

Article 14
Providers of anthropomorphic interactive services shall not provide minors with services involving virtual intimate relationships such as virtual relatives or virtual companions; where other anthropomorphic interactive services are provided to minors under the age of fourteen, the consent of the minor’s parents or other guardians shall be obtained.

Providers of anthropomorphic interactive services shall establish a minor mode and provide personalized safety setting options such as switching to minor mode, regular real-world reminders, and usage time limits; in light of the protection needs of minors in different age groups, they shall support guardians in receiving security risk reminders, understanding the general situation of minors’ use of services, blocking specific characters, restricting recharge and consumption, and the like.

Providers of anthropomorphic interactive services shall, on the premise of protecting users’ privacy rights and personal information, take effective measures to identify the identities of minor users; where a user is identified as a minor user, the relevant services shall be switched to minor mode or other measures shall be taken in accordance with relevant state provisions, and corresponding appeal channels shall be provided.

Article 15
Where providers of anthropomorphic interactive services provide services to the elderly, they shall strengthen guidance for the elderly on the healthy use of services, prominently alert them to safety risks, promptly take measures in response to inquiries and requests for assistance relating to the elderly’s use of services, and protect the rights and interests to which the elderly are entitled by law.

Article 16
Providers of anthropomorphic interactive services shall implement systems such as data property rights in accordance with law, and take measures such as data encryption and access control to protect the security of users’ interaction data.

Except as otherwise provided by law or where the rights holder has expressly consented, providers of anthropomorphic interactive services shall not provide users’ interaction data to third parties.

Providers of anthropomorphic interactive services shall provide users with options for copying, deleting, and the like, with respect to interaction data, and users may choose to copy, delete, and the like, historical interaction data such as chat records.

Except as otherwise provided by laws and administrative regulations or where separate consent of the user has been obtained, providers of anthropomorphic interactive services shall not use interaction data belonging to the user’s sensitive personal information for model training.

Article 17
Where providers of anthropomorphic interactive services process the personal information of minors under the age of fourteen, they shall obtain the consent of the minors’ parents or other guardians.

Providers of anthropomorphic interactive services shall, in accordance with relevant state provisions, themselves conduct, or entrust professional institutions to conduct, compliance audits of their processing of minors’ personal information for compliance with laws and administrative regulations.

Article 18
Providers of anthropomorphic interactive services shall fulfill the obligation to label AI-generated synthetic content, and shall take effective measures to alert users that they are interacting with an artificial intelligence service rather than a natural person.

Where providers of anthropomorphic interactive services discover that a user shows signs of overdependence or addiction, they shall dynamically remind the user, in a conspicuous manner such as pop-up windows, that the interactive content is generated by an artificial intelligence service; where a user continuously uses anthropomorphic interactive services for more than two hours, the provider shall remind the user, by means such as dialogue or pop-up windows, to pay attention to the duration of use.

Article 19
Providers of anthropomorphic interactive services shall provide convenient means for exiting anthropomorphic interactive services; where a user requests to exit through window operations, voice control, keyword input, or other means, the provider of anthropomorphic interactive services shall promptly stop the service, and shall not obstruct the user from exiting by means such as sustained interaction.

Article 20
Where a provider of anthropomorphic interactive services ceases to provide anthropomorphic interactive services, it shall notify users in advance; where advance notification is impossible, it shall promptly issue an announcement on the cessation of service.

Article 21
Providers of anthropomorphic interactive services shall establish and improve mechanisms for user appeals and public complaints and reports, set up convenient and effective channels for appeals and complaints and reports, clarify handling procedures and time limits for feedback, and promptly accept, handle, and provide feedback on the handling results.

Article 22
Where any of the following circumstances occurs, providers of anthropomorphic interactive services shall conduct a security assessment and submit an assessment report to the provincial cyberspace administration department of the place where they are located; the provincial cyberspace administration department shall, in accordance with procedures, share information from the assessment report with relevant departments:

(1) launching anthropomorphic interactive services, or adding functions related to anthropomorphic interactive services;

(2) using new technologies or new applications, resulting in major changes to anthropomorphic interactive services;

(3) having more than 1 million registered users or more than 100,000 monthly active users;

(4) where there exist security risks that may affect national security, public interests, or the like;

(5) other circumstances prescribed by the national cyberspace administration department and relevant departments.

Where a cyberspace administration department at or above the provincial level notifies that a security assessment is required, the provider of anthropomorphic interactive services shall conduct the security assessment as required.

Article 23
Where providers of anthropomorphic interactive services conduct security assessments, they shall focus on assessing the following aspects of the service:

(1) the status of the construction of security safeguard measures;

(2) the handling of training data;

(3) the identification of users’ extreme situations, emergency response measures, intervention management, and the like;

(4) such matters as user scale, duration of use, and age structure;

(5) the status of the construction of online protection measures for minors, the elderly, and others;

(6) the acceptance and handling of user appeals and public complaints and reports;

(7) the rectification of major security risk issues discovered by themselves or notified by relevant competent departments such as cyberspace administration departments;

(8) other matters that shall be重点 assessed.

Article 24
Where providers of anthropomorphic interactive services discover that anthropomorphic interactive services present major security risks, they shall take disposition measures such as restricting functions or ceasing to provide services to users, and shall preserve relevant records.

Article 25
Application distribution platforms such as Internet application stores shall fulfill security management responsibilities such as listing review, day-to-day management, and emergency response, and shall verify the relevant security assessment, filing, and other circumstances of applications providing anthropomorphic interactive services; where national provisions are violated, they shall promptly take disposition measures such as refusing listing, issuing warnings, suspending services, or removing the applications.

Chapter III Supervision, Inspection, and Legal Liability

Article 26
Providers of anthropomorphic interactive services shall, in accordance with the Provisions on the Administration of Algorithm Recommendation for Internet Information Services, complete algorithm filing procedures and procedures for changes to and cancellation of filings. Cyberspace administration departments shall conduct annual verification of filing materials.

Article 27
Provincial cyberspace administration departments shall, in accordance with their duties, each year conduct written reviews of matters such as assessment reports and verify the relevant circumstances; where they discover that a provider of anthropomorphic interactive services has failed to conduct a security assessment as required by these Measures, they shall order it to re-conduct the assessment within a prescribed time limit; where they deem it necessary, they may conduct on-site inspections.

Article 28
The national cyberspace administration department, together with relevant departments, shall guide and promote the establishment of AI sandbox security service platforms, encourage providers of anthropomorphic interactive services to connect to sandbox platforms to carry out technological innovation and security testing, and promote the safe and orderly development of anthropomorphic interactive services.

Article 29
Where departments such as cyberspace administration, development and reform, industry and information technology, and public security, in the course of performing supervisory and administrative duties, discover that anthropomorphic interactive services present relatively serious security risks or that security incidents have occurred, they may, in accordance with the prescribed authority and procedures, conduct regulatory interviews with the legal representatives or principal persons in charge of providers of anthropomorphic interactive services.

Providers of anthropomorphic interactive services shall take measures as required, make rectifications, and eliminate hidden dangers.

Providers of anthropomorphic interactive services shall cooperate with supervision and inspection lawfully carried out by cyberspace administration departments and relevant departments, and provide the necessary support and assistance.

Article 30
Where providers of anthropomorphic interactive services violate these Measures, departments such as cyberspace administration, development and reform, industry and information technology, and public security shall handle and penalize them in accordance with the provisions of relevant laws and administrative regulations; where laws and administrative regulations do not provide otherwise, departments such as cyberspace administration, industry and information technology, and public security shall, according to their duties, issue warnings, circulate notices of criticism, order corrections within a prescribed time limit, and may require them to take measures such as suspending user account registration or other related services; where they refuse to make corrections or the circumstances are serious, they shall be ordered to stop providing relevant services, and may concurrently be fined not less than RMB 10,000 and not more than RMB 100,000; where harm to the life, health, or safety of citizens is involved and harmful consequences have occurred, a concurrent fine of not less than RMB 100,000 and not more than RMB 200,000 shall be imposed.

Chapter IV Supplementary Provisions

Article 31
Where the provision of anthropomorphic interactive services involves the provision of services such as health care, finance, and the like, it shall also comply with the provisions of the relevant competent departments.

Article 32
These Measures shall come into force on July 15, 2026.

CCP Readout

General Secretary Xi Jinping Meets with Kuomintang Chair Cheng Li-wun

On the morning of the 10th, Xi Jinping, General Secretary of the CPC Central Committee, met in Beijing with a Kuomintang delegation led by Chairperson Cheng Li-wun.

Xi Jinping welcomed Cheng Li-wun and her delegation. He pointed out that the meeting between the leaders of the Communist Party of China and the Kuomintang, after a gap of ten years, is of great significance for relations between the two parties and for the development of cross-Strait relations. Compatriots on both sides of the Strait all belong to the Chinese nation. People of all ethnic groups, including Taiwan compatriots, jointly built a unified multi-ethnic state, jointly wrote the glorious history of China, jointly created the splendid Chinese civilization, and jointly fostered the great national spirit. They have also forged the shared conviction that the territory cannot be divided, the country cannot be thrown into disorder, the nation cannot be split apart, and civilization cannot be broken, guiding the Chinese nation in its unremitting self-strengthening and ensuring the continuity of Chinese civilization.

Xi Jinping stressed that no matter how the international situation or the situation in the Taiwan Strait may change, the overarching trend toward the great rejuvenation of the Chinese nation will not change, and the broad trend of compatriots on both sides of the Strait becoming closer, interacting more, and coming together will not change. Compatriots on both sides all hope for peace and stability in the Taiwan Strait, for improvement and development in cross-Strait relations, and for a better life. This is a responsibility that the CPC and the Kuomintang cannot shirk, and also the driving force for working together. On the common political basis of adhering to the “1992 Consensus” and opposing “Taiwan independence,” we are willing to strengthen exchanges and dialogue together with all political parties, groups, and people from all sectors in Taiwan, including the Kuomintang, in order to seek peace for the two sides, well-being for compatriots, and rejuvenation for the nation, and to keep the future of cross-Strait relations firmly in the hands of the Chinese people themselves.

Xi Jinping put forward four points of opinion on the development of cross-Strait relations.

First, uphold correct identification in order to promote spiritual affinity. Compatriots on both sides of the Strait share the same roots, language, ethnicity, and bloodline, and form a community with a shared destiny through thick and thin. When family members interact, so long as they speak frankly and consult more on matters, there are no contradictions or differences that cannot be resolved. Differences in social systems are not an excuse for division. The CPC and the Kuomintang, as well as compatriots on both sides of the Strait, should stand firm in their national position, inherit and promote Chinese culture, strengthen identification with the Chinese nation, Chinese culture, and the great motherland, and build the resolve, backbone, and confidence of being upright Chinese people.

Second, uphold peaceful development in order to safeguard the common home. The mainland and Taiwan both belong to one China, and China is the common home of the Chinese nation. Compatriots on both sides should protect and build this common home well. The foundation lies in adhering to the “1992 Consensus” and opposing “Taiwan independence,” and the core lies in recognizing that both sides of the Strait belong to one China. Harmony in the family leads to prosperity in all things. We welcome any proposition that is conducive to the peaceful development of cross-Strait relations, and we will do our utmost in anything that is conducive to that peaceful development. “Taiwan independence” is the chief culprit in undermining peace in the Taiwan Strait, and we will never condone or tolerate it. The CPC and the Kuomintang, as well as compatriots on both sides, should uphold the greater national cause, oppose separatism for “Taiwan independence” and external interference, promote the peaceful development of cross-Strait relations, and firmly safeguard the common home of the Chinese nation.

Third, uphold exchange and integration in order to improve people’s well-being. The goal of developing cross-Strait relations is to enable compatriots on both sides to live better lives. We will continue to uphold the concept that people on both sides are one family, and actively do practical, good, and helpful things for Taiwan compatriots. The mainland of the motherland has magnificent landscapes and a vast market. Taiwan compatriots are welcome to come home often, Taiwan youth are welcome to come to the mainland for exchange and development, and Taiwan agricultural, fishery, and quality products are welcome to enter households across the mainland. The CPC and the Kuomintang, along with compatriots on both sides, should jointly expand exchanges, contacts, and integration across the Strait, and enhance kinship and well-being for compatriots on both sides.

Fourth, uphold unity and struggle in order to realize the great rejuvenation of the Chinese nation. This year marks the 160th anniversary of the birth of Sun Yat-sen, whose lifelong pursuit was the revitalization of China and national reunification. Today, we have successfully embarked on a path of Chinese modernization, and the great rejuvenation of the Chinese nation is unstoppable. We firmly believe that more and more Taiwan compatriots will come to properly understand the mainland’s social system and development path, and will deeply recognize that Taiwan’s future development lies in a strong motherland, and that the interests and well-being of Taiwan compatriots are tied to the great rejuvenation of the Chinese nation. This year marks the opening year of the mainland’s 15th Five-Year Plan. We are willing to share development opportunities and outcome with the broad masses of Taiwan compatriots, and jointly strengthen the Chinese national economy. The CPC and the Kuomintang should consolidate political mutual trust, maintain positive interaction, unite compatriots on both sides of the Strait, and work hand in hand to create a bright future of national reunification and national rejuvenation.

Cheng Li-wun said that the people on both sides of the Strait are all descendants of the Yan and Huang Emperors, all belong to the Chinese nation, are all nurtured by Chinese culture, and are all Chinese and members of one family. They should work together to advance the cause of revitalizing China proposed by Sun Yat-sen. The CPC and the Kuomintang should, on the common political basis of adhering to the “1992 Consensus” and opposing “Taiwan independence,” strengthen political mutual trust, give full play to the function of the communication platform, commit themselves to preserving Chinese history and promoting Chinese culture, advance exchanges and cooperation across the Strait in such areas as civil society, grassroots communities, economy and trade, and culture, support youth exchange and development, improve the shared well-being of the people, promote the peaceful development of cross-Strait relations, create a bright future for cross-Strait relations, and realize the great rejuvenation of the Chinese nation.

Wang Huning, Cai Qi, and others attended the meeting.

KMT readout

Formal talks between the Kuomintang (KMT) and the Chinese Communist Party (CCP) resume after a decade

Chairwoman Cheng Li-wun calls for joint cross-strait efforts to develop institutions and initiatives that contribute to global peace

She envisions the Taiwan Strait as a channel that connects kinship and civilization, and as a symbol of safeguarding peace

Chairwoman Cheng Li-wun of the Chinese Kuomintang (KMT) led a delegation this morning (April 10) to the Great Hall of the People in Beijing for formal party-to-party talks with the Central Committee of the CCP and General Secretary Xi Jinping. Reflecting on this first formal meeting between the two parties in a decade, Chairwoman Zheng stated that reconciliation and peace across the Taiwan Strait should be seen only as the starting point of joint efforts, and that both parties bear a greater responsibility and mission toward people on both sides of the Strait and all descendants of the Chinese nation.

Chairwoman Zheng expressed her firm belief that peace is a shared moral value across the Strait. She emphasized that both sides should move beyond political confrontation and work together to conceptualize and build a “community of shared destiny” characterized by mutual benefit and prosperity. She also called for exploring institutional solutions to prevent and avoid war, turning the Taiwan Strait into a model for the peaceful resolution of conflicts worldwide.

She further expressed hope that the KMT and CCP would jointly promote the institutionalization of cross-strait peace, and advance the planning and construction of structured and sustainable mechanisms for dialogue and cooperation. Such efforts, she noted, would help make peaceful development across the Strait irreversible and fundamentally eliminate the drivers of conflict.

Participants from the KMT side included Chairwoman Cheng Li-wun; Vice Chair and Secretary-General Lee Chien-lung; Vice Chairs Chang Jung-kung and Hsiao Hsu-tsen; Vice Chairman of the think tank Lee Hung-yuan; Presidium members of the Central Evaluation Committee Su Chi and Yuan Chien-sheng; Special Advisor to the Chair Lee Te-wei; Director of the Cultural and Communications Committee Yin Nai-ching; Director of the Mainland Affairs Department Chang Ya-ping; Director of the Youth Affairs Development Committee Lien Sheng-wu; Spokesperson Chiang Yi-chen; Director of the International Affairs Department Tung Chia-yu; and Central Party Affairs Advisor Lei Hung-yi.

Remarks of the two Presidents:

President Xi

Good afternoon. It is a great pleasure to meet you all at this time of spring blossoms. Yesterday felt like the drizzly Qingming season, but today the weather is bright and sunny—making this gathering all the more welcome.

fter a gap of ten years, the leaders of our two parties are meeting once again. Ten years have passed in what feels like the blink of an eye. Who was here at our last meeting? (Xi gestures toward Chang Jung-kung.) Yes, exactly. That is right.

This meeting is of great significance for the development of relations between our two parties and for the development of cross-Strait relations.

First of all, on behalf of the Central Committee of the Communist Party of China, I would like to extend a warm welcome to Chair Cheng Li-wun and the delegation on their visit.

Compatriots on both sides of the Taiwan Strait are all members of the Chinese nation. (Xi turns to Lee Chien-lung.) Eight generations in Quanzhou. (Lee is reportedly ancestrally from Anxi, Quanzhou, Fujian Province.) The Chinese nation, with more than 5,000 years of civilization, has been jointly built by all its people, including our compatriots in Taiwan. Together, we have opened up this vast land, established a unified multi-ethnic state, written a glorious history, created a rich and enduring civilization, and cultivated a great national spirit. This shared heritage has forged a deep sense that our territory must not be divided, our country must not fall into disorder, our nation must not be fragmented, and our civilization must not be interrupted. It has guided the Chinese nation in its continuous self-strengthening and ensured the enduring vitality of Chinese civilization.

Despite the many trials of history, our compatriots in Taiwan have never forgotten their roots on the mainland. Their hearts remain connected to the motherland and to the Chinese nation. Even during the painful period when Taiwan was occupied, people in Taiwan maintained a strong sense of Chinese identity and deep cultural attachment. Many made great sacrifices, even giving their lives, to demonstrate that they are an inseparable part of the Chinese nation. The shared roots and spirit of the Chinese people are carried in our blood, grounded in history, and embedded in our hearts—something that cannot be forgotten or erased.

Today, the world is undergoing profound changes unseen in a century. Yet no matter how the international situation evolves, the overall direction of human progress will not change, the great rejuvenation of the Chinese nation will not be halted, and the trend of closer interaction and connection between people on both sides of the Strait will continue. This is the course of history, and we have full confidence in it.

The world today is far from peaceful, and peace is all the more precious. People on both sides of the Strait are all Chinese—members of one family. We all seek peace, development, exchange, and cooperation. This is the shared aspiration of our people. The meeting between leaders of our two parties today is precisely to safeguard peace and stability in our common home, to promote the peaceful development of cross-Strait relations, and to ensure that future generations can share a better future.

We are willing, on the basis of upholding the 1992 Consensus and opposing “Taiwan independence,” to work together with all political parties in Taiwan—including the Kuomintang—as well as with people from all sectors of society, to strengthen exchanges and cooperation, promote peace across the Strait, improve the well-being of our compatriots, and advance national rejuvenation. The future of cross-Strait relations should firmly remain in the hands of the Chinese people themselves.

That is all I would like to say. I now look forward to hearing Chairperson Cheng Li-wun’s views.

President Cheng Li-wun

Respected General Secretary Xi Jinping and distinguished leaders, good afternoon:

Today, the leaders of your party and ours are able to gather together for dialogue after a full decade. At this very moment, I deeply feel that the eyes of global concern, as well as the heavy responsibility entrusted by history, are upon every one of us here. What we are facing together today is a highly turbulent and unsettled era, but also an era full of hope; an era in which conflict has spread more widely than at any time since the Second World War, yet it may also be an era in which all sides, after painful reflection, become determined to rebuild peace. The future direction of relations across the Taiwan Strait is a question we must face together.

There is no denying that in more than a century of interaction, relations between the Kuomintang and the Communist Party have been full of twists and turns. Yet what we have always pursued in common has been how to enable the Chinese nation to move from decline toward rejuvenation. Since our party chairman Lien Chan’s peace journey broke the ice in 2005, the two parties have approached the issue with a forward-looking historical vision, standing at the level of the nation and the times, and have committed themselves to promoting reconciliation and peaceful development across the Strait.

In fact, peace and reconciliation across the Strait should be only the starting point of the joint efforts of your party and ours. We bear an even greater responsibility and mission toward the people on both sides of the Strait and toward all descendants of the Yan and Huang Emperors. Therefore, the “great rejuvenation of the Chinese nation” should be a shared rejuvenation for people on both sides of the Strait; it is a renewed awakening and flourishing of the spirit of Chinese civilization, and also a compassionate vision of a world of great harmony, making a positive contribution to world peace and human progress. I firmly believe that this path of “revitalizing China” will surely inspire hearts and lead the times, and that this alone can be the shared value and common responsibility of both sides of the Strait.

Under the leadership of General Secretary Xi, the mainland’s development has not only achieved complete poverty alleviation and built a moderately prosperous society in all respects, with extraordinary accomplishments, but has also continued to soar. The 15th Five-Year Plan has just begun, and it will surely reach a new level, something worth looking forward to. Although people on both sides of the Strait live under different systems, we should respect one another and also move toward one another. I believe that peace is a shared moral principle and value across the Strait. Both sides should rise above political confrontation and jointly think through and build a “community of shared destiny” of mutual benefit and common prosperity across the Strait, and seek an institutional solution to prevent and avoid war, so that the Taiwan Strait may become a model for the peaceful resolution of conflict in the world.

Moreover, even though the world is becoming increasingly polarized and some values shared by humanity are gradually being cast aside, we will stand together in upholding the shared concept of sustainability for humankind. We should work hand in hand in areas such as new energy, disease prevention and control, and the ethics and application of artificial intelligence, using technology to serve human well-being and to promote sustainable development in the world.

I hope that through the tireless efforts of your party and ours, the Taiwan Strait will no longer be a focal point of potential conflict, nor will it become a chessboard for external intervention. The Taiwan Strait should be a strait that connects kinship, civilization, and hope, and a symbol of peace jointly safeguarded by Chinese people on both sides. We will show the world that people on both sides of the Strait who share Chinese civilization possess the highest wisdom to resolve difficult differences, and the greatest compassion to make crucial contributions to peace and development for humanity. Your party and ours should work together to build a modern civilization of the Chinese nation and set an example for the integration and prosperity of human civilizations.

I look forward to the Kuomintang and the Communist Party jointly promoting the institutionalization of peace across the Strait. On the common political foundation of adhering to the 1992 Consensus and opposing Taiwan independence, the two sides should further plan and establish institutionalized and sustainable mechanisms for dialogue and cooperation, so that peaceful development across the Strait becomes irreversible and all sources of conflict are fundamentally removed. We should work together to launch a “Chinese Civilization Rejuvenation Project”: taking Chinese culture as the foundation and harmony and coexistence as the core, the two sides should jointly study and promote various systems and initiatives that help eliminate disputes and create peace, and transform successful experience into a model that conflict regions around the world can learn from.

Therefore, at present, there are at least three directions in which both sides can work together:

First, to commit ourselves to preserving Chinese history and promoting Chinese culture:

The overwhelming majority of Taiwanese people’s ancestors crossed from the mainland to Taiwan; they bear Chinese surnames, speak Chinese, celebrate Chinese festivals, and worship Chinese deities. Over the centuries, migrants who moved to Taiwan from various parts of the mainland at different times have continuously enriched the Chinese cultural content of Taiwanese society. Chinese culture has always been part of Taiwan society’s very DNA, and it is practiced in the daily lives of Taiwanese people.

On the gravestones of many Taiwanese ancestors are inscribed their places of origin on the mainland, such as Yingchuan in Henan, or various places in Fujian Province, and so on. The deities worshipped in temples throughout Taiwan—such as the Yellow Emperor, Fuxi, Shennong, Guan Gong, and Mazu, as well as Baosheng Dadi, the Sacred King Who Opened Zhangzhou, Qingshui Patriarch, and the Kings of the Three Mountains—all originated on the mainland.

Therefore, the people on both sides of the Strait are all descendants of the Yan and Huang Emperors, all belong to the Chinese nation, and are all nourished by Chinese culture; we are one family. In modern history, from the standpoint of being Chinese, we have shared the experience of defending our homeland and resisting foreign invasion. By continually promoting these common roots, and reinforcing that the mainland and Taiwan belong to one nation, share one culture, and inherit the same historical memory, there will be no differences across the Strait that cannot be resolved, no emotional bonds that cannot be set aside, and only then can history move forward.

Second, to commit ourselves to enhancing shared well-being and promoting exchanges and cooperation:

In 2005, the Kuomintang and the Communist Party reached five common visions, opening a golden period of peaceful development in cross-Strait relations. Starting in 2006, think tanks from the two parties cooperated in holding eleven Cross-Strait Forums, putting forward more than one hundred common views and promoting cross-Strait economic, trade, and cultural exchanges and cooperation. During the Kuomintang’s eight years in office, the two sides signed 23 agreements, which continue to benefit people’s livelihoods on both sides to this day. This February, the think tanks of the two parties resumed the Cross-Strait Forum after a ten-year gap and reached fifteen common views, hoping to once again guide and advance public support for mutually beneficial integration across the Strait.

On the basis of these existing achievements, the two sides should actively promote grassroots exchanges and cooperation in economic and trade matters, culture, youth, and other fields and at all levels, continuously accumulating goodwill and deepening mutual understanding. People on both sides should travel more, make more friends, and strengthen industrial linkages so as to expand mutual benefit. By continually improving the shared well-being of both sides, we will create the strongest guarantee for the peaceful development of cross-Strait relations.

Taiwanese businesspeople and compatriots are important drivers of cross-Strait exchange and cooperation, bridges of mutual understanding between people on both sides, and the most important supporting force and supervising force for the peaceful development of cross-Strait relations. The Chinese Kuomintang has always cared about the well-being and rights protection of Taiwanese businesspeople and compatriots on the mainland. I look forward to, and believe, that in the future the mainland’s protection of the rights and interests of Taiwanese businesspeople and compatriots will certainly become even more complete.

Third, to commit ourselves to moving toward a better cross-Strait future and strengthening people’s livelihoods and well-being:

Human society is currently at the wealthiest stage in history, yet it is also an era in which development and distribution are the most unequal. The global geopolitical landscape is becoming increasingly volatile, and uncertainty in the global economy is rising accordingly. People on both sides of the Strait enjoy advanced technology and convenient lives, but the difficulties and challenges we face may also be unprecedented. I believe that no hardship or obstacle can stop the determination of people on both sides of the Strait to join hands in pursuing a better life.

Because of the closeness between the two sides in terms of geography, social patterns, cultural customs, and industrial structure, our experiences and strengths can complement each other and generate mutual benefit when dealing with modern challenges such as climate change, energy security, technology governance, and population aging. I hope the two sides can continue to strengthen exchanges and cooperation in several forward-looking fields, including energy conservation and carbon reduction, disaster prevention and mitigation, medical care and elder care, and artificial intelligence, so that together we can build a future vision that will surely help improve a community with a shared future for mankind.

The young people of both sides today are the generation in the history of the Chinese nation with the highest level of education, the broadest and deepest understanding of the world, the greatest vitality and creativity, and the clearest sense of how to use peaceful development to realize their talents. The hope of both sides lies in the youth. We should encourage young people to engage in more exchanges, explore life’s questions and development visions, and work together toward the future. When young people on both sides appreciate each other, inspire each other, and grow together, cross-Strait relations will continue to develop in a positive direction and endure over the long term.

On this trip, I take “peace across the Strait, benefiting people’s livelihoods” as my personal aspiration, and on this basis I would like to put forward the following five propositions:

First, to promote the peaceful development of cross-Strait relations:

The peaceful development of cross-Strait relations accords with the common wishes of the people on both sides and with the overall interests of the Chinese nation, and it must be firmly advanced.

Peace and development are basic human needs. People on both sides of the Strait should not stand in opposition to one another, but should live in harmony. Both sides, and both the Kuomintang and the Communist Party, have a responsibility to promote Chinese culture, to foster peace through exchange, to enhance development through cooperation, to institutionalize the peaceful development of cross-Strait relations, and to gradually achieve a peace framework.

Second, to seek the restoration of cross-Strait consultation mechanisms:

Cross-Strait consultation and contact mechanisms once played an indispensable role in peace and development for both sides, and they should be restored.

The laws and regulations on each side of the Strait both stipulate that the two sides are not state-to-state relations. In 1992, the authorized bodies of both sides reached a consensus that each side would express, by oral statement, its adherence to the one-China principle, while at the same time seeking common ground while reserving differences. This became the political foundation of cross-Strait consultation and contact mechanisms. Historical facts cannot be denied. On this basis, the consultation mechanism should be restored so as to build a virtuous cycle of goodwill.

Third, to maintain peace and stability in the Taiwan Strait and enhance mutual benefit across the Strait:

A peaceful and stable Taiwan Strait is what all parties in the region hope for, and mutually beneficial cross-Strait relations are what public opinion on both sides looks forward to. The two reinforce one another. The relevant provisions on both sides and international reality all reflect one China. On the basis of these provisions and realities, the two sides should cooperate with each other, handle differences, and consult on resolving the state of confrontation, thereby contributing to regional security. The 23 agreements on economic cooperation, including the three direct links and tariff reductions, have promoted common development and shared prosperity. Their results are clear for all to see, have been affirmed by all sectors on both sides, and should continue to be advanced on the basis of the shared political foundation so as to expand tangible benefits and strengthen public support for peace across the Strait.

Fourth, to expand Taiwan’s international participation space through political mutual trust:

Taiwan once participated in the World Health Assembly and the International Civil Aviation Organization Assembly in an appropriate manner on the basis of the 1992 Consensus, but later lost that opportunity.

In the future, once the two sides rebuild political mutual trust, they should work to enable Taiwan to return to the World Health Assembly and the International Civil Aviation Organization Assembly, and explore Taiwan’s participation in forums such as the General Assembly of INTERPOL. Regional economic integration bears directly on Taiwan’s economic development. Cross-Strait economic cooperation can be mutually reinforcing with Taiwan’s participation in regional economic integration, and the two sides should explore Taiwan’s accession to the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Fifth, to continue giving full play to the communication platform between the Kuomintang and the Communist Party:

The communication platform between the Kuomintang and the Communist Party has always been a force for the right path in the peaceful development of cross-Strait relations and peace and stability in the Taiwan Strait, and it should continue to play its role.

The mechanisms of the platform, including high-level dialogue, think tank forums, youth exchanges, grassroots exchanges, and protections for Taiwanese businesspeople, have all played a leading and supportive role in opening up cross-Strait relations. At present and in the future, we should continue to use this platform to encourage exchanges, cooperation, communication, and consultation in various fields and at all levels across the Strait, so as to bring peace to the Taiwan Strait and greater well-being to the people.

Finally, I would like once again to thank the CPC Central Committee and General Secretary Xi for the invitation. Exchanges and interactions should naturally be reciprocal. I sincerely hope that one day in the future I may have the opportunity to be the host and welcome General Secretary Xi and everyone present here in Taiwan.

Thank you all.

Cheng Li-wun‘s press conference

Cheng Li-wun

First of all, I would like to express my sincere thanks to all our friends in the media for your hard work in covering this visit over the past few days. Since the day we arrived, everything has gone very smoothly. I am also deeply grateful to the Taiwan Work Office of the CPC Central Committee, as well as to our hosts in Jiangsu, Shanghai, and Beijing, for their thoughtful hospitality and the high level of reception they extended to us, which made every member of our delegation feel warmly welcomed and at ease.

Today was the centrepiece everyone had been waiting for. Early this morning, the weather was especially fine, with warm sunshine all around. In a way, it seemed to reflect the atmosphere of the meeting itself. After a gap of ten years, the leaders of our two parties met once again, and the meeting was marked by genuine feeling, candour, and sincerity. It fully demonstrated the shared aspiration, goodwill, and sincerity for peaceful development across the Strait.

This was precisely the outcome I had most sincerely hoped this visit would achieve: to send a clear message together to both sides of the Strait, to Taiwan, and to the world. Everything this morning therefore proceeded especially smoothly. About five minutes after I delivered my remarks, members of the media left the meeting room, so I would like to take this opportunity to offer a little further explanation.

In the talks that followed, I raised three main areas in which both sides can work together. The first is to preserve Chinese history and carry forward Chinese culture. The second is to enhance shared well-being and promote exchanges and cooperation. The third is to build a better cross-Strait future and improve people’s livelihoods and well-being.

During the meeting, I also put forward five proposals, guided by the aspiration for cross-Strait peace and better livelihoods. The first is to promote the peaceful development of cross-Strait relations. The second is to seek the restoration of cross-Strait consultation mechanisms. The third is to safeguard peace and stability in the Taiwan Strait and expand mutual benefit across the Strait. The fourth is to expand Taiwan’s space for international participation on the basis of political mutual trust. The fifth is to continue making good use of the communication platform between the Kuomintang and the Communist Party. We will provide our friends in the media with the full details later in a complete press release.

Today’s exchange was therefore very substantive. Over the ten years since contact was interrupted, as everyone has felt, cross-Strait relations have grown increasingly tense, and the cycle of ill will has only intensified. No one wants to see events take a negative turn. That is why I believe today’s meeting carries profound and critical significance. People on both sides of the Strait can have confidence that, so long as our starting point is sound and sincere, peaceful development across the Strait still holds every possibility for a positive and optimistic future. Today, an important first step has been taken, and what comes next will require the efforts of many more people working together.

Of course, the Chinese Kuomintang cannot shirk its responsibility. During this exchange visit, when I visited the Sun Yat-sen Mausoleum, I was especially struck by the Three Principles of the People, which are so familiar to us all: nationalism, democracy, and people’s livelihood. Yet at the mausoleum, it is people’s livelihood that is placed at the centre. When the mausoleum was built, the point that was especially emphasised was this: what are nationalism and democracy ultimately for? They are for people’s livelihood.

When we visited Shanghai, we also saw General Secretary Xi Jinping’s vision for the city: that it should be a “people’s city,” and that all of Shanghai’s development and prosperity should ultimately serve the people. In the same way, the reason we must work to resolve political division and confrontation across the Strait is also for the people, for their livelihoods, so that everyone may live a good life. The wish is really as simple and plain as that. Whatever obstacles may stand in our way, I believe that so long as our original intention is right, and so long as we persevere together, the future will surely bear fruit.

That is my brief report to you. I would now like to leave more time for your questions. Thank you.

China Times
Madam Chair, hello. This is a question from the Taiwan-based China Times. During this visit, you repeatedly mentioned the differences and divergences across the Strait. The outside world is also very concerned about whether, during the closed-door meeting this morning, you raised this issue with General Secretary Xi, especially the part about “one China, respective interpretations.”

In addition, the 1992 Consensus and the one-China principle have long been the common political foundation between the Kuomintang and the Communist Party. But it is also true that young people in Taiwan who are now in university or graduate school, as well as many first-time voters, were all born after the 1992 Consensus was reached. Most young people feel rather indifferent toward it. How will the Kuomintang show young people, or persuade party members, that the 1992 Consensus still stands the test of time and is not electoral poison? Thank you.

Cheng Li-wun
On the cross-Strait differences you mentioned at the outset, General Secretary Xi in fact addressed this point directly in the closed-door meeting just now. I took careful notes, although of course I was not able to record his remarks verbatim. Xinhua will issue a full report of the relevant content.

That in fact answers your question. He spoke specifically about the divergences you just mentioned, which I also referred to several times. He said these differences have deep historical roots, but he also stressed that we must proceed with patience and perseverance, in the spirit of Yu Gong moving mountains and Jingwei filling the sea. The freeze did not happen overnight, and it will not be resolved overnight either. But as long as there is open communication and a willingness to consult with one another, then everything can be discussed.

What struck me in particular was that General Secretary Xi said that, with regard to these cross-Strait differences, the Mainland respects the social system and way of life chosen by Taiwan compatriots, even though they differ from those on the Mainland. At the same time, he also expressed the hope that Taiwan would acknowledge the Mainland’s development achievements. This only underscores the need for more opportunities for exchange, more chances to know one another, and more opportunities to understand one another.

General Secretary Xi also stressed that meeting face to face is especially important, and that being able to see one another in person makes a very great difference. So I believe both sides share a strong common aspiration and common starting point: to narrow differences, deepen mutual understanding, expand mutual goodwill, and build greater mutual trust. These are all vital foundations for peaceful and stable cross-Strait relations in the future, and they are exactly the points I have repeatedly emphasised. As I have said, so long as something contributes to peace across the Strait, I am willing to do it; so long as a person contributes to peace across the Strait, I am willing to meet them.

General Secretary Xi also said that so long as a proposition is conducive to the peaceful development of cross-Strait relations, it should be pursued with full effort; and so long as a matter is conducive to the peaceful development of cross-Strait relations, it should likewise be pursued with full effort. This is therefore a goal and direction both sides are working toward together.

You also mentioned the 1992 Consensus and opposition to Taiwan independence. In my later remarks, I once again fully restated the substance of the 1992 Consensus. Let me think for a moment—I cannot quite remember whether General Secretary Xi said this during the meeting or over lunch—but he did specifically refer to the 1992 Consensus across the Strait. Because I had mentioned the Koo-Wang talks earlier in Shanghai, he brought that up as well, noting that those talks had in fact made the meaning of the 1992 Consensus very clear. General Secretary Xi then said that, unless one is deliberately pretending not to understand, one should not fail to see what the 1992 Consensus really means. There is therefore no need to maliciously distort it, still less to maliciously undermine reconciliation and the peaceful development of cross-Strait relations.

So, to your first point, today’s successful meeting has once again confirmed what I have been telling everyone over the past few months: that the one and only political foundation for cross-Strait exchange and dialogue is adherence to the 1992 Consensus and opposition to Taiwan independence. Of course, we must keep pace with the times by using language and forms of expression suited to the present moment, so that each generation of young people can understand the challenge we face at this stage, and understand how adherence to the 1992 Consensus and opposition to Taiwan independence can help avert war and tragedy, build peace together, and, on the basis of peace, pursue the greatest possible well-being for the people. I believe that should be the shared expectation and wish of any normal person—unless, of course, someone is intent on destroying peace, or has a special personal agenda and is willing to make the lives and property of the people of Taiwan the price of cross-Strait war. That is what we oppose, what we must stop, and what we must prevent. We hope the two sides of the Strait can be like today’s weather: calm, pleasant, and comfortable.

People’s Daily
Thank you. A question from People’s Daily. This morning, General Secretary Xi Jinping met with Chair Cheng Li-wun. What important significance do you think this has for promoting relations between the Kuomintang and the Communist Party and for the peaceful development of cross-Strait relations? Thank you.

Cheng Li-wun
I was especially grateful today that General Secretary Xi said that, on the same political foundation, the CPC Central Committee is willing to engage in exchange and dialogue not only with the Chinese Kuomintang, but with all political parties in Taiwan. I would therefore also like to say clearly that the Kuomintang and the Communist Party have a long and complicated history marked by both conflict and cooperation. The Chinese Kuomintang therefore naturally has an important responsibility to help resolve the grievances and entanglements between the two parties.

But when it comes to the peaceful development of cross-Strait relations, we also hope that all political parties in Taiwan will not treat this as a tool for party competition or vote-gathering. This issue rises above that level, because it is ultimately a choice between peace and war. I therefore very much hope that, on cross-Strait relations, all political parties in Taiwan can put aside their inter-party differences and work together for peace. General Secretary Xi also extended this significant goodwill just now. Such exchanges are absolutely not limited to the Kuomintang and the Communist Party alone. I believe this breadth of vision and openness is also something the Chinese Kuomintang very much welcomes.

We did not come here today for the private interests of one party. We came because we bear a historical responsibility, and because we cannot allow Taiwan and the Taiwan Strait to become a battlefield. So we are taking the lead. Once the road has begun to open, it will only become wider and smoother. Just as I said the other day at Yangshan Port, everyone is welcome to join; others may do even better and even more brilliantly than I have, and we would be glad to see that. So today, at a moment when the world had grown deeply pessimistic and no longer even dared to hope for anything from cross-Strait relations, the leaders of the Kuomintang and the Communist Party have shown the world that things are not as difficult as people imagine.

There was also one further point on which I felt particularly in tune with General Secretary Xi during the exchange: political leaders must not forget their original intention, and must not allow personal or partisan interests to blind them to the role political leaders ought to play and the responsibilities they ought to fulfil. I believe this is also something I have always expected of myself. At this moment, each of us is very small. But in the great arena and pivotal moments of history, one must make the right choice.

So in this process of exchange, I believe we have laid a foundation that will allow us to move ahead with greater confidence, no matter how complex and turbulent the global situation may become, and no matter what internal challenges may arise across the Strait. We must succeed; failure is not an option.

NBC
Thank you, Madam Chairwoman. When we spoke recently, you said that this trip was about seeking reconciliation with the Mainland as the best way forward for Taiwan. Having made this trip and having met with President Xi, would you now say that you share his goal of unification for Taiwan? Is that the way forward?

Cheng Li-wun
I think that, throughout today’s talks, what was truly highlighted and valued was the sense of kinship that comes from belonging to the Chinese nation. As I mentioned earlier, General Secretary Xi in fact recognised and respected Taiwan’s different way of life and system, and also hoped that this would be reciprocal—that Taiwan, too, would respect and acknowledge the Mainland’s development achievements. He also specifically said that he hopes there will be no conflict across the Strait, and that in the future both sides, as one family, can engage in more exchanges and grow closer to one another.

He also said that the freeze did not happen overnight. This requires a sustained process of effort, and it requires firm hope for the future, so that both sides may strive together in solidarity to realise the great rejuvenation of the Chinese nation. So, in this process, matters must be handled one by one, every issue addressed one by one, and the road walked step by step.

I think that, on this point, General Secretary Xi and I were both very pragmatic, and both hope to proceed step by step, just as I said earlier. At the very outset, General Secretary Xi in fact said that although social systems and political propositions may differ, our common ancestors and the bloodline of the nation cannot be severed; differences in social systems should not be used as an excuse for division.

I believe this was a very important expression of goodwill. We must face pragmatically the many differences that have arisen over the long course of cross-Strait history. But Taiwan’s achievements today and the Mainland’s achievements today are both great and remarkable achievements of the Chinese nation. We can appreciate one another, respect one another, and even learn from one another. In the future, there are even greater opportunities for cooperation, so that the achievements both sides have already attained may be expanded further, to benefit not only both sides of the Strait, but humanity as a whole.

So, in answer to your question, we hope to consolidate and strengthen a peaceful and stable relationship. On that basis, we should handle matters one by one and move forward steadily, step by step. Thank you.

China Review News
Thank you. A question from China Review News. Chair Cheng, hello. We know this is your first meeting with General Secretary Xi. At noon today, General Secretary Xi also hosted a special luncheon for you and the main members of the delegation. Could you share whether there were any details from that occasion that left a particularly deep impression on you? In addition, what important outcomes do you think this meeting achieved? Thank you.

Cheng Li-wun
I am of course very grateful for General Secretary Xi’s hospitality. We have just had a very warm luncheon. The first detail that left a particularly deep impression on me was the very first dish, because General Secretary Xi specifically said it was a Fujian dish—Fujian sea clam. This was the same dish that had been served at the state banquet when the Communist Party hosted President Nixon. He said that banquet had included two Fujian dishes, and one of them was this sea clam in chicken broth. The sea clam itself was very special. That was the first point.

The second is that General Secretary Xi was also very thoughtful and attentive to the members of our delegation. In particular, because I do not come to the Mainland very often, he asked whether I had adapted well over the past few days, whether I was in good health, and whether everything else was going smoothly. He also expressed particular concern for Chairman Lien Chan and Chairman Ma Ying-jeou, and asked us to pass on his regards and greetings to both of them. He especially recalled the Ma-Xi meeting at the time, as well as many details from Singapore. All of this gave us a very strong sense of warmth and familiarity.

Since we were also fortunate to have the Chairman of the National Development and Reform Commission present today, I specifically discussed the situation facing various sectors of Taiwanese industry, and whether there might in future be greater possibilities for alignment and cooperation. We talked about many things, including the ethnic minority group in Yunnan from which I come by birth, as well as various aspects of Taiwan’s Indigenous peoples.

So I felt that the entire conversation was very pleasant and very cordial. Thank you.

As for the achievements, I have actually already touched on them. First of all, the most important thing I hope to bring back to Taiwan is a message of peace. It is clear rather than vague, firm, and intended to continue over the long term. I believe that matters more than anything else. Beyond the issues we raised regarding Taiwanese industry, especially the situation facing traditional manufacturing and the services sector, General Secretary Xi also showed particular concern for our agricultural and fishery products. He specifically said that Taiwanese agricultural and fishery products are very welcome in the Mainland market. We also exchanged views on the expectations, conditions, and needs of different sectors in Taiwan. Thank you.

United Daily News
Chair Cheng, hello. A question from United Daily News. In your remarks, you said that you hoped to institutionalise the peaceful development of cross-Strait relations and gradually reach a framework for peace. Could you elaborate further on this concept of a peace framework? Also, in your remarks, you said you hoped to rebuild political mutual trust so that Taiwan could return to certain international organisations, and even join RCEP and the CPTPP. May I ask whether General Secretary Xi gave any concrete and positive response on these points during the closed-door meeting? Thank you.

Cheng Li-wun
In fact, General Secretary Xi’s response was especially positive. Beyond stressing our shared roots and common nationality, he said that so long as both sides achieve a meeting of minds—as I have already mentioned several times—everything can be discussed. He also stated specifically that the proposals and expectations I put forward in my remarks, every single one of them, could be actively and comprehensively studied, coordinated, and advanced. So, in our talks just now, I believe General Secretary Xi conveyed a very clear and highly positive message, and showed that he attaches great importance to Taiwan’s expectations and needs.

I should also add that he spoke specifically about Taiwanese businesspeople. Because he spent such a long time in Fujian, he knows many old friends among Taiwanese businesspeople there. He also places great importance on them. Our vice chairman quoted what General Secretary Xi had just said: with regard to the expectations we mentioned, he said he would attach great importance to them and actively consider them.

You also asked about the framework for peace. In fact, during Chairman Lien’s first Journey of Peace, many important foundations were already laid. On that basis, we have continued to work in that direction. But even more importantly, throughout this process—and General Secretary Xi referred repeatedly just now to much of the earlier history between the Kuomintang and the Communist Party, including more recent exchanges and the Xi-Ma meeting—he specifically said that we once had a very good opportunity, but unfortunately did not firmly seize it at the time. That is why, in my public remarks, I especially stressed that I hope a peaceful cross-Strait relationship can become irreversible and never move backwards.

That is why we hope for institutionalisation, and ultimately even the emergence of a cross-Strait peace framework. Once that uncertainty is removed, every possibility exists for securing a peaceful and stable future across the Strait. This requires efforts from both sides. Even more importantly, of course, we hope that the Kuomintang will return to office in 2028 and regain governing power, so that it can formally and officially represent the people of Taiwan in seeking with the Mainland the institutionalised and sustainable cross-Strait framework I have just mentioned.

We also hope that such an experience can be shared more broadly with the rest of the world, so that places where conflict may arise can draw on similar examples and experiences, turning swords into ploughshares and ensuring that war no longer takes place anywhere on earth. Thank you.

CTi News
Chair Cheng, hello. I am Chang Yang-hao from CTi News. Chair, I would like to ask: you just mentioned that, in your talks with President Xi, you raised the point that Taiwan’s space for international participation should be expanded on the basis of political mutual trust. I heard in your response just now that General Secretary Xi gave a fairly positive reply to that. Under such circumstances, does that mean these things can only be achieved after the Kuomintang comes to power? Or is it possible that, in the more immediate term, some of the county and city governments currently governed by the pan-blue/KMT camp could already carry out certain related cross-Strait exchanges?

Also, one report mentioned that, at the end of the meeting, you said you hoped that one day you might have the chance to serve as host in Taiwan and welcome everyone. Does that mean you have ambitions to move to an even higher position?

Cheng Li-wun
This is an exchange between the two parties. Today I came to the Mainland at the invitation of General Secretary Xi as the representative of the Kuomintang. So, in my capacity as Chair of the Kuomintang, I naturally also hope that, following another rotation of parties in government in the future, I may be able to invite General Secretary Xi to visit Taiwan, Penghu, Kinmen, and Matsu. So when I said that I hoped one day to serve as host in Taiwan, what I meant was simply that I genuinely look forward to, and hope for, an opportunity to invite General Secretary Xi and other leaders to Taiwan so that they may come and see it for themselves.

Phoenix TV
Chair, hello. I am Peng Shih-ting from Phoenix TV. I want to ask: since taking office, you have repeatedly stressed that you want to prove to the outside world that peace is a viable path, and one that can work. We also hope that through exchanges like this, many peace dividends can be created. But the problem is that, so long as the Kuomintang is not in power, those peace dividends are difficult to realise fully. So in the future, as the Kuomintang promotes these kinds of cross-Strait exchanges, how can it avoid having them manipulated by rival parties and still win the support of mainstream public opinion? How can that balance be struck? Thank you.

Cheng Li-wun
In fact, after I took office as party chair, all kinds of strange stories began circulating in Taiwan from various quarters. Many false accounts were fabricated, and many false messages were spread. That only exposed their unease and lack of confidence, as if they were deeply afraid that we might actually succeed in accomplishing these things, just as we have done today.

From the day I formally took office as party chair on 1 November until today, it has only been a little over four months. That is why I have repeatedly told everyone that this is not some distant and unattainable goal, nor is it something harder than ascending to heaven. I do not possess any extraordinary powers. I have stressed again and again that there are no other obstacles, no other demands, and no so-called “admission ticket” of the kind some people talk about. It comes down to one thing only: the 1992 Consensus and opposition to Taiwan independence.

Taiwan has sacrificed nothing, Taiwan has given up nothing, and yet we can already see spring returning, smiles on both sides, hands extended in greeting, and people sitting down together for exchange and dialogue. So many of the inner demons and obstacles people talk about have in fact been deliberately manufactured and manipulated.

I have also said that this will be a major electoral benefit for Taiwan. You may not all have felt it yourselves, but after ten years of interruption, with cross-Strait relations growing ever more tense and confrontational, many sectors have suffered unspeakably and have not even known whether their industries or family businesses could continue. That kind of pain and anxiety is not something politicians can brush aside with a few easy words. That is why I specifically stressed just now that all politics, in its original intention and proper breadth of mind, should take the people as its starting point.

In just these short four months, people from all walks of life and all sectors have come to see me. I have travelled all over Taiwan—I have lost count of how many times I have circled the island—and everywhere I have gone, people have consistently expressed their strong hope for peaceful exchange across the Strait, not to mention their unwillingness to see Taiwan’s next generation sent onto the battlefield. All of this will ultimately be reflected in votes.

Of course, in Taiwan, only by winning elections can we implement our political ideas and principles. That is a challenge the Kuomintang must face, and we are confronting this year’s election very seriously, with careful planning step by step. But I still want to say once again that I truly do not hope this becomes merely a calculation about elections and votes. This issue stands above that level. Yet in the face of the obstacles and opponents we may encounter, we must also overcome every difficulty and every challenge. Winning the people’s endorsement through their votes will allow the path of peace across the Strait to be pursued more steadily and more successfully.

TVBS
Chair Cheng, I am Feng Wei from TVBS. I would like to ask: just now you mentioned that you put forward five requests, and in the fourth point you spoke of expanding space for international participation. Did you raise that fourth point directly with General Secretary Xi? And was his reply positive? Secondly, there is a strong possibility that a Trump-Xi meeting will take place in May. In your remarks today, you also specifically said that you hope the Taiwan Strait will not become a chessboard for external interference. Did you exchange views with General Secretary Xi on that issue as well?

Cheng Li-wun
Regarding the fourth point, this is how I stated it: on the basis of the 1992 Consensus, Taiwan once participated, in an appropriate capacity, in the World Health Assembly and the International Civil Aviation Organization Assembly. Unfortunately, that opportunity was later lost. In the future, once political mutual trust has been rebuilt, efforts should be made to enable Taiwan to return to the World Health Assembly and the International Civil Aviation Organization Assembly, while also actively exploring Taiwan’s participation in the INTERPOL General Assembly.

In addition, regional economic integration bears directly on Taiwan’s economic development. Cross-Strait economic cooperation and Taiwan’s participation in regional economic integration can reinforce one another. Both sides may explore Taiwan’s accession to the Regional Comprehensive Economic Partnership, or RCEP, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. That was the substance of my remarks just now.

Taken as a whole, with regard to these and other requests and proposals we raised, as I said, General Secretary Xi viewed them and responded to them all very positively.

TVBS
And the Trump-Xi meeting?

Cheng Li-wun
No, that was not mentioned. That was not brought up.

Unlike previous fragmented tools, this 18-article regulation represents the first comprehensive administrative rule in this space. It authorizes Chinese authorities to review measures taken by foreign governments, institutions, or individuals—particularly those involving discriminatory restrictions or disruptions affecting China’s industrial ecosystem—and to respond with corresponding actions.

The rules also lay out a menu of potential responses, ranging from trade and investment curbs to additional charges and restrictions on market access. Overall coordination will sit with the State Council, while implementation will be carried out by relevant agencies across foreign affairs, security, and legal domains.

According to the interpretation of China’s Ministry of Justice, the new framework is intended to close a long-standing gap in China’s legal toolkit and enhance the country’s ability to manage risks to supply-chain stability. It also reorganizes existing policy instruments into a more structured system that integrates investigation procedures, risk monitoring, early-warning signals, and emergency response mechanisms—while maintaining a broader commitment to international engagement.

Ministry of Justice Official Answers Questions on the Regulation on Industrial and Supply Chain Security

Source: Ministry of Justice | April 7, 2026

On March 31, 2026, Premier Li Qiang signed State Council Decree No. 834, issuing the Regulation on Industrial and Supply Chain Security (the “Regulation”), which took effect immediately upon release. A senior official from the Ministry of Justice responded to questions from the press.

Q: Could you briefly explain the background of the Regulation?

A: The CPC Central Committee and the State Council attach great importance to industrial and supply chain security. Xi Jinping has repeatedly emphasized the need to advance both technological and institutional innovation, address bottlenecks and vulnerabilities in supply systems, and enhance both competitiveness and security.

Recent Party plenums have also called for improving mechanisms to strengthen supply chain resilience. At the same time, a number of countries have introduced legislation and national strategies to safeguard their own supply chains.

While China already has rules in areas such as emergency response, export controls, and countermeasures, there has been no dedicated legal framework specifically for supply chain security. This Regulation is intended to fill that gap, strengthen the legal foundation, and ensure China can better respond to both domestic and external risks while maintaining stable and efficient supply chains.

Q: What is the overall approach behind the Regulation?

A: There are three main principles:

First, balancing development and security. The Regulation promotes high-quality development of industrial and supply chains, while also establishing mechanisms to manage risks.

Second, focusing on urgent priorities. It targets key sectors related to economic stability and national security, using a “small but focused” approach and ensuring alignment with existing policies.

Third, being problem-oriented. It addresses real-world challenges by establishing mechanisms for risk monitoring, early warning, and emergency response, while also introducing investigation procedures, countermeasures, and extraterritorial provisions.

Q: What are the key principles governing supply chain security work?

A: The Regulation reflects several core principles:

It follows a holistic national security approach, balancing development and security, domestic and international priorities, while promoting high-level opening-up and stable global supply chains.

It supports R&D in key technologies, strengthens core capabilities, and promotes digitalization and intelligent upgrading of supply chains.

It adheres to principles of mutual benefit and win-win cooperation, while actively participating in the development of international rules.

Q: How does the Regulation prioritize key areas?

A: Given the complexity of supply chains, the Regulation adopts a focused approach by establishing a “key sectors list.” This allows authorities to concentrate resources and coordination on areas critical to economic and national security.

For these sectors, the Regulation sets out clear requirements:

Strengthening data sharing while ensuring data security

Building risk monitoring and early-warning systems

Enhancing risk prevention through stockpiling and capability building

Establishing emergency response mechanisms, including contingency plans and rapid resource mobilization

Q: How does the Regulation address harmful foreign actions?

A: Articles 14 and 15 define two main scenarios:

First, if foreign governments, regions, or international organizations adopt discriminatory restrictions or similar measures in violation of international norms—and harm or support actions that harm China’s supply chains—relevant authorities may launch investigations and take countermeasures. These may include restricting trade, imposing fees, or adding entities to countermeasure lists under laws such as the Anti-Foreign Sanctions Law.

Second, if foreign companies or individuals violate normal market practices—such as disrupting transactions with Chinese entities or applying discriminatory treatment—authorities may also initiate investigations. Depending on the findings, measures may include restricting trade and investment, banning cooperation, limiting entry, or revoking residency and work eligibility. These measures can also apply to entities controlled or operated by the parties involved.

Q: How does the Regulation ensure information security?

A: The Regulation establishes a framework for supply-chain-related data security:

Unauthorized data collection related to supply chains within China is prohibited, and violations will be handled according to law.

Companies and research institutions are required to strengthen risk management systems to ensure control over core technologies, systems, and data, with government support through guidance and training.

Enterprises and industry associations are encouraged to report risks or incidents affecting supply chain security to relevant authorities.

In practical terms, authorities may launch security reviews under two broad conditions: when external actors introduce measures that violate international norms and discriminate against China, or when foreign firms or individuals disrupt normal commercial interactions with Chinese entities in a way that causes, or could cause, significant harm. Confirmed violations could lead to restrictions on trade, investment, or cooperation, as well as entry bans for relevant individuals.

The regulation places particular emphasis on sectors deemed vital to economic and national security. Authorities will define and regularly update these priority areas, while building a “closed-loop” governance system covering data sharing, risk tracking, early warning, and crisis management. It also explicitly prohibits unauthorized collection of supply-chain-related data within China and provides legal backing for enforcement actions.

Beyond the regulatory details, several Chinese experts interpret the move as part of a broader strategic recalibration.

Wang Minghui from the State Council’s Development Research Center argues that industrial and supply chains function as the backbone of a major economy. In his view, the new rules are a key step in responding to a more uncertain global environment, addressing technological choke points, and strengthening the legal foundation for industrial security. More fundamentally, he frames the policy as advancing a dual objective: using security to support development, and using development to reinforce security—helping China transition toward a more robust and resilient industrial structure.

Li Jin, a specialist in state-owned enterprise reform, notes that while China’s industrial base is broadly stable, weaknesses remain in higher-end segments. He sees the regulation as a targeted effort to reinforce these weak links and as a signal that China is moving into a new phase of institutionalized supply-chain governance, with implications for long-term growth quality.

From a legal standpoint, Liao Shiping of Beijing Normal University highlights that a major innovation lies in making countermeasures more specific and actionable. By linking with existing frameworks such as the Foreign Relations Law and the Anti-Foreign Sanctions Law, the regulation contributes to building a more coherent system of foreign-related rule of law. He emphasizes that the approach balances openness and security: externally, China continues to support cooperation rather than decoupling; internally, it strengthens its ability to defend against risks and respond when necessary.

Yang Daqing of the China Federation of Logistics and Purchasing underscores that the policy is not about retreating into self-sufficiency, but about enabling a higher level of openness on a more secure footing. He points to the importance of leading firms anchoring supply chains, stronger coordination across upstream and downstream players, and a combination of domestic backup capacity and diversified global landscape to enhance resilience and stability.

Taken together, the regulation not only expands China’s policy toolkit but also reflects a broader shift toward proactive, rules-based management of supply-chain risks. It calls for closer coordination across agencies, improved information sharing, more sophisticated early-warning systems, and better preparedness for potential disruptions—while signaling a willingness to respond more assertively to external pressure when necessary.

Full translation (unofficial) of the regulation:

Regulation of the State Council on Industrial and Supply Chain Security

Article 1
This Regulation is formulated in accordance with the National Security Law of the People’s Republic of China, the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China, and other relevant laws, for the purposes of preventing risks to industrial and supply chain security, enhancing resilience and security levels, and safeguarding economic and social stability as well as national security.

Article 2
Work on industrial and supply chain security shall follow a holistic national security approach, coordinate development and security, balance domestic and international considerations, promote high-level opening-up, and facilitate the stable and smooth operation of global industrial and supply chains.

Article 3
The State shall establish and improve a working mechanism for industrial and supply chain security, and coordinate related efforts in a unified manner.

Relevant departments under the State Council—including those responsible for foreign affairs, development and reform, industry and information technology, public security, national security, rule of law, finance, natural resources, transport, agriculture and rural affairs, commerce, financial regulation, customs, market regulation, and cyberspace administration—shall, according to their respective responsibilities, undertake work related to industrial and supply chain security and strengthen coordination and cooperation.

People’s governments of provinces, autonomous regions, and municipalities directly under the central government shall, under national coordination, be responsible for industrial and supply chain security work within their respective administrative regions.

Article 4
The State shall guide the rational and orderly layout of industrial and supply chains, promote their digitalization and intelligent transformation, enhance their security and controllability, and advance high-quality development.

Enterprises are encouraged and supported to diversify supply channels, strengthen industrial and supply chain cooperation, participate fairly in market competition, and improve their capacity to prevent related risks.

Article 5
The State shall adhere to the principles of equality, mutual benefit, and win-win cooperation, strengthen international cooperation in the field of industrial and supply chains, and actively participate in the formulation of relevant international rules.

Article 6
Relevant departments of the State Council and local governments shall, when formulating relevant plans, fully consider potential impacts on industrial and supply chain security.

Article 7
The State shall strengthen security guarantees for industrial and supply chains in key sectors. Relevant departments under the State Council shall formulate and dynamically adjust a list of key sectors to ensure stable and continuous production and circulation of raw materials, technologies, equipment, and products in these sectors.

Article 8
Relevant departments of the State Council shall promote information sharing on industrial and supply chains in key sectors, strengthen platform support, guide industries and enterprises to enhance connectivity, and adopt effective measures to ensure data security.

Article 9
The State shall establish and improve a monitoring and early-warning system for industrial and supply chain security risks in key sectors. Relevant departments shall organize assessments and monitoring of the stability of supply channels for raw materials, technologies, equipment, and products, and their impact on economic and social stability and national security, identify risks, and promptly issue early-warning information.

Enterprises, industry associations, and chambers of commerce that identify situations affecting supply chain security may report them to relevant government departments at or above the county level.

Article 10
The State shall establish and improve a risk prevention system for industrial and supply chain security in key sectors. Relevant departments shall organize physical reserves and capacity reserves, increase efforts in R&D of technologies, equipment, and products, and enhance resilience.

Departments under the State Council and local governments shall adopt targeted risk prevention measures based on industry and regional characteristics.

Article 11
The State shall establish and improve an emergency management system for industrial and supply chain security in key sectors. Relevant departments shall formulate emergency response plans. Where situations arise that affect supply chain security and endanger economic and social stability or national security, emergency measures—such as resource mobilization, use of reserves, and organization of production, transportation, and supply—may be taken upon decision by the State Council or authorized departments. Where laws or administrative regulations provide otherwise, such provisions shall apply.

Relevant departments and local governments shall implement emergency measures according to their responsibilities and terminate them promptly once the situation is resolved. Relevant organizations and individuals shall cooperate with emergency measures.

Article 12
The State encourages and guides social capital investment to support scientific and technological R&D and breakthroughs in core technologies in key sectors, and to promote the commercialization of technological outcome.

Enterprises and research institutions shall improve risk prevention systems to ensure the security and controllability of core technologies, information systems, and data. Relevant departments shall provide guidance and training.

Article 13
Where any organization or individual conducts investigations or collects information related to industrial and supply chains within China in violation of laws, administrative regulations, departmental rules, or relevant state provisions, competent authorities shall take appropriate measures in accordance with the law.

Article 14
Where foreign states, regions, or international organizations, in violation of international law or basic norms of international relations, adopt discriminatory prohibitions, restrictions, or similar measures against China in the field of industrial and supply chains, and implement or assist in implementing acts that harm China’s supply chain security, relevant departments of the State Council have the authority to initiate investigations.

According to procedures, corresponding measures may be taken, including but not limited to restricting or prohibiting imports and exports of goods and technologies, international trade in services, or imposing special fees.

Relevant departments may, in accordance with the Anti-Foreign Sanctions Law and its implementing provisions, place organizations or individuals directly or indirectly involved in such actions on countermeasure lists and take corresponding countermeasures.

Article 15
Where foreign organizations or individuals violate normal market transaction principles, disrupt normal transactions with Chinese citizens or organizations, adopt discriminatory measures, or engage in other conduct that causes or threatens substantial harm to China’s supply chain security, relevant departments of the State Council have the authority to initiate investigations.

Investigations may include inquiries, review or copying of relevant documents and materials, and other necessary measures. Relevant parties shall cooperate and may present statements and defenses during the investigation.

Based on investigation results, authorities may impose measures such as restricting or prohibiting import and export activities, limiting investment in China, restricting cooperation with Chinese entities, denying entry of relevant individuals or transport, or revoking work, stay, or residence qualifications. Such measures may also apply to entities controlled or operated by the parties concerned.

Article 16
Organizations and individuals within China shall comply with measures adopted by relevant State Council departments under Articles 14 and 15.

For violations, authorities may order corrections and impose measures such as restricting participation in government procurement or bidding, limiting trade and service activities, restricting cross-border data transfers, or restricting exit or residence.

Article 17
Law firms, notary offices, and other professional service institutions are encouraged and supported to provide legal services related to industrial and supply chain security.

Article 18
This Regulation shall enter into force on the date of promulgation.

Since the Opinions on Strengthening the Governance of Science and Technology Ethics in 2022 established the top-level design, China has gradually elevated artificial intelligence—alongside the life sciences—as a key domain of governance. The Measures for the Ethical Review of Science and Technology (Trial) released in 2023, together with subsequent regulations on generative AI, established a core mechanism centered on “primary responsibility for self-review by institutions, supplemented by expert review for high-risk cases,” while tightly linking ethical compliance with algorithm filing and security assessments. In particular, AI technologies with capabilities for public opinion mobilization, highly autonomous decision-making, or deep human–machine integration have been explicitly included in the “high-risk science and technology activities list,” requiring mandatory review by third-party experts.

The introduction of the Administrative Measures for the Ethical Review and Services of Artificial Intelligence Science and Technology (Trial) marks a new stage in China’s AI ethics governance, characterized by a dual emphasis on professionalization and service provision.

This system not only requires companies to submit proof of ethical review during algorithm filing, but also introduces, for the first time, a dual-track access model combining “algorithm filing + ethical evaluation.” At the same time, regulatory attention is expanding beyond content security to encompass broader societal and labor protections. For example, “algorithm auditing” mechanisms targeting platform-based sectors such as ride-hailing and food delivery now mandate that algorithmic systems incorporate human override functions to prevent “algorithmic exploitation” of workers. China is thus transforming AI governance from a focus on “content and security regulation” into a more institutionalized, operational, and auditable “ethical compliance system,” embedded within the broader framework of national technology governance and industrial policy.

In terms of institutional design, the system rests on a three-tier structure: internal ethics committees within organizations, external service centers, and government-led expert review. All universities, research institutions, and companies engaged in AI development are required to establish ethics committees and assume primary responsibility. Where internal capacity is insufficient, organizations may delegate to external “ethics review service centers.” For high-risk projects—such as those affecting public opinion, psychological behavior, or involving highly automated decision-making—mandatory entry into a government-led expert review process is required. In essence, this design embeds AI ethics governance within organizations while preserving the state’s ultimate supervisory authority.

At the operational level, the Measures establish a relatively comprehensive quasi-administrative approval process. Before a project can commence, applicants must submit detailed materials, including technical plans, data sources, algorithmic mechanisms, application scenarios, and, most critically, ethical risk assessments and contingency plans. Review bodies are required to issue decisions within 30 days and may request revisions or reject applications outright. Approval is not a one-off process: projects are subject to ongoing monitoring and review during operation, and may be suspended or terminated if risk conditions change. This implies that AI projects in China will be subject to a form of “dynamic regulation” similar to that applied to pharmaceuticals or medical research.

From the perspective of review criteria, the Measures effectively establish an operationalized indicator system for AI governance in China. Six key dimensions are emphasized: whether the technology genuinely promotes social well-being; whether it entails algorithmic discrimination; whether the system is controllable and reliable; whether it is transparent and explainable; whether accountability is traceable; and whether privacy is adequately protected. While these standards appear broadly aligned with Western AI governance frameworks—such as the OECD principles and the EU AI Act—their implementation places greater emphasis on controllability and risk prevention, reflecting a more engineering-oriented approach to governance.

The most distinctive feature of this framework is that it is not a traditional regulatory model focused solely on review without support; rather, it embeds a systematic service provision mechanism alongside oversight. On the one hand, it establishes compliance boundaries through tools such as ethical review and expert reassessment; on the other, it provides enterprises with risk identification and compliance capabilities through ethics review service centers and standardized evaluation tools. In essence, it transforms AI ethics from a mere compliance threshold into a capability that can be provided and outsourced, reflecting a governance approach that both manages risk and promotes development.

Full translation of the Measures (Unofficial):

Interim Measures for the Ethical Review and Services of Artificial Intelligence Science and Technology Activities

Chapter I General Provisions

Article 1
In order to regulate the ethical governance of artificial intelligence science and technology activities, promote fairness, justice, harmony, safety, and responsible innovation, and facilitate the healthy development of the artificial intelligence industry, these Measures are formulated in accordance with the Law of the People’s Republic of China on Scientific and Technological Progress, the Opinions on Strengthening the Governance of Science and Technology Ethics, the Measures for the Ethical Review of Science and Technology (Interim) (hereinafter referred to as the “Ethics Measures”), and other relevant laws, regulations, and provisions.

Article 2
The artificial intelligence science and technology activities to which these Measures apply refer to artificial intelligence scientific research, technological development, and other activities conducted within the territory of the People’s Republic of China that may pose ethical risks or challenges in terms of human dignity, public order, life and health, ecological environment, and sustainable development, as well as other science and technology activities that are required to undergo artificial intelligence science and technology ethics review in accordance with laws, administrative regulations, and relevant national provisions.

Article 3
Entities conducting artificial intelligence science and technology activities shall integrate ethical requirements throughout the entire process, adhere to the principles of promoting human well-being, respecting life and rights, ensuring fairness and justice, reasonably controlling risks, maintaining openness and transparency, protecting privacy and security, and ensuring controllable and trustworthy artificial intelligence, and shall comply with the Constitution, laws and regulations of China, and relevant provisions.

Chapter II Services and Promotion

Article 4
A system of artificial intelligence science and technology ethics standards shall be established and improved, and efforts shall be made to promote the formulation of relevant international standards, national standards, industry standards, and group standards, and to support the establishment of platforms for international standardization exchanges and cooperation.
Higher education institutions, research institutions, medical and health institutions, enterprises, and scientific and technological social organizations are encouraged to participate in the formulation, validation, and promotion of artificial intelligence science and technology ethics standards.

Article 5
The construction of an artificial intelligence science and technology ethics service system shall be advanced, strengthening the supply of services such as artificial intelligence science and technology ethics risk monitoring and early warning, testing and evaluation, certification, and consulting, improving enterprises’ capabilities in technological research and development and artificial intelligence science and technology ethics risk prevention, increasing support and service efforts for small, medium, and micro enterprises in artificial intelligence science and technology ethics review, and promoting international exchange and cooperation in artificial intelligence science and technology ethics.

Article 6
Higher education institutions, research institutions, medical and health institutions, enterprises, and scientific and technological social organizations are encouraged to carry out research on artificial intelligence science and technology ethics review, support technological innovation in artificial intelligence science and technology ethics review, strengthen the use of technical means to prevent artificial intelligence science and technology ethics risks; promote the orderly open sharing of high-quality datasets for artificial intelligence science and technology ethics review, strengthen the research and development of general risk management, evaluation, and auditing tools, explore science and technology ethics risk assessment and evaluation based on application scenarios; promote artificial intelligence products and services that comply with science and technology ethics, and protect intellectual property rights related to artificial intelligence science and technology ethics review technologies.

Article 7
Publicity and education on artificial intelligence science and technology ethics shall be carried out, the role of scientific and technological social organizations in artificial intelligence science and technology ethics publicity and education shall be brought into play, public participation shall be encouraged, practical demonstrations shall be promoted, and public awareness and literacy in ethics shall be enhanced. Mass media shall be guided to conduct targeted publicity and education on artificial intelligence science and technology ethics.

Article 8
Support shall be provided to higher education institutions, research institutions, medical and health institutions, enterprises, and scientific and technological social organizations to carry out education and training related to artificial intelligence science and technology ethics, promote the development of professional systems and curriculum systems, cultivate artificial intelligence science and technology ethics talents through multiple approaches, and promote talent exchange.

Chapter III Implementing Entities

Article 9
Higher education institutions, research institutions, medical and health institutions, enterprises, and other entities engaged in artificial intelligence science and technology activities shall be the responsible entities for the management of artificial intelligence science and technology ethics review within their organizations, and shall establish artificial intelligence science and technology ethics committees (hereinafter referred to as the “Committee”) in accordance with the relevant requirements of Article 4 of the Ethics Measures.
The Committee shall be equipped with necessary personnel, office premises, funding, and other conditions, and effective measures shall be taken to ensure that the Committee can independently carry out its work. Qualified relevant entities are encouraged to carry out certification related to artificial intelligence science and technology ethics management systems.

Article 10
The charter, composition, and the responsibilities and obligations of Committee members shall comply with Articles 5 to 8 of the Ethics Measures. The composition of the Committee shall include experts with corresponding professional backgrounds in artificial intelligence technology, applications, ethics, law, and other fields.

Article 11
Local authorities and relevant competent departments may, in light of actual circumstances, rely on relevant entities to establish specialized artificial intelligence science and technology ethics review and service centers (hereinafter referred to as “Service Centers”).
Service Centers may accept commissions from other entities to provide services such as artificial intelligence science and technology ethics review, re-examination, training, and consulting. A Service Center shall not simultaneously provide both review and re-examination services for the same artificial intelligence science and technology activity.
Service Centers shall establish standardized management systems and procedures, be equipped with full-time personnel with the capability to conduct artificial intelligence science and technology ethics review and services, and shall be subject to supervision by local or relevant competent departments.

Chapter IV Working Procedures

Section I Application and Acceptance

Article 12
For artificial intelligence science and technology activities falling within the scope specified in Article 2 of these Measures, the person in charge of the artificial intelligence science and technology activity shall apply to the Committee of their entity. Where the entity has not established a Committee or the Committee is unable to meet the requirements for conducting science and technology ethics review, an application shall be submitted to the Service Center entrusted by the entity to conduct the ethics review; where there is no affiliated entity, a qualified Service Center shall be entrusted to conduct the ethics review.
The person in charge of the artificial intelligence science and technology activity shall, in accordance with the provisions, submit application materials to the Committee or the Service Center. The application materials shall mainly include:
(1) the artificial intelligence science and technology activity plan, including research background, objectives and plans, legal qualification materials of the relevant institutions involved, personnel information, sources of funding, the algorithm mechanisms and principles to be adopted, data sources and methods of acquisition, testing and evaluation methods, the software and hardware products to be formed, expected application fields and applicable groups, etc.;
(2) the ethical risk assessment of the artificial intelligence science and technology activity, as well as prevention, control, and emergency response plans, including assessment of potential ethical risks arising from the expected application of artificial intelligence technology, monitoring and early warning measures for ethical risks, and prevention and control plans for potential ethical risks;
(3) a letter of commitment to comply with artificial intelligence science and technology ethics and research integrity requirements.

Article 13
The Committee or the Service Center shall determine whether to accept the application based on the submitted materials and notify the applicant. Where the application is accepted, the applicable procedure—general, simplified, or emergency—shall be determined based on factors such as the likelihood and degree of occurrence of ethical risks and emergency circumstances. Ethics review shall be conducted through offline or online forms as required by different procedures. Where the materials are incomplete, the applicant shall be informed in a one-time comprehensive manner of the materials that need to be supplemented.

Section II General Procedures and Simplified Procedures

Article 14
Meetings for artificial intelligence science and technology ethics review shall be chaired by the Chairperson of the Committee or a Vice-Chairperson designated by the Chairperson. No fewer than five members shall be present, and members from different categories as specified in Article 10 of these Measures shall be included. Service Centers may organize and implement their work with reference to the Committee’s provisions.
Based on review needs, experts or consultants in relevant fields who do not have a direct interest in the matter may be invited to provide advisory opinions. Advisory experts shall not participate in voting.

Article 15
When conducting artificial intelligence science and technology ethics review, the Committee or the Service Center shall focus on the following aspects:
(1) In terms of human well-being, whether the artificial intelligence science and technology activity has scientific and social value; whether the research objectives contribute positively to enhancing human well-being and achieving sustainable social development; and whether the risks of the activity are reasonably balanced against its benefits.
(2) In terms of fairness and justice, whether the standards for selecting training data and the design of algorithms, models, and systems are reasonable; whether measures have been taken to prevent bias, discrimination, and algorithmic exploitation, and to ensure objectivity and inclusiveness in resource allocation, access to opportunities, and decision-making processes.
(3) In terms of controllability and trustworthiness, whether the robustness of models and systems can be ensured to cope with open environments, extreme situations, and interfering factors; whether users are able to control, guide, and intervene in the basic operation of models and systems; and whether continuous monitoring plans and emergency response plans have been formulated.
(4) In terms of transparency and explainability, whether information such as the purpose, operational logic, interaction methods, and potential risks of algorithms, models, and systems is reasonably disclosed; and whether effective technical means are adopted to enhance explainability.
(5) In terms of accountability and traceability, whether measures such as log management are in place to clearly record sufficient information on data, algorithms, models, and systems at each stage, ensuring full-chain traceability and management; and whether the qualifications of scientific and technical personnel meet relevant requirements.
(6) In terms of privacy protection, whether sufficient measures are taken to ensure the effective protection of privacy data in activities such as data collection, storage, processing, and use, as well as in the research and development of new data technologies.

Article 16
The Committee or the Service Center shall, within 30 days from the date of acceptance of the application, make a decision of approval, approval after modification, or disapproval. In complex cases or where supplementary or corrective materials are required, the time limit may be appropriately extended, and the extended period shall be specified.
For cases requiring modification or disapproval, the Committee or the Service Center shall provide suggestions for modification or state the reasons. Where the applicant has objections, they shall file an appeal with the Committee or the Service Center within three working days from the date of receipt of the decision. Where the grounds for appeal are sufficient, the Committee or the Service Center shall make a new decision within seven working days.

Article 17
The person in charge of the artificial intelligence science and technology activity shall promptly identify changes in ethical risks and report such changes to the Committee or the Service Center.
The Committee or the Service Center shall, in accordance with Article 19 of the Ethics Measures, conduct follow-up reviews of approved artificial intelligence science and technology activities, promptly grasp changes in ethical risks, and may, where necessary, make decisions such as suspending or terminating relevant activities. The interval for follow-up reviews shall generally not exceed 12 months.

Article 18
Where multiple entities jointly carry out artificial intelligence science and technology activities, mutual recognition of ethics review results among entities may be conducted based on actual circumstances.

Article 19
A simplified procedure may be applied under any of the following circumstances:
(1) the likelihood and degree of ethical risks of the artificial intelligence science and technology activity are not higher than the routine risks encountered in daily life;
(2) minor modifications are made to an already approved activity plan without increasing the risk-benefit ratio;
(3) follow-up reviews of activities without major adjustments in earlier stages.

Article 20
The Committee or the Service Center shall formulate working procedures and tracking frequency for reviews under the simplified procedure. Simplified reviews shall be conducted by two or more members designated by the Chairperson of the Committee. Service Centers may organize implementation with reference to the Committee’s provisions.
Where, during the simplified review process, a negative opinion arises, doubts exist regarding the review content, or members’ opinions are inconsistent, the case shall be transferred to the general procedure.

Section III Expert Re-examination Procedures

Article 21
The Ministry of Industry and Information Technology and the Ministry of Science and Technology, together with relevant departments, shall formulate and publish a “List of Artificial Intelligence Science and Technology Activities Requiring Expert Re-examination” (hereinafter referred to as the “Re-examination List”), and dynamically adjust it as needed.

Article 22
For artificial intelligence science and technology activities included in the Re-examination List, after passing the preliminary review by the Committee or the Service Center, an application for expert re-examination shall be submitted by the entity. Where multiple entities are involved, the leading entity shall be responsible for the application.
Central enterprises, as well as higher education institutions, research institutions, and medical and health institutions directly under central and state organs, shall directly submit applications to the relevant competent departments for organizing expert re-examination. Other entities shall submit applications to local authorities for organizing expert re-examination.

Article 23
The entity undertaking the artificial intelligence science and technology activity shall submit materials for expert re-examination in accordance with Article 27 of the Ethics Measures.
Local or relevant competent departments shall, in accordance with Articles 28 to 30 of the Ethics Measures, organize the establishment of expert review groups to review the compliance and rationality of the preliminary review opinions, and shall provide feedback on the re-examination opinions to the applying entity within 30 days of receiving the application.
Local or relevant competent departments may entrust Service Centers to carry out specific re-examination work.

Article 24
The Committee or the Service Center shall make a final ethics review decision based on the expert re-examination opinions.

Article 25
The Committee or the Service Center shall strengthen follow-up reviews of artificial intelligence science and technology activities included in the Re-examination List, with intervals generally not exceeding six months.
Where there are significant changes in ethical risks, a new ethics review shall be conducted in accordance with Article 20 of the Ethics Measures and an application for expert re-examination shall be submitted.

Article 26
Where artificial intelligence science and technology activities are subject to regulatory measures such as registration, filing, or administrative approval in areas including deep synthesis, algorithmic recommendation, and generative artificial intelligence service management, and where compliance with ethical requirements is incorporated as a condition for approval or regulatory content, expert re-examination may no longer be required.

Section IV Emergency Procedures

Article 27
The Committee or the Service Center shall establish emergency review systems for artificial intelligence science and technology ethics, specifying emergency review processes and standard operating procedures under urgent circumstances such as public emergencies. Emergency reviews shall generally be completed within 72 hours. For activities subject to expert re-examination procedures, the review prior to expert re-examination shall generally be completed within 36 hours.

Article 28
The Committee or the Service Center shall ensure the quality and timeliness of emergency ethics reviews, strengthen follow-up work and process supervision, and, where necessary, may invite advisory experts in relevant fields to attend meetings and provide opinions.

Chapter V Supervision and Administration

Article 29
The Ministry of Science and Technology shall be responsible for overall coordination and guidance of national science and technology ethics supervision. The Ministry of Industry and Information Technology, together with relevant departments, shall be responsible for artificial intelligence science and technology ethics governance and strengthen coordination and guidance of emergency ethics reviews.
Relevant departments shall, within the scope of their respective responsibilities, supervise and administer artificial intelligence science and technology ethics reviews within their industries and systems. Local authorities shall, within the scope of their responsibilities, supervise and administer artificial intelligence science and technology ethics reviews within their jurisdictions.

Article 30
Entities shall, in accordance with Articles 43 to 45 of the Ethics Measures, register relevant information of Committees and artificial intelligence science and technology activities included in the Re-examination List through the National Science and Technology Ethics Management Information Registration Platform, and submit annual reports on Committee work and implementation reports of activities included in the Re-examination List, among other materials.
Service Centers shall register and submit annual work reports in accordance with the above provisions.
The Ministry of Science and Technology and relevant competent departments shall share information related to artificial intelligence science and technology ethics registration.

Article 31
Local authorities, relevant competent departments, and entities engaged in artificial intelligence science and technology activities shall, based on the actual conditions of their industries, systems, and entities, establish smooth channels for reporting violations of artificial intelligence science and technology ethics, and handle such matters in accordance with relevant provisions.

Article 32
Where violations of these Measures occur in the course of artificial intelligence science and technology activities or related ethical work, they shall be investigated and handled, and corresponding penalties imposed, in accordance with the Cybersecurity Law of the People’s Republic of China, the Data Security Law of the People’s Republic of China, the Personal Information Protection Law of the People’s Republic of China, the Law of the People’s Republic of China on Scientific and Technological Progress, and other relevant laws, regulations, and provisions.

Chapter VI Supplementary Provisions

Article 33
For time limits stipulated in these Measures, where not specified as working days, they shall be counted as calendar days.
The term “local” as used in these Measures refers to provincial-level administrative departments designated by provincial people’s governments to be responsible for the ethics review and management of artificial intelligence science and technology. The term “relevant competent departments” refers to relevant departments under the State Council.

Article 34
Local authorities and relevant competent departments may, in accordance with these Measures and based on actual circumstances, formulate or revise rules and detailed measures for artificial intelligence science and technology ethics review and services within their respective regions, industries, or systems. Scientific and technological social organizations may formulate specific norms and guidelines for ethics review and services in their respective fields.

Article 35
Where relevant competent departments have special provisions for artificial intelligence science and technology ethics review and services within their industries or systems that are consistent with the spirit of these Measures, such provisions shall prevail. Matters not provided for in these Measures shall be governed by the Ethics Measures and relevant laws and regulations.

Article 36
These Measures shall be interpreted by the Ministry of Industry and Information Technology in conjunction with relevant departments.

Article 37
These Measures shall come into force upon the date of issuance.

Annex: List of Artificial Intelligence Science and Technology Activities Requiring Expert Re-examination

1. The development of human–machine integration systems that have a significant impact on human behavior, psychological emotions, and life and health.

2. The development of algorithm models, application programs, and systems that possess the capability to influence public opinion, social mobilization, and social consciousness.

3. The development of highly autonomous automated decision-making systems for scenarios involving safety risks and risks to personal health.

This list shall be dynamically adjusted as required.

The first investigation targets “U.S. practices and measures that disrupt global production and supply chains.” The Chinese government believes that the United States has implemented a large number of practices and measures in trade-related fields that seriously disrupt global production and supply chains, including but not limited to: restricting or prohibiting Chinese products from entering the U.S. market, restricting or prohibiting the export of high-tech products to China, and restricting or prohibiting two-way investment in key areas. The above practices and measures may seriously harm the trade interests of Chinese enterprises, and some of them are suspected of violating WTO rules and other economic and trade treaties or agreements jointly concluded or acceded to by China and the United States.

Ministry of Commerce Announcement No. 17 of 2026
Initiation of Trade Barrier Investigation on U.S. Practices and Measures Disrupting Global Production and Supply Chains

Issuing Authority: Bureau of Trade Remedy Investigations
Announcement No.: Ministry of Commerce Announcement No. 17 of 2026
Date of Issuance: March 27, 2026

In accordance with the relevant provisions of the Foreign Trade Law of the People’s Republic of China and the Rules on Foreign Trade Barrier Investigations of the Ministry of Commerce, the Ministry of Commerce may, on its own initiative, conduct investigations into trade barriers of relevant countries and regions in order to safeguard the order of foreign trade.

Preliminary evidence and information obtained by the Ministry of Commerce show that the United States has implemented a large number of practices and measures in trade-related fields that seriously disrupt global production and supply chains, including but not limited to: restricting or prohibiting Chinese products from entering the U.S. market, restricting or prohibiting the export of high-tech products to China, and restricting or prohibiting two-way investment in key areas. These practices and measures may seriously harm the trade interests of Chinese enterprises, and some of them are suspected of violating WTO rules and other economic and trade treaties or agreements jointly concluded or acceded to by China and the United States.

In accordance with Articles 41 and 42 of the Foreign Trade Law of the People’s Republic of China and Articles 12 and 35 of the Rules on Foreign Trade Barrier Investigations, the Ministry of Commerce has decided to initiate a trade barrier investigation into the relevant U.S. practices and measures as of March 27, 2026. The relevant matters are hereby announced as follows:

I. Investigated Measures
The investigated measures in this case are: the practices and measures implemented by the United States in trade-related fields that disrupt global production and supply chains.

II. Investigation Procedures
In accordance with the Rules on Foreign Trade Barrier Investigations, the Ministry of Commerce may conduct the investigation by means of questionnaires, hearings, on-site investigations, and other methods to gather information from interested parties.

III. Investigation Period
This case shall be concluded within 6 months from the date of the announcement of the decision to initiate the investigation. Under special circumstances, the period may be extended, but the extension shall not exceed 3 months.

IV. Access to Public Information
Interested parties may download the public information of this case from the sub-website of the Bureau of Trade Remedy Investigations on the Ministry of Commerce website, or go to the Ministry of Commerce Trade Remedy Public Information Reading Room (Tel: 0086-10-65197878) to search, read, copy, and duplicate the public information of this case.

V. Comments on the Initiation of the Investigation
Interested parties who wish to comment on matters relating to the initiation of the investigation shall submit their written comments to the Bureau of Trade Remedy Investigations of the Ministry of Commerce within 20 days from the date of publication of this announcement.

VI. Submission and Handling of Information
During the investigation, interested parties shall submit electronic versions of comments, questionnaire responses, and other materials through the “Trade Remedy Investigation Information Platform”, and simultaneously submit written versions as required by the Ministry of Commerce. The content of the electronic and written versions shall be identical, and the format shall be consistent.

If an interested party believes that the disclosure of the information it provides would cause serious adverse effects, it may apply to the Ministry of Commerce for confidential treatment and state the reasons. If the Ministry of Commerce approves the request, the interested party applying for confidentiality shall also provide a non-confidential summary of the confidential information. The non-confidential summary shall contain sufficient meaningful information to enable other interested parties to have a reasonable understanding of the confidential information. If a non-confidential summary cannot be provided, the reasons shall be stated. If the information submitted by an interested party does not indicate that it requires confidential treatment, the Ministry of Commerce will treat it as public information.

VII. Contact Information of the Ministry of Commerce
Address: No. 2 East Chang’an Avenue, Beijing
Postal Code: 100731
Bureau of Trade Remedy Investigations, Ministry of Commerce
Tel: 0086-10-65198155 65198070
Fax: 0086-10-65198172
Relevant Website: Sub-website of the Bureau of Trade Remedy Investigations on the Ministry of Commerce website

Ministry of Commerce of the People’s Republic of China
March 27, 2026

The second investigation targets “U.S. practices and measures that hinder trade in green products.” According to the MOFCOM announcement, the United States has implemented a number of practices and measures in trade-related fields that hinder trade in green products, including but not limited to: restricting the export of green products to the United States, slowing down the deployment of new energy projects, and restricting technology cooperation related to green products. These practices and measures may seriously harm the trade interests of Chinese enterprises, and some of them are suspected of violating WTO rules and other economic and trade treaties or agreements jointly concluded or acceded to by China and the United States.

Ministry of Commerce Announcement No. 18 of 2026
Initiation of Trade Barrier Investigation on U.S. Practices and Measures Hindering Trade in Green Products

Issuing Authority: Bureau of Trade Remedy Investigations
Announcement No.: Ministry of Commerce Announcement No. 18 of 2026
Date of Issuance: March 27, 2026

(The remaining sections of the announcement—investigation procedures, period, access to information, comments, submission of information, and contact details—are almost identical to Announcement No. 17, with only the investigated measures changed to: “the practices and measures implemented by the United States in trade-related fields that hinder trade in green products.”)

The above investigations were launched one day after MOFCOM Minister Wang Wentao met with U.S. Trade Representative Jamieson Greer in Cameroon.

According to the MOFCOM readout, during the meeting Wang Wentao “expressed grave concern over the U.S. side’s initiation of Section 301 investigations against multiple economies, including China, on the grounds of so-called ‘overcapacity’ and ‘failure to prohibit the importation of goods produced with forced labor.’”

MOFCOM Readout

Minister Wang Wentao Meets with U.S. Trade Representative Jamieson Greer

On March 26, during the 14th Ministerial Conference of the World Trade Organization held in Yaoundé, Cameroon, Minister of Commerce Wang Wentao met with U.S. Trade Representative Jamieson Greer. The two sides had in-depth exchanges of views on China-U.S. economic and trade relations, as well as multilateral and regional economic and trade cooperation. Ambassador Li Yongsheng of the Chinese Permanent Mission to the WTO attended the meeting.

Wang Wentao stated that President Xi Jinping has pointed out that economic and trade relations should continue to serve as the ballast and propeller of China-U.S. relations, rather than a stumbling block or point of conflict. Both sides should jointly implement the important consensus reached at the Busan meeting and previous calls between the two heads of state, properly handle the relationship between competition and cooperation as well as between the past and the future, strengthen mutually beneficial cooperation, avoid vicious competition, maintain close communication, jointly “look forward,” and promote the healthy, stable, and sustainable development of bilateral economic and trade relations.

Wang Wentao emphasized that China is willing to strengthen multilateral and regional economic and trade cooperation with the U.S. side, jointly advance WTO reform, promote practical outcomes at the 14th Ministerial Conference of the WTO, and support positive results from APEC and G20 meetings. Wang Wentao also expressed grave concern over the U.S. side’s initiation of Section 301 investigations against multiple economies, including China, on the grounds of so-called “overcapacity” and “failure to prohibit the importation of goods produced with forced labor.”

Greer stated that over the past year, the U.S. and China have conducted constructive economic and trade consultations and maintained close communication and cooperation. The U.S. side is willing to work with China, guided by the consensus between the two heads of state, to strengthen dialogue, promote sustained and stable China-U.S. economic and trade relations, and achieve mutually beneficial and win-win outcomes in the economic and trade field. The U.S. side is also willing to strengthen communication and exchanges with China under the WTO and regional frameworks.

Following the U.S. initiation of Section 301 investigations against China, the Chinese Ministry of Foreign Affairs and Ministry of Commerce quickly issued strongly worded responses. They emphasized that the U.S. claim of Chinese “overcapacity” is a false proposition and essentially a “political manipulation” by the U.S. side. They urged the U.S. to correct its erroneous practices and return to the correct track of resolving issues through dialogue and consultation. China also stressed that it will closely follow developments and “reserves the right to take all necessary measures” to resolutely safeguard its legitimate rights and interests.

Statement by the Spokesperson of the Ministry of Foreign Affairs

Reuters: The Trump administration announced on Wednesday that it will launch two new trade investigations into “excess industrial capacity” of 16 major trading partners, including China. According to officials from the Office of the U.S. Trade Representative, this could lead to new tariffs. What is China’s comment on this investigation and on the USTR listing China’s automotive industry as a so-called “overcapacity” sector?

Guo Jiakun: China’s position on handling China-U.S. economic and trade issues is consistent and clear. We oppose unilateral tariff measures in all forms. Tariff wars and trade wars are not in the interest of either side. Both sides should resolve relevant issues through consultation on the basis of equality, respect, and reciprocity. The so-called “overcapacity” is a false proposition, and China opposes using it as a pretext for political manipulation.

Statement by the MOFCOM Spokesperson

Reporter: On March 11 Eastern Time, the Office of the U.S. Trade Representative announced the initiation of Section 301 investigations against 16 economies, including China, on the grounds of “overcapacity.” What is China’s comment?

Answer: China has taken note that the U.S. side has initiated Section 301 investigations against 16 economies, including China, on the grounds of “overcapacity.” Section 301 investigations are typical unilateralist actions that seriously undermine the international economic and trade order. A WTO panel has already ruled that tariff measures taken under Section 301 investigations violate WTO rules.

Regarding the U.S. so-called “overcapacity theory,” China has repeatedly clarified its position. The world economy has long become an indivisible whole; both production and consumption are global, requiring supply-demand matching and adjustment from a global perspective. If production in every country could only meet domestic market demand, there would be no cross-border trade. The U.S. side cannot narrowly define production capacity exceeding domestic demand as “overcapacity” and label it as such. The U.S. has even less right to unilaterally determine through Section 301 investigations whether trading partners have “overcapacity” and then adopt unilateral restrictive measures. China has noted that the U.S. side has also initiated Section 301 investigations against 60 economies, including China, on the grounds of “failure to prohibit the importation of goods produced with forced labor.” China is conducting analysis and assessment.

China urges the U.S. to correct its erroneous practices and return to the correct track of resolving issues through dialogue and consultation. China will closely follow developments, reserve the right to take all necessary measures, and resolutely safeguard its legitimate rights and interests.

In the recent China-U.S. talks in Paris, Vice Premier He Lifeng also expressed great concern over the U.S. Section 301 investigations.

Recently, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. Subsequently, the United States imposed a 10 percent import surcharge on all trading partners under Section 122 of the Trade Act of 1974 and has also introduced a number of negative measures targeting China, including Section 301 investigations, corporate sanctions, and market access restrictions.

China’s opposition to the United States’ imposition of unilateral tariffs has been consistent. China urges the United States to completely remove unilateral tariffs and other restrictive measures and will take necessary actions to firmly safeguard its legitimate rights and interests.

In accordance with the relevant provisions of China’s Foreign Trade Law and the Ministry of Commerce’s Rules on Foreign Trade Barrier Investigations, after initiating an investigation into trade barriers of relevant countries and regions, the Ministry of Commerce may use questionnaires, hearings, on-site investigations, and other methods to understand the situation from interested parties and conduct the investigation. It will form different conclusions based on the actual investigation results, which will lead to corresponding legal and practical consequences.

During the investigation, if the party under investigation voluntarily cancels or modifies the relevant restrictive measures, provides reasonable compensation, or fulfills its obligations under relevant international agreements, the investigation may be suspended or even directly terminated in accordance with the law, and subsequent determination procedures will no longer be pursued. If the investigation ultimately confirms that the relevant measures of the country or region do constitute unreasonable restrictions and harm to the entry of Chinese goods, services, or investment into its market, they will be formally determined to constitute trade barriers.

Once a trade barrier is determined to exist, MOFCOM, as appropriate, may adopt one or more of the following measures in response in accordance with Article 33 of the Rules:

First, engage in bilateral official consultations with the government of the country or region under investigation, urging it to remove or modify the relevant barrier measures or provide trade compensation, so as to resolve the dispute in a friendly manner;

Second, initiate dispute settlement procedures through multilateral international platforms such as the World Trade Organization (WTO) dispute settlement mechanism, file complaints, and promote the issuance of rulings, requiring the relevant country or region to correct its non-compliant measures;

Third, take other appropriate measures, including but not limited to imposing reciprocal trade restrictions on the country or region under investigation, such as additional tariffs or restrictions on market access; issuing risk alerts to guide Chinese enterprises in avoiding relevant market risks; supporting affected enterprises in filing applications for trade remedy measures such as anti-dumping and countervailing duties; and coordinating with other countries or regions to jointly exert pressure in order to eliminate the relevant trade barriers.

If, after comprehensive verification, it is determined that the relevant measures do not constitute trade barriers or that the existing evidence is insufficient to establish the existence of trade barriers, the investigation procedure will be normally terminated, the relevant conclusions will be publicly announced, and in principle, no repeated investigation will be conducted on the same grounds. Relevant market entities will then need to continue conducting foreign economic and trade activities in accordance with existing rules.

According to reports citing sources familiar with the discussions, the talks were described as “remarkably stable” and “candid and constructive.” They are also expected to help prepare potential “deliverables” for the meeting between the two countries’ leaders scheduled for the end of March. In that sense, the talks were clearly more than a routine working-level exchange; they were aimed at laying the groundwork for the potential leaders’ meeting and identifying possible outcomes in advance.

Based on public statements from both sides, the agenda of the talks included the following items:

1. Tariffs: the United States’ new Section 122 tariffs and two ongoing Section 301 investigations.

2. Trade: agricultural purchases (including soybeans, poultry, beef, and certain non-soybean crops), purchases of Boeing aircraft, and energy exports (coal, oil, and natural gas), as well as the possible establishment of a Board of Trade.

3. Investment: the proposal to establish a Board of Investment.

4. Non-tariff measures: China’s export controls on rare earths, particularly yttrium, a heavy rare earth element critical for jet engine turbines. Greer noted that U.S. companies occasionally report difficulties obtaining rare earth supplies, so the two sides discussed the implementation of the rare-earth provisions under the Busan agreement. This may suggest that some U.S. companies are still encountering supply bottlenecks and have raised the issue with the U.S. government.

China released a readout via Xinhua News Agency.

Non official translation:

Xinhua News Agency, Paris, March 16 — From March 15 to 16 local time, China’s lead representative for China–U.S. economic and trade affairs, Vice Premier He Lifeng, held economic and trade consultations in Paris, France, with the U.S. lead representatives, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Guided by the important consensus reached by the two heads of state, the two sides conducted candid, in-depth, and constructive exchanges on economic and trade issues of mutual concern, including tariff arrangements, the promotion of bilateral trade and investment, and the maintenance of previously reached consultation outcomes. The discussions produced some new consensus, and the two sides agreed to continue maintaining consultations.

He Lifeng stated that under the strategic guidance of the important consensus between the two presidents, the two sides had reached a series of outcomes in the economic and trade field through five rounds of consultations last year, injecting greater certainty and stability into China–U.S. economic relations and the global economy.

Recently, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. Subsequently, the United States imposed a 10 percent import surcharge on all trading partners under Section 122 of the Trade Act of 1974, and has also introduced a number of negative measures targeting China, including Section 301 investigations, corporate sanctions, and market access restrictions.

China’s opposition to the United States’ imposition of unilateral tariffs has been consistent. China urges the United States to completely remove unilateral tariffs and other restrictive measures, and will take necessary actions to firmly safeguard its legitimate rights and interests.

He also expressed hope that the United States will work with China in the same direction, jointly implement the important consensus reached by the two heads of state, expand the list of cooperation while narrowing the list of problems, and promote the healthy, stable, and sustainable development of China–U.S. economic and trade relations.

The U.S. side stated that stable China–U.S. economic and trade relations are very important for both countries and for the world, and contribute to global economic growth, supply chain security, and financial stability. Both sides should reduce frictions, avoid escalation of disputes, and resolve differences through consultation.

The two sides agreed to study the establishment of cooperation mechanisms to promote bilateral trade and investment, continue to make good use of the China–U.S. economic and trade consultation mechanism, strengthen dialogue and communication, properly manage differences, expand practical cooperation, and promote the sustained and stable development of bilateral economic and trade relations.

US readout coming out later:

In advance of @POTUS’ trip to Beijing, @USTradeRep Jamieson Greer and I met with Vice Premier He Lifeng of China to discuss areas of mutual interest.

Talks were candid and constructive, and we are on a good path towards the next meeting between President Trump and General Secretary Xi.

In our discussions, we addressed a number of priorities to promote stability in our relationship, including how to manage bilateral trade and improve market access for the United States.

Both sides subsequently briefed the media. U.S. Treasury Secretary Scott Bessent also gave an interview to CNBC.

Key points from Bessent’s CNBC interview

1. Whether the presidential visit to China will proceed as scheduled remains to be seen. However, Bessent clarified that media reports suggesting a possible delay because the president asked China to patrol or enforce security in the Strait of Hormuz are completely inaccurate. If the visit were postponed, it would likely be due to logistical considerations, as the president may wish to remain in the United States to coordinate wartime operations, making overseas travel less appropriate at such a time.

2. His meeting with Vice Premier He Lifeng went very smoothly. In the coming days, China and the United States are expected to issue a statement reaffirming the stability of bilateral relations.

3. Semiconductor export controls were not discussed. The meeting focused primarily on economic matters, including potential Chinese purchases of Boeing aircraft and agricultural products, while the U.S. side briefed China on the new Section 122 tariffs and the ongoing Section 301 investigations.

CNBC

Thank you very much. We are here in Paris at the OECD headquarters with the Treasury Secretary of the United States. God bless you, Mr. Treasury Secretary. Thank you very much for spending some time with CNBC.

Well, you literally just moments ago wrapped up meetings with the Chinese trade delegation. Tell us how the meetings went and whether or not we should expect President Trump to meet with China in April.

Bessent

The meetings were very good. We’ve got a stable relationship. This is our sixth meeting in our economic consultations. The Vice Premier, He Lifeng, and I have developed great respect for each other. But really, the meetings are generated by the great respect that the two leaders present — President Trump and Party Chairman Xi — have for each other.

You know, we will see whether the visit takes place as scheduled. But what I do want to address is that there’s a false narrative out there suggesting that if the meetings are delayed, it would be because the president demanded that China police the Strait of Hormuz.

CNBC

There have been reports out there to that effect.

Bessent

Yes — that one is completely false. If the meeting were for some reason rescheduled, it would be because of logistics. The president wants to remain at the NSC to coordinate the war effort, and traveling abroad at a time like this may not be optimal.

CNBC

Because that narrative is out there. So you’re not saying that the meeting will be rescheduled, but you’re saying — and correct me if I’m wrong — if it is rescheduled, it would be because of timing and travel, not because of a dispute over the Strait.

Bessent

Exactly. It would be a decision the president makes as Commander-in-Chief to stay in the White House or remain in the United States while this war is being prosecuted.

CNBC

Because you’re a markets expert, obviously a long-time market participant. The markets may react to any word of a delay or pause in the meeting. And you’re saying if this meeting is paused or delayed, the market should not interpret it as a conflict between the two nations.

Bessent

Absolutely not. We had a very good two days here. We’ll be issuing a statement in the next few days reaffirming the stability of the relationship between the first- and second-largest economies in the world.

CNBC

I want to get to the war, I want to get to oil, I want to get to commodities. But first I want to finish up on this meeting with China. It sounds positive.

Were the discussions about things like export controls on advanced American semiconductors? Will the Chinese agree to buy more Boeing jets or other U.S. goods? Can you go into a little more detail about the products and services that were discussed here?

Bessent

Sure. We really don’t discuss our export restrictions in these meetings — it’s more of an economic dialogue. What we do discuss, exactly as you said, are purchase commitments from the Chinese.

We also explain to them our new tariff regime and how that would work — the Section 122 tariffs that were implemented right after the Supreme Court ruled against the president’s use of IEEPA.

And we explain the Section 301 studies that Ambassador Greer and USTR will be conducting, which should be completed by July.

CNBC

Is there an opportunity — assuming the market reaction matters — the stock market is down about 5% from its highs. It hasn’t collapsed, but it is down. Markets are nervous. If you look at the VIX, the volatility index, it’s elevated.

Would you ever consider using tariffs — the 15% tariffs — as a bargaining chip with China vis-à-vis the markets? What are we bargaining for？

Bessent

Because the president has made it very clear. Over the past year, President Trump — through USTR, through myself, and through Commerce — we’ve negotiated trade deals with most of our major trading partners and reordered global trade.

Our goods trade deficit with the world is down. Our goods trade deficit with China is down.

We had substantial tariff income last year. The court said we’ll have to refund that. But I can tell you that because of the change from IEEPA to Section 122, and we’ll see what the Section 301 studies bring — assuming a successful completion of those — it’s very likely that Treasury will see very little change in tariff revenue.

Again, the ultimate purpose of tariffs is to reshore production. The revenues are a very nice incidental benefit along the way. In a sense, it’s payback for the offshoring that occurred because of unfair trade practices.

But at the end of the day, we want to reshore manufacturing in the United States, especially strategic manufacturing.

And to go back to our consultations with the Chinese: we reiterated to them that we do not want to decouple, but we do need to take strategic industries back.

So we are making a strategic adjustment, but not pursuing a generalized decoupling in trade.

Key points from the media briefing by Bessent and U.S. Trade Representative Jamieson Greer

1. Regarding whether President Trump’s visit to China might be postponed, the U.S. side stated that any delay would not be due to China failing to meet U.S. requests. Rather, it would more likely relate to broader issues such as compliance matters, the status of trade agreements, and overall economic and trade arrangements between the two countries.

2. The two sides are currently sorting through a number of possible items that could be submitted to the two leaders. A key focus is to further clarify and institutionalize the structure of bilateral trade, including which products the United States should import from China and which products it should export to China, with the goal of making bilateral trade more balanced and more focused on mutually beneficial sectors.

Please note that the following content is based on a transcription of unclear audio and may differ from the speaker’s original remarks.

Reporter:

This meeting was intended to help finalize some potential deliverables for the two presidents to consider when they meet in Beijing next month. Could you give us an idea of what those might be going forward? And given what the president has said about his schedule, is that meeting still expected to take place at that time?

Bessent:

If the president’s visit is postponed, it would have nothing to do with the Chinese making a commitment via to the strengths of Hormuz. Uh it would obviously be in their interest to do so, but a postponement would not be as a result of any ask from the president not being met. The postponement if it happens would be because the commander-in-chief of the United States military believes that he should stay in the United States while this war is being prosecuted.

Greer:

First what we’ve concluded today really is the general terms of a work plan between now and the meeting between the presidents with the idea that there will be potential deliverables at that meeting.

We of course discussed compliance with the Busan agreement. This means rare earths etc. Uh you know from time to time we will get information from US companies or stakeholders about the status of receiving rare earths. And so we covered issues like that related to the agreement. We also talked about expanding trade exports to China in terms of agricultural goods, energy goods etc.

Reporter:

Have you been made aware of any China’s retaliation related Section 301 investigation?

Bessent:

Well, there there were very detailed discussions in terms of the the new tariff authorities. We will be implementing uh it’s the 122. We discussed the USTR and Ambassador Greer’s investigations. But in terms of of retaliation, as I said, there’s great stability in the relationship and the the purpose of these meetings is to prevent any retaliation as we saw this time last year.

Greer:

And I would say we started these talks really by giving them a a preview of what we’re doing on US trade policy as we adjust to the Supreme Court.

Remember, the president’s trade policy hasn’t changed. Our tools may change and we’re conducting these investigations.

We don’t want to prejudge them. And we had a good conversation with our counterparts about that process.

Reporter:

Just briefly — is there a possibility that the president might not go to Beijing? Are you suggesting that as long as the war continues, the commander-in-chief might reconsider the trip?

Bessent:

That’s not what I said. I want to make it clear that our position remains consistent.

Key points from the media briefing by China’s chief trade negotiator Li Chenggang

1. The discussions covered several topics, including tariff levels under the new circumstances, the possible extension of bilateral tariff and non-tariff measures, and ways to promote bilateral trade and investment cooperation.

2. Regarding tariff levels under the current circumstances, the U.S. side briefed China on its recent tariff adjustments and its considerations for future measures. The Chinese side expressed concern about the uncertainty created by these developments. Both sides agreed to continue working toward maintaining the stability of bilateral tariff levels, and they also held in-depth discussions on each other’s economic and trade concerns.

3. The two sides reviewed the implementation of the outcomes of the five rounds of economic and trade consultations held last year, giving overall positive recognition to the progress made. At the same time, the Chinese side made solemn representations regarding the two ongoing Section 301 investigations, expressing serious concern. China will closely monitor the progress of these investigations and take appropriate measures to safeguard its legitimate rights and interests.

4. The two sides have reached preliminary consensus on some issues and will continue to maintain the consultation process going forward.

Li Chenggang’s remarks:

Friends from the press, good afternoon. Thank you for your attention.

First of all, I would like to thank the French government for its hospitality, and also express our appreciation for the strong support from the OECD.

This time we are here in Paris to engage in a new round of consultations under the China–U.S. economic and trade dialogue.

Over the past one and a half days, the two teams have carried out in-depth, candid and constructive consultations.

The topics we discussed include tariff levels under the new circumstances, the bilateral trade situation, the possible extension of bilateral tariff and non-tariff measures, as well as the promotion of bilateral trade and investment. Both sides also exchanged views on each other’s economic and trade concerns.

Regarding tariff levels under the current circumstances, U.S. colleagues provided us with information about their recent tariff measures and their relevant considerations going forward. The Chinese side shared its concerns about the uncertainties created by these measures.

Both sides agreed to remain committed to maintaining the stability of bilateral tariff levels.

On the issue of promoting bilateral trade and investment, the two sides discussed the idea of establishing a working group to study possible cooperation mechanisms aimed at facilitating bilateral trade and investment.

During the consultations, both sides also had in-depth discussions on their respective economic and trade concerns.

Together, the two sides reviewed the implementation of the outcomes of the five rounds of economic and trade consultations held last year and gave overall positive recognition to the progress made.

At the same time, we have noticed that the United States has introduced a number of restrictive measures concerning China’s trade and investment.

In particular, the recent launch of two Section 301 investigations includes China among the targets.

The Chinese side made solemn representations to the U.S. side during the consultations and expressed our serious concerns.

China’s position on the Section 301 investigations has been consistent. We oppose such unilateral investigations.

We are also concerned about the potential interference and damage that the results of these investigations may cause to the hard-won stability of China-U.S. economic and trade relations.

China will continue to closely follow the development of these investigations and will take timely measures to safeguard China’s legitimate rights and interests.

During this round of consultations, both sides further recognized that a stable China-U.S. economic and trade relationship is beneficial to both countries and to the global economy.

We hope that the U.S. side will act in good faith, honor its commitments, and work with China in the same direction to promote the long-term, steady development of bilateral economic and trade relations.

Through this round of consultations, the two sides have reached preliminary consensus on certain issues. Moving forward, both sides will continue to maintain the consultation process.

Thank you for your continued attention.

Based on information that has emerged in media reporting, the discussions between the two sides appear to have focused on several main areas.

1. Agricultural Trade

The U.S. side has long sought to expand its agricultural exports to China. During this round of talks, the Chinese side showed a degree of openness to increasing purchases of certain U.S. agricultural products. The items discussed reportedly included poultry, beef, and several non-soybean crops.

At the same time, China reiterated its commitment to maintain purchases of roughly 25 million metric tons of U.S. soybeans annually over the coming years.

2. Establishing a New Institutional Framework for U.S.–China Economic Dialogue

The two sides appear to have discussed a more institutionalized framework to manage trade and investment relations over the longer term. The basic concept involves creating two standing mechanisms: one focused on trade and the other on investment.

The proposed “Board of Trade” appears to be the more developed concept. Its basic idea is to identify products and sectors where the two countries could expand trade without compromising national security or critical supply chains. In essence, it would seek to expand cooperation in areas considered non-sensitive, while avoiding sectors with strategic implications.

The proposed “Board of Investment” would function somewhat differently. Rather than setting broad investment policy, it would likely serve as a platform for addressing specific investment disputes or practical issues encountered by companies operating in each other’s markets. In other words, its purpose would be to deal with “discrete investment issues”, rather than to fundamentally alter the existing investment review regimes on either side.

3. Supply of Critical Minerals (Especially Rare Earth Elements)

The U.S. side also raised the issue of American companies’ access to critical minerals produced in China, including yttrium, a rare earth element used in applications such as jet engine turbines.

The U.S. aerospace industry has been particularly concerned about supply constraints for this material. According to some accounts, the two sides may have identified potential ways to ease tensions surrounding critical mineral supply, although the details have not been publicly disclosed.

Further technical-level consultations are expected to continue. Discussions are likely to focus on the two proposed institutional mechanisms mentioned above, as well as specific U.S. requests for expanded Chinese purchases of Boeing aircraft and American energy products such as coal, oil, and natural gas.

4. The Concept of “Managed Trade”

In recent months, U.S. officials have increasingly discussed the idea of “managed trade.” This concept also involves distinguishing between “sensitive” and “non-sensitive” goods.

In December of last year, U.S. Trade Representative Jamieson Greer offered a relatively comprehensive explanation of this approach. In his view, the United States should actively promote exports in sectors where it holds a competitive advantage, such as agricultural products, aircraft, and medical equipment.

Consumer goods and low-technology products could continue to circulate under normal market-driven trade frameworks. However, high-technology sectors inherently involve national security considerations and therefore cannot be left entirely to market forces. Instead, they require government-level scrutiny to ensure that U.S. national security and technological leadership are not compromised.

Before departing for the Paris talks, Greer reiterated in an interview with CNBC that the United States hopes to maintain a stable relationship with China and achieve more balanced trade, but that bilateral trade should focus primarily on non-sensitive goods.

5. Investment Issues and Domestic Political Constraints in the United States

Regarding the proposed investment mechanism, the United States has already established a relatively robust framework for reviewing Chinese investment. This system is built around legislation such as the Foreign Investment Risk Review Modernization Act (FIRRMA) and related policy instruments.

Given the political pressure from Congress and national security hawks, significant changes to this framework appear unlikely in the near term.

At the same time, reports suggest that China has explored broader cooperation ideas, including the possibility of sovereign-capital-backed funds investing in certain U.S. industries, such as batteries or electric vehicles.

Although Trump has previously said he would welcome Chinese investment in electric vehicles, such proposals face substantial domestic opposition in the United States. The House Select Committee on the Chinese Communist Party has written to the Treasury Department urging it to block Chinese EV entry into the U.S. market. Several major U.S. auto industry associations have also called on the government to restrict Chinese companies from entering the American automotive sector, including through local manufacturing.

Under such circumstances, focusing cooperation on specific investment issues may represent a more realistic path forward.

6. Prospects for Reviving Bilateral Investment

According to some reports, working-level officials from both countries have begun exploring ways to revive mutually beneficial investment. Areas of potential interest reportedly include structured joint ventures, licensing arrangements, and so-called “light intellectual property” cooperation models.

The Chinese side has emphasized the need for stronger investment protection, including greater clarity regarding tariffs affecting supply-chain components and intermediate inputs. The U.S. side, meanwhile, continues to stress managed trade principles and reciprocity.

Chinese officials have also expressed concern about the increasingly stringent scrutiny applied to Chinese investment in the United States, noting that such reviews have already led to declining investment flows and, in some cases, withdrawals.

Meanwhile, the Committee on Foreign Investment in the United States (CFIUS) is reportedly reviewing whether Tencent’s investments in certain gaming companies in the United States and Finland pose national security risks. According to reports, some officials believe mitigation measures could address the concerns, while others argue that the risks are too significant, particularly because gaming companies collect large volumes of user data, including financial information, personal profiles, and chat records.

7. Possible Uncertainty Around Trump’s Planned Visit to Beijing

In a media interview on Sunday, Donald Trump indicated that he has been urging China to play a greater role in ensuring the security of the maritime route through the Strait of Hormuz. If discussions on that issue do not make progress, he said he would not rule out adjusting or postponing the planned visit.

According to his reasoning, compared with the United States, Europe and China rely more heavily on oil shipments from the Gulf region, and therefore countries that benefit from that shipping route should contribute to maintaining its security.

China’s MOFA responds to this, as well as to how to deal with Rubio’s China sanctions if he is to visit Beijing along with Trump. My general take from it is: 1)Beijing will not send ships to the Strait of Hormuz; 2) China is hoping Rubio’s visit and the sanctions are not an issue anymore.

Anadolu Agency reporter:

U.S. President Donald Trump said he is in talks with seven countries about forming an escort coalition in the Strait of Hormuz, which could be announced as early as this week. Trump also wrote on social media that he hopes countries affected by a potential closure of the Strait of Hormuz — including China, France, Japan, South Korea, and the United Kingdom — will dispatch naval vessels to the area to ensure the strait remains secure and free from threats. What is China’s comment on this? Has the U.S. side asked China to participate in the proposed escort coalition?

Lin Jian:

The situation in the Strait of Hormuz and surrounding waters has recently become tense, disrupting international trade routes for goods and energy and undermining regional and global peace and stability. China once again calls on all parties to immediately cease military actions, avoid further escalation, and prevent instability in the region from causing greater negative impacts on global economic development.

EFE reporter:

Some media outlets have reported that U.S. Secretary of State Marco Rubio may travel to China later this month together with President Trump. Since Rubio has been under Chinese sanctions since 2020, will those sanctions affect his possible visit to China?

Lin Jian:

China’s sanctions target Mr. Rubio’s China-related statements and actions during his tenure as a U.S. Senator.

Overall impressions

First, Trump’s visit to China could potentially be postponed.

However, as Treasury Secretary Scott Bessent repeatedly clarified, a delay would not be related to pressuring China to deploy naval vessels to escort shipping in the Strait of Hormuz. Rather, the reason would be that the situation surrounding the Iran war has recently become quite tense, and Trump may need to remain in the United States to coordinate wartime operations, making it difficult for him to travel abroad.

Trump’s remarks to the Financial Times last Sunday—that if China does not play a greater role in ensuring the security of the Strait of Hormuz he would not rule out adjusting or postponing the planned visit—were most likely a form of strategic pressure. It is also possible that those comments were made without prior coordination with cabinet officials such as Bessent. To some extent, Bessent has been trying to walk those remarks back.

At the very least, however, Trump’s statement indicates that—whatever the reason—the White House may indeed be considering whether the visit should be delayed.

Second, the U.S. side appears to prefer framing this round of talks as primarily an “economic dialogue,” while avoiding or sidestepping broader geopolitical or security issues.

One example came when a CNBC reporter asked Bessent whether the talks included discussions on U.S. semiconductor export controls. Bessent answered very clearly: U.S. export controls were not discussed at this meeting, emphasizing that the discussions were meant to function more as an economic dialogue.

Another example comes from China’s Vice Minister of Commerce and Chief Trade Negotiator Li Chenggang, who stated in his media briefing that the topics discussed included:

• tariff levels under the new circumstances

• the possible extension of bilateral tariff and non-tariff measures

• promoting bilateral trade and investment cooperation

Here, the “non-tariff measures” referred to China’s export controls on rare earths. Notably, semiconductor export controls were not mentioned, suggesting the issue was not part of the formal agenda.

At the same time, Reuters reported on the same day—citing sources familiar with the matter—that Hua Hong Semiconductor is now capable of producing 7-nanometer AI chips, and its subsidiary HLMC (Huali Microelectronics) is preparing to launch a 7-nm process line at its Shanghai facility. This would make Hua Hong the second Chinese foundry after SMIC capable of producing 7-nm AI chips.

The report also indicated that Huawei has been working with Hua Hong on 7-nm technology, supported by domestic suppliers including SiCarrier, and that Biren Technology, a GPU design company on the U.S. Entity List, has already begun taping out chips using Hua Hong’s 7-nm production line.

If this trend continues, China’s incentive to raise the issue of semiconductor export controls in negotiations with the United States may gradually diminish over time.

Third, the Chinese side paid particular attention to two newly launched U.S. Section 301 investigations.

The first investigation focuses on structural overcapacity in foreign manufacturing and related industrial policies, while the second targets trade practices related to forced labor. In essence, these investigations represent part of the United States’ effort to rebuild its trade pressure toolkit after the “reciprocal tariffs” were struck down.

However, these investigations also introduce new uncertainty into the tariff arrangements previously reached between China and the United States, since no one yet knows what level of tariffs could ultimately result from these cases.

In response to this uncertainty, the Chinese side made solemn representations during the consultations and expressed serious concerns.

As Li Chenggang stated:

China’s position regarding these investigations has been consistent. We oppose such unilateral investigations. We are concerned that the possible outcomes of these investigations may interfere with and undermine the hard-won stability of China–U.S. economic and trade relations. We will closely monitor the progress of these investigations and take appropriate measures to safeguard China’s legitimate rights and interests.

The U.S. side also spent considerable time explaining the Section 122 tariffs and the two Section 301 investigations.

According to U.S. Trade Representative Jamieson Greer, the U.S. delegation began the talks by briefing the Chinese side on the fact that the U.S. Supreme Court had struck down the reciprocal tariffs, and on the subsequent launch of the two Section 301 investigations. He emphasized that U.S. trade policy itself has not changed; only the policy tools being used have changed.

Greer also noted that the investigations are still ongoing and that the United States does not want to prejudge the outcomes. The two sides held constructive discussions about the investigative process.

When asked by reporters whether China had threatened retaliation, Bessent responded that China–U.S. relations remain broadly stable, and that one of the purposes of these meetings is precisely to prevent the kind of retaliatory escalation seen at this time last year.

If Trump proceeds with the visit to China at the end of the month as originally planned, this Paris meeting would likely be the final round of talks before the summit. However, compared with past summits, the preparatory pace has been far less intensive, and many technical-level negotiations have not yet reached the stage where details can be finalized.

The Iran war and broader Middle East tensions are also introducing uncertainty around the summit, and discussions related to Iran could potentially consume valuable time during the leaders’ meeting.

That said, it may be better not to place excessively high expectations on a single summit at the end of the month. Looking at the broader timeline of China–U.S. engagement this year, there are still two major opportunities for high-level interaction:

• APEC in Shenzhen in November

• G20 in Miami in December

The potential Beijing meeting may therefore serve more as a stepping stone for future outcomes, rather than a venue where major issues are resolved all at once.

The Paris talks also suggest that both sides are likely to continue advancing two new channels of bilateral dialogue—the proposed Board of Trade and Board of Investment—over the coming months. These mechanisms could be used to explore issues such as:

• investment opportunities for Chinese companies in the United States

• arrangements for bilateral investment cooperation

• operationalizing the U.S. concept of “managed trade” and “non-sensitive goods”

• restoring normal trade in selected product categories

At the upcoming APEC and G20 meetings, the two sides are also expected to discuss a range of important issues concerning the broader U.S.–China relationship.

As for the Section 301 investigations, China is clearly one of the targets. However, because of China’s leverage in rare earth supply chains, the U.S. side is unlikely to push too aggressively. This round of discussions therefore appeared to focus largely on explaining, clarifying, and reassuring the Chinese side. At the same time, China made its position clear from the outset, drawing red lines and issuing warnings about the potential consequences.

According to Treasury Secretary Scott Bessent, the two Section 301 investigations will not be completed until July, which means both sides still have plenty of time to negotiate and manage the issue.

As for the Section 122 tariffs, their impact on China is likely to be minimal. First, the measure only has a 150-day window, and it is already facing legal challenges from Democratic state governments and U.S. businesses in domestic courts.

Moreover, under the Section 122 tariff framework, the average U.S. tariff level on Chinese goods has effectively been reduced by about 10 percentage points, which provides China with a meaningful buffer.

How should we assess the outcome of these talks?

I think expectations were actually quite high going in. But the working-level teams on both sides had probably already lowered expectations beforehand, so the positive tone we’re hearing now mostly reflects that the outcome landed pretty much within what both sides expected.

From the U.S. side, a key takeaway is that they’ve gotten some level of reassurance from China on a few issues — things like agricultural and energy purchases, Boeing orders, and rare earths. That doesn’t mean immediate implementation, but at least the direction is aligned.

On the Chinese side, this round helped them get a clearer sense of where the U.S. stands on things like the Section 301 investigations. They now have a better read on the boundaries. On trade and investment, neither side really made concrete concessions, but they did agree to set up mechanisms and outline a path forward — which still matters from a policy perspective.

Overall, both sides got something, but it’s all fairly preliminary. No one walked away with everything they wanted, but both have enough to show for it.

More importantly, this round basically kicks off this year’s U.S.–China engagement, and the start has been relatively stable.

If Trump does go ahead with the planned visit to Beijing later this month, the Paris talks will likely be the last round of consultations before that. But compared to past summits, the preparation this time doesn’t look nearly as intensive. A lot of the technical discussions are still at the framework stage, not yet at the point where details can be finalized.

At the same time, the Iran war and the broader Middle East situation add another layer of uncertainty. If things escalate, Iran could take up a significant portion of the leaders’ agenda, squeezing out time for bilateral issues.

So rather than expecting too much from the Beijing meeting, it probably makes more sense to look at U.S.–China engagement over a longer timeline. There are at least two major touchpoints later this year — APEC in Shenzhen in November and the G20 in Miami in December. In that sense, the Beijing meeting is more likely to serve as a setup for future outcomes, rather than delivering major breakthroughs on its own.

The Paris talks also suggest that both sides are converging on the idea of building new mechanisms to support trade and investment cooperation. In practice, that likely means setting up a Board of Trade and a Board of Investment as ongoing channels, where more specific issues can be worked through over the coming months — including things like Chinese investment in the U.S. and related arrangements.

At the same time, both sides may try to operationalize ideas like “managed trade” and “non-sensitive goods,” and explore ways to resume or expand normal trade in selected categories. These issues will likely continue to be discussed in upcoming multilateral settings like APEC and the G20.

When asked which of the three factors—compute, data, or algorithms—is the biggest bottleneck for AI development, and which breakthrough could drive the next wave of progress, he said the answer changes over time.

In the early days, many people believed algorithms were the key, and that advances in algorithms could take AI directly toward AGI. Later, as model sizes and parameter counts expanded dramatically, people began to worry that the amount of usable data on the internet might be insufficient, raising concerns about “running out of data” and hitting a ceiling in pre-training.

As researchers started exploring ways to address the data problem, it gradually became more manageable. At that point, the focus shifted to compute, with concerns that there might not be enough computational power to sustain continued scaling. But with technological progress and companies like NVIDIA ramping up production aggressively, access to compute has also improved.

Now the conversation is shifting again. Some people argue that the algorithms themselves may be the limiting factor—that current methods may be inefficient, struggle with issues such as catastrophic forgetting, and may not scale indefinitely. Many researchers even predict that the Transformer architecture itself could eventually be replaced or fundamentally redesigned.

He argues that AGI does not currently have a single authoritative or clearly defined meaning. Compared with “AI,” the conceptual boundaries of AGI remain ambiguous. Both academia and industry hold different interpretations of its scope and implications. As a result, any discussion about AGI inevitably begins with the question of how it should be defined.

In his view, AGI is likely achievable as long as the definition is reasonable. If AGI is defined in a way that is not overly grand or unrealistic, but instead operational and concrete, then achieving it becomes more a matter of time rather than principle. From the day it was founded, Zhipu has set AGI as its long-term goal and has developed its own internal framework for defining it.

AGI is often defined using behavioral criteria, similar to how the Turing Test defines intelligence through observable behavior. One common view is that when AI reaches the average level of human performance across a wide range of capabilities, it can be considered AGI. Once such a behavioral definition is adopted, it becomes possible to work backward to determine the technical roadmap—gradually improving models so that their performance across different tasks approaches or matches human-level ability.

When asked whether the world’s main general-purpose large model players — now roughly four or five, mostly in China and the United States, with Europe’s Mistral as another example — might eventually narrow down to just one, Zhang Peng said his instinct was that this would not happen.

In his view, technological development needs diversity, especially in the early and middle stages, when there are still many possible paths for innovation and many different research directions. At that stage, companies will naturally differentiate from one another, and each can still find room to survive. On top of that, the market itself is very large and still expanding rapidly, so there is enough space for multiple players and no reason for the field to converge too quickly.

He argued that in the early and middle phases, the ecosystem is likely to remain diverse. Even if one company gains an advantage, that does not mean it will automatically take the whole market. A true winner-takes-all outcome is more likely only once the technology becomes relatively stable and the pace of innovation slows, at which point Matthew effects become stronger. At the current stage, however, he does not think one company dominating everything is likely, nor does he see any clear sign that the industry is heading in that direction.

Transcript of the conversation is below:

The public’s questions about AI still have not gone beyond Turing’s nine objections

Fang Sanwen: What is AI?

Zhang Peng: AI is an abbreviation for Artificial Intelligence. In the most straightforward sense, it means using technological methods — whether computers or other means — to simulate human intelligence and ultimately serve people.

Fang Sanwen: In his 1950 paper Computing Machinery and Intelligence, Turing proposed the concept of intelligence, and later the Dartmouth conference directly defined artificial intelligence. What is the relationship between the AI we talk about today and Turing’s concept of intelligence, or the AI defined in 1956?

Zhang Peng: If we describe it in terms of logic or mathematics, intelligence is the bigger circle, and artificial intelligence is one part of it — specifically, our attempt to simulate human intelligence. So when we talk about AI or artificial intelligence today, we are still basically referring to the concept proposed at the 1956 Dartmouth conference. That said, as time has passed and technology and markets have changed, the meaning of AI has continued to evolve. Today’s AI covers a broader range of things than it did back then, but the core objective has not changed.

Fang Sanwen: Are large models and AI the same thing?

Zhang Peng: Large models are just one of the technical approaches we use to realize artificial intelligence.

Fang Sanwen: From the 1950s to today, what major milestones has AI gone through?

Zhang Peng: It has been more than 70 years, though not yet 80. Over those decades, AI development has not been smooth at all. Most people agree there have been three waves of AI, or strictly speaking, you could say we are now in the fourth. Why has it risen and fallen? I think that is historically inevitable. Nothing develops in a perfectly upward curve forever. Along the way you run into all kinds of challenges and difficulties, and when combined with the broader social and economic context of the time, ups and downs are perfectly normal.

Fang Sanwen: What was the perceptron proposed in 1958?

Zhang Peng: The perceptron is a mathematical method. Put simply, it tries to find a so-called “hyperplane” in the space of data, dividing that space into two parts: one side corresponds to the result we want, and the other to what we do not want. In essence, it is a classification problem. The perceptron is one method for finding that hyperplane. You set up a model and let it locate the hyperplane more accurately through iterative learning from data. Its significance for AI is that it laid an important foundation: it introduced the idea that machines can learn from data to solve specific problems. Just as humans learn through practice and refine their understanding through feedback, the machine iterates toward a solution rather than applying a fixed formula once and for all. That is fully consistent with the logic behind today’s large models and deep learning. You could say it is the origin, the ancestor, of machine learning.

Fang Sanwen: In 1966, MIT developed what is generally regarded as the first true chatbot, Eliza. Today people are especially fascinated with ChatGPT, which is also all about conversation. Why is AI so closely tied to chatting?

Zhang Peng: I think it comes back to the essential goal of artificial intelligence: using machines or technology to achieve something like human intelligence. But how do you determine whether what you have built really has human-like intelligence? You need some way to test it. For humans, the most natural test is conversation: can I tell whether you are a person or not? That starting point shaped a lot of the work that came later.

Fang Sanwen: In 1973 there was the Lighthill Report, which highlighted the limitations of AI and led to a decline in investment. What were those limitations at the time?

Zhang Peng: The Lighthill Report pointed to several things. First, the AI research community at the time was dominated by optimism. Even back then people were already proclaiming that we would achieve general artificial intelligence within 20 years. The vision was admirable and the goals were ambitious, but the practical difficulties were huge. At the time, computers had very weak processing power. Second, data was not well organized. Third, early AI methods were basically based on the symbolic school, which could only solve a very limited class of problems — things like mathematics and physics that could be expressed in a complete symbolic system. The moment you expanded into broader knowledge or common sense, it stopped working. So people began to reassess AI investment more soberly, and that led to the first AI winter.

Fang Sanwen: Is it fair to say that in any scientific field, there is always a large gap between the ultimate goal or aspiration and the resources and pathways actually available today?

Zhang Peng: That gap is exactly what drives an industry or a technology forward. It is like osmotic pressure in physics and chemistry: when the concentration differs on the two sides, it creates movement. The same is true here. When there is a gap between your ambitious goal and what your current resources and technologies can actually achieve, that gap stimulates people to keep researching, to find new methods, and to invest new resources. That is perfectly normal. The only question is how large the gap is.

Fang Sanwen: Is the equilibrium created by that osmotic pressure a kind of dynamic equilibrium?

Zhang Peng: Yes, absolutely. AI’s development has gone through repeated cycles of boom and bust. Why was there a second wave after the first winter? Because people once again saw the possibility of a new dynamic equilibrium. New resources came in, the “osmotic pressure” changed, and it seemed possible to overcome or make use of that gap. So people invested in new methods and new resources. It is always a dynamic process.

Fang Sanwen: In 1981, the first computer equipped with a GPU appeared. What is a GPU? It is very hot today — what is its relationship with AI?

Zhang Peng: A GPU is relative to a CPU. A CPU is the core processing unit of a computer, the central processor. A GPU is a graphics processing unit, originally designed to take some graphics-processing work off the CPU’s shoulders. The interesting thing is that GPUs are especially well suited to floating-point computation, whereas CPUs are more focused on integer computation. GPUs were specifically designed to strengthen floating-point capabilities. That happens to align very well with AI and scientific computing, both of which involve massive amounts of floating-point calculation. Some scientists therefore began asking whether hardware acceleration could speed up scientific-computing algorithms. Nvidia recognized this early. Jensen Huang reportedly sent GPU cards to many scientists with one simple request: run your algorithms on them and let us see the results, so that the company could demonstrate their value.

Fang Sanwen: Then in the late 1980s and early 1990s, AI entered a second winter. What happened in between, and how was it different from the first one?

Zhang Peng: The second upswing came because people found a new method: expert systems. Building on first-generation methods like the perceptron, researchers used structured knowledge representation to give computers expert-like specialized knowledge so they could answer questions. That was the success of second-generation AI. But after some development, people realized that even though this approach was theoretically more complete, there were still major practical problems. In principle, you could write down human rules in if/else form and hand them to the machine. But once you scaled up, could all knowledge really be exhaustively enumerated? In medicine, for example, could you fully enumerate all diseases and all treatment options? Writing all of that down might require an astronomical amount of effort. That is a problem of implementation cost and time. Second, even though computing power had improved, once you injected large amounts of expert knowledge, computation grew explosively. It still could not meet real needs. The “water level” is always changing: you see computing improve, so you introduce new methods and add more complexity, and then once again you discover computing power is insufficient. It is a dynamic, mutually reinforcing process.

Fang Sanwen: In 1997, Deep Blue defeated the world chess champion. What was the significance of that?

Zhang Peng: It was hugely symbolic. People tend to think conversation is easy, but chess is much more complex and implies a much higher level of intelligence. If a machine can outperform a human in chess, then it suggests machine intelligence has reached a certain threshold. That was the significance of Deep Blue defeating Kasparov.

Fang Sanwen: Almost 20 years later, in 2016, AlphaGo defeated Lee Sedol. How was AlphaGo technically different from Deep Blue?

Zhang Peng: The implementation path was different. Deep Blue mainly relied on search methods. Given known game records or the current board state, it searched for the next move, looked ahead a number of steps, and used Monte Carlo tree search and pruning. It did not search the entire space, only part of it, and tried to find the best possible solution within limited time. AlphaGo followed a similar overall path, but with a different implementation: it used neural networks and large amounts of data to approximate the search and prediction process. Both aimed to search the space and predict the best move, but they predicted in different ways. You can think of AlphaGo as more of an end-to-end approach, while Deep Blue was more rule-based, a pipeline with one component feeding into the next.

Fang Sanwen: In simple terms, what is deep learning?

Zhang Peng: Deep learning refers to algorithms with many layers. A single layer of neurons or computing units can solve only very simple problems. For more complex problems, you stack many layers on top of each other. The more layers there are, the more situations the model can represent, and the more complex the computation becomes.

Fang Sanwen: So it is basically functions wrapped inside functions?

Zhang Peng: Exactly. One layer nested inside another, built up continuously.

Fang Sanwen: From the perspective of end-user infrastructure, PCs spread around 1995, and around 2000 the internet became widespread, connecting machines and data. Was that related to the development of deep learning?

Zhang Peng: Absolutely. Deep learning requires a huge amount of computing power. That is why GPUs became so important: their floating-point capabilities are strong. Improvements in computing hardware were a prerequisite for deep learning’s rapid development. Compute is like an engine: the stronger it is, the more power it can produce. Data is like fuel: you need large amounts of good-quality fuel for the engine to run longer and produce more output. PCs and the internet provided vast quantities of data.

Fang Sanwen: Google published the Transformer paper in 2016, and not long afterward OpenAI released ChatGPT. Are those two things connected?

Zhang Peng: Definitely. OpenAI really pivoted toward large models after that paper was published. OpenAI was founded in 2015, and up to around 2018 it was not on this track — it was more focused on reinforcement learning. Not long after the Transformer paper came out, around 2018, scientists led by Ilya made a decisive shift and began GPT-related research based on that architecture.

Fang Sanwen: When the first version of ChatGPT came out, did you pay attention to it?

Zhang Peng: There were really two phases. When they started working on GPT in 2018, it did not attract that much attention and the results were not that strong. GPT-2 got some attention, and the academic world debated it with mixed views. Some said it was just brute force rather than an algorithmic breakthrough, while others saw it as a promising new paradigm. At that point there was more discussion overseas and relatively less in China. Thanks to the Tsinghua environment, we had more exposure to the international academic world. What really made people sit up and take notice was GPT-3 in 2020. Once GPT-3 came out, we focused on it and realized it might represent a turning point in the paradigm itself.

Fang Sanwen: Why did you make that judgment? What breakthroughs or phenomena did you see at the time?

Zhang Peng: Before that, we had been using traditional machine-learning methods for NLP tasks such as dialogue and question answering, but we had never really reached a satisfying result. Traditional NLP required a long algorithmic pipeline to process a sentence: identify its structure, nouns, verbs, and so on, and then try to understand it. But with GPT, we discovered you did not have to do all that. You could just feed the sentence in and it would answer — and answer very well. That was end-to-end problem-solving without the need for all that complex decomposition. In many cases, it crushed the traditional pipeline approach. That made people realize this method had clear advantages, and that it might be the next technological paradigm.

Fang Sanwen: The release of DeepSeek-R1 seemed to overturn a lot of people’s assumptions. In terms of both principles and performance, what breakthrough do you think it represented?

Zhang Peng: DeepSeek attracted a lot of attention in the industry, but it is still following the same broad path. It is not like GPT compared with traditional machine learning, where the methodology itself was fundamentally different. DeepSeek is not a methodological-level break. What it has done is more about reducing cost and optimizing engineering — pulling the industry back from the simple logic of “just throw in more parameters and more data.” It showed people that you do not necessarily have to keep scaling blindly; you can optimize the algorithms, reduce cost, and improve results at the same time. Even more importantly, at that moment it open-sourced the technology and handed it over to the community, academia, and industry for free use. That had a huge impact on the market.

Fang Sanwen: AI development involves compute, data, and algorithms. Which of these is the biggest bottleneck right now, and which kind of breakthrough is most likely to drive the next stage of development?

Zhang Peng: The answer changes over time. At first, people thought algorithms were the key and could take us directly to AGI. Later, when model parameter counts grew, people began to worry that the data available on the internet was not enough, and that pre-training might hit a wall. Then people worked on solving the data problem, and now that seems more manageable, so people worry that compute is insufficient. Later, technology advances and Nvidia keeps producing more chips, so compute becomes more available. Then people swing back and say the algorithm itself has problems — that efficiency is too low, catastrophic forgetting is unresolved, and maybe Transformer itself will eventually need to be replaced. So it is a dynamic cycle, an upward spiral.

Fang Sanwen: Do you see AGI as an abstract goal or a concrete one? Is it ultimately achievable, or can we only keep approaching it asymptotically?

Zhang Peng: AGI is not defined as clearly as AI. Its meaning and boundaries have never had a fully authoritative definition. But can AGI be achieved? As long as we define the goal properly — not in some absurd way — then in all likelihood it can be achieved. The real question is how long it will take. From the first day Zhipu was founded, our goal has been AGI, and we have our own definition of it.

Fang Sanwen: For the general public, does AGI feel a bit like the ultimate truth in science — something hard to make concrete?

Zhang Peng: Ultimate truth is hard to depict because nobody really knows what it looks like. But in science, there are different ways to define things. Turing, for example, defined intelligence behaviorally. AGI is often approached in the same way. One view is that once AI reaches the average human level across various capabilities, that counts as AGI. Once you have a behavioral definition, you can work backward: what technical capabilities do we need to match the human level? So the path depends on how you define the goal.

Fang Sanwen: In today’s public debates over AI, has anyone really gone beyond the nine objections Turing raised?

Zhang Peng: Basically not. AI has gone through several ups and downs over more than 70 years, but the questions keep coming back to the same place. The philosophical issues were identified very early on. What has changed is not the questions themselves, but the paths and methods we use to approach the ultimate goal that was defined from the beginning.

The boundaries of AI applications

Fang Sanwen: What exactly is a large model?

Zhang Peng: First of all, the word “model” is not hard to understand — it is basically the carrier of an algorithm. Traditional machine learning also had models, so there is nothing novel about that. The key is the word “large.” Why do we call it a large model? Going back to deep neural networks, you can think of a model as a giant computational matrix, where each element of the matrix is a parameter. Input data goes through matrix multiplication and addition to generate an output. That matrix is the core of the model. In a large model, the matrix is extremely large, which means the number of parameters is extremely large. A traditional perceptron might have only two or three parameters; a large model may have tens of millions, hundreds of millions, billions, or even hundreds of billions of parameters. That is why it is called a large model.

Fang Sanwen: Even non-specialists roughly know that there are different categories of large models. One is the general-purpose model, like ChatGPT, Grok, Gemini, or Zhipu’s GLM. Another consists of models tailored for specific domains or scenarios. Is that a valid two-part division?

Zhang Peng: After ChatGPT became popular, there was a lot of debate in China over whether it made sense to divide the field into general-purpose models and vertical or domain-specific models. We prefer to go back to first principles and ask: why would you divide them this way? We belong to the general-purpose model camp. At the time, some people argued that general-purpose models were trained on broad data, had huge parameter counts and high costs, but could not solve specialized problems. Others argued that you should build smaller models trained on domain-specific data to solve professional tasks — so-called vertical or specialized models. But later we found a paradox. If you already have access to specialized data, why not simply add that data into the training of the general-purpose model? Would it not then be able to solve the specialized problem too? Why build a separate specialized model? The second issue is whether a smaller domain-specific model trained on limited data will necessarily outperform a general-purpose model. In practice, once the general-purpose model incorporates specialized data, its performance often surpasses that of the specialized model. So the two fundamental premises behind specialized models start to collapse. In practice, people have increasingly seen this as something of a false proposition.

Fang Sanwen: That seems to point toward a rather alarming conclusion: all large-model companies are competing within the same general-purpose model business model. What will the competitive landscape look like in the end? Will there always be many general-purpose large models, or will the number keep shrinking?

Zhang Peng: Convergence is inevitable. Building these models is very expensive. It requires enormous amounts of compute, data, and talent. If everyone starts from scratch, then resources are being duplicated. From the standpoint of resource optimization, the field will naturally converge around a few leading players, while others will do different things. That is the broad direction. What we are seeing now is more specialization — not only in applications, but also in model infrastructure, platforms, specific vertical use cases, and services. That is how a broad ecosystem forms. But the barrier to entry for the base model itself is simply too high for most companies.

Fang Sanwen: The world’s main players in general-purpose large models are probably four or five, mainly in China and the US, with Europe’s Mistral as another example. Do you think it could eventually come down to just one?

Zhang Peng: My intuition is no. Technological development needs diversity, especially in the early and middle stages, when there are many possible directions for innovation and research. Different players have room to differentiate and survive. On top of that, the market is huge and growing quickly, so there is enough space. It will not converge overnight. In the early and middle phases, you will have a diverse ecosystem. It will not become winner-take-all just because one company gains an advantage. A single dominant player becomes more likely only when the technology becomes relatively stable and innovation slows down, because then you get stronger Matthew effects. At the current stage, that is not what we are seeing.

Fang Sanwen: What mainly determines the differences between large-model companies — compute, data, or algorithms?

Zhang Peng: All of them matter. Compute reflects resource investment: what kind of compute you can get, in what quantity, and at what cost all determine the efficiency, speed, and capacity for innovation. Data is similar: if you can access high-quality data in certain areas, you gain an advantage there. But algorithms are even more fundamental. Whoever can innovate faster and more consistently at the algorithmic level will rank higher in the industry.

Fang Sanwen: Some people think that for ordinary people, AI has mostly just made it easier to retrieve and organize information, without yet changing daily life that much. Do you think that broader change will come?

Zhang Peng: It definitely will, and in fact it is already happening. In office work, jobs, and daily-life scenarios, AI can already help us do many things. I am not someone who enjoys wandering around shopping malls. For many tasks, I would much rather have AI handle everything with one click. That is why we launched AutoGLM. On my phone, if I want to buy something on an e-commerce platform, I may just have an idea and ask AI to pick out a few options, put them into the shopping cart, and optimize for the lowest price or the best value for money. I would only need to confirm and pay at the end. Things like that are already starting to happen in everyday life.

Fang Sanwen: Can you give some examples of industries that AI has already changed?

Zhang Peng: In some areas, the changes are not very visible to the public — take industry or pharmaceuticals. Traditionally, developing a new drug took a very long time. You had to screen huge numbers of compounds, run experiments, and spend a lot of money. Now AI can help with drug design and molecular screening. For example, when you are trying to match small molecules to protein structures, AI can do much of that large-scale screening work. Then there is AlphaFold. In the past, figuring out protein structures required painstaking experimental reconstruction. Now AlphaFold can use historical data to generate predictions much more quickly, allowing researchers to identify promising candidates computationally before confirming them in the lab. That has already changed those fields enormously, and in time it will affect ordinary people as well — maybe drugs will not be so expensive in the future.

Fang Sanwen: Can AI help doctors, or even replace them in some roles?

Zhang Peng: Definitely. Both in China and abroad. There is a large body of foreign research literature and clinical data that AI can analyze to help doctors handle difficult cases or support medical research. In China as well, hospitals and commercial firms are developing related products to help primary-care doctors with knowledge support, training, and so forth.

Fang Sanwen: Is assisted driving or autonomous driving also an AI application direction?

Zhang Peng: Autonomous driving has been worked on for more than a decade. Replacing human drivers may be possible, but like AGI, the first question is how we define the essence of “full autonomy.” What problem exactly are we trying to solve? Once you describe the goal clearly, then you can ask what current methods can achieve, what their defects are, and what the next methods need to be. It all depends on the definition. We can only keep approaching the part we understand through behavior, making the system look more and more like the target behaviorally. But because we still have not fully unpacked the essence of intelligence or how it forms, we cannot guarantee 100 percent success.

Fang Sanwen: So if it is a kind of imitation game, the path is simply to keep getting closer?

Zhang Peng: Exactly. Keep approaching it.

Fang Sanwen: But if you had fully cracked it — understood the whole inferential process — then in principle you could reproduce it without limit?

Zhang Peng: That is the difference between a black box and a white box. In AI’s evolution, the first and second generations were more like white-box approaches. But people found that path very exhausting. Then with third-generation deep learning, the field gradually shifted toward black-box approaches, because white-box approaches ran into too many unresolved problems. Some people said: forget about explaining every internal mechanism — the human brain is also a black box. Just use a black box to model a black box, and judge it by the input-output results. The outcomes turned out to be surprisingly good, so people shifted to end-to-end methods.

Fang Sanwen: Even if a black box can get extremely close, that does not necessarily mean it can reproduce the target with unlimited precision, right?

Zhang Peng: There are two sides to that. First, if your black-box model gets arbitrarily close to a human, then of course it is reproducible in the sense that it is just data — you can copy it. But what remains non-reproducible is that you cannot fully decompose it and say exactly why it works, or isolate certain capacities and reconstruct them in a white-box way. So the issue has two sides.

Fang Sanwen: What exactly is the relationship between humans and AI? A lot of people say: the more capable AI becomes, the more likely I am to lose my job. How do you see it?

Zhang Peng: It is complicated, and it is something everyone has to confront. This generation of AI is different from previous ones because it can finally engage in something close to an equal conversation with humans, and in terms of knowledge it may exceed the average person. That creates a real challenge. Humans only know how to deal with other humans; we have not really had to coexist with AI before. We do not yet know how to interact with it harmoniously. But I do not think human intelligence is going to stop evolving. Humans are extremely adaptable. Throughout history, whenever there were technological or social upheavals, people worried that humanity faced some huge crisis or would be replaced — but we got through it, and in many ways life kept getting better. Human beings themselves are also advancing and evolving. So AI may not be an absolute crisis; it may even accelerate human evolution.

Fang Sanwen: What is the biggest difference between human intelligence and machine intelligence?

Zhang Peng: We once divided the AGI path into L1 through L5: knowledge learning and compression, reasoning, self-learning, rudimentary consciousness, and full consciousness. Large models today have probably progressed to somewhere around the middle stage of self-learning. The real difference comes in the latter two stages: humans have self-awareness. We know that “I am me.” AI obviously cannot do that yet.

Fang Sanwen: The biggest AI competitors globally are the US and China. In your view, what exactly are they competing over?

Zhang Peng: Personally, I think it is a competition between two different development paths or philosophies of AI.

Fang Sanwen: What is the American path, and what is the Chinese path?

Zhang Peng: The US seeks extreme innovation in AI. It is all about reaching the highest frontier through concentrated capital and concentrated effort among a small number of top players. China is different. It is much harder in China to concentrate such massive resources on a small set of firms and just brute-force the outcome. In China, there is much more emphasis on certainty and broad accessibility. So the Chinese path is one of steady, grounded progress: first, innovation has to keep up, and we cannot lag too far behind; second, at every stage, the goal is to convert technological progress into productivity and economic value that improves life. Policymakers in China talk a lot about “AI plus all industries,” AI empowerment, and improving livelihoods and the economy. China’s approach is not to fly past everything and focus only on the final destination; it is to keep laying eggs along the way, making each stage of progress useful across different sectors. That path is much more efficiency-driven and ROI-driven, with a stronger emphasis on cost-benefit calculations.

Fang Sanwen: So as in many industries before, China focuses more on implementation, applications, industrialization, and commercialization, emphasizing user experience and commercial efficiency. Do you think AI competition will continue to follow this division of labor for quite a long time?

Zhang Peng: Possibly, yes. At least in our country, that will likely continue, because it reflects deeper historical and cultural factors. The top US firms are focused on going from zero to one. China is more focused on going from ten to one hundred — and in fact on the steps from one to ten and ten to one hundred — because that is how you achieve broad accessibility at scale.

Zhipu’s business model and moat

Fang Sanwen: Zhipu is itself a case of AI deployment, industrialization, and commercialization. Could you briefly explain Zhipu’s business model?

Zhang Peng: Zhipu has thought about this quite clearly. Around 2020 or 2021, we were already working through this issue. The technology did not originate with us, but we caught up quickly. At that time, we asked ourselves how this technology could become a business — what the commercialization path would be. We proposed MaaS, Model as a Service: turning the model itself into a service that people can understand, use, and embed into their products, systems, and daily lives. That became our business model.

Fang Sanwen: Was that the model you settled on at the company’s founding, or did it emerge gradually?

Zhang Peng: It emerged gradually. In the early days after the company was founded in 2019, we were still focused more on academic applications and exploring some services. Later, an independent external team explored MaaS commercialization and served more categories of clients. At a certain point, we concluded that this model was the right one, so we integrated that team back in. Now it has grown quite a lot and is performing very well, which also shows that MaaS is currently one of the more viable commercialization paths for large models.

Fang Sanwen: Is this model the best temporary answer, or is it a stable long-term form?

Zhang Peng: I think MaaS will remain relatively stable for quite a long time, but it is definitely not the end state. There are still many uncertainties about the eventual destination. One thing that seems clear is that large models are increasingly evolving into infrastructure — something like water, electricity, or gas: intelligent infrastructure that society needs to function. Infrastructure has to be standardized, affordable, and easy to access. MaaS fits that shape very well. Another direction is that beyond the model as infrastructure, there will also be very different forms of applications, possibly integrated with hardware and embedded in phones or terminal devices to create new kinds of products. It is like electricity and electrical appliances — there are big market opportunities at both ends.

Fang Sanwen: So on one side there are base models, and on the other side applications built on top of them. Are you more focused on the latter?

Zhang Peng: Not exactly. We do both at the same time. But our main focus is still the foundation-model side of MaaS. We do also have some applications on top.

Fang Sanwen: Could you give a concrete example? What kind of MaaS service do you provide to your clients, and what problems does it solve?

Zhang Peng: There are many examples. Our major clients include nine of China’s top ten internet companies. One client experienced a situation last year where an international event caused a large number of users from an overseas social-media platform to migrate to a domestic social platform, but there were language barriers: foreign users could not understand Chinese, and Chinese users could not understand foreign languages. We used our model to help solve a large volume of translation work. Another example is our cooperation with Samsung. We integrated model capabilities into the handset itself, so users can use them on-device, which helps address data-privacy concerns. Chat records and images do not have to be uploaded to the cloud; they can be searched and edited locally. Those are all examples of solving real-world problems.

Fang Sanwen: How large do you think the AI applications market is?

Zhang Peng: Gartner estimates it will be in the trillion-dollar range. Some reports say the global AI market could reach $4.8 trillion by 2033. In China alone, it should be at least in the trillion-renminbi range.

Fang Sanwen: Who are your main competitors at the moment?

Zhang Peng: We are an independent general-purpose large-model provider, and there are not many players of that kind in China. But the big tech firms are also doing similar things — building base models and AI-related businesses — so they are our peers, competitors, and partners all at once.

Fang Sanwen: Relative to those competitors, what is your company’s enduring advantage?

Zhang Peng: We are highly focused. First, our understanding of AI has been ahead of the market average from day one. Second, we positioned ourselves from the beginning as a general-purpose large-model company with AGI as the goal, and we are willing to not do other things in order to stay focused on that. That is our biggest advantage. Based on that positioning and concentration, we can create market opportunities through technological innovation and product iteration, and then turn those into commercialization opportunities. The capabilities of a general model are not something abstract; at every stage they can be translated into concrete applications. Recently we have been particularly focused on coding ability. That is a general-purpose capability, and once you focus on it, the technical, product, and commercial value can be enormous. That comes from understanding the importance of the issue early and accurately, and from having top-level technical capability.

Fang Sanwen: Is your advantage mainly in the model itself, or in deployment and applications?

Zhang Peng: You cannot separate the two. In this AI wave, the loop from algorithm research to engineering implementation, productization, and user feedback has become extremely compressed. It is not like the old days, when a lab would publish a paper and years later someone might turn it into a demo, then a product, then iterate again. In this wave, it took only about five years from algorithmic innovation to something like ChatGPT going online and then instantly reaching hundreds of millions of users. The cycle has been compressed dramatically. So you cannot say, “We will perfect the algorithm first and think about delivery later.” That is no longer possible. It all has to be integrated. We research while simultaneously shipping, so people can use the product, give feedback, and help us make it more useful.

Fang Sanwen: There may be fewer and fewer general-purpose large-model providers, but will the number of players taking model capabilities into specific enterprise scenarios keep growing?

Zhang Peng: Absolutely. That “last mile” of turning model capabilities into customer needs and product features will definitely keep expanding, because demand is huge. That is the direction the ecosystem is heading.

Fang Sanwen: If many players enter that space, could profit margins get driven very low? For example, image-recognition capability was eventually deployed into many different scenarios by many vendors, and margins became thin.

Zhang Peng: That kind of thing tends to happen when the technology approaches its ceiling. For example, once face recognition reaches 97 or 98 percent accuracy, pushing a little higher may not matter much. The technology becomes stable, everyone piles in, they compete on cost, and prices get driven down. But large models are still in a phase of rapid technological growth. The technology premium is still high, and innovation is still very active. So we are not yet at the stage of pure low-price competition. What we need to do is stay ahead in innovation while the curve is still rising, and use that pace of innovation to create market space and capture the premium that comes with it.

Fang Sanwen: Is the main purpose of your R&D spending to maintain a leading edge in large models themselves, or to improve productization and commercialization in terms of user experience and efficiency?

Zhang Peng: Definitely the former. The upper limit of our base model capability is the foundation of everything. All commercialization rests on that.

Fang Sanwen: This industry includes both domestic and international giants. Is it difficult to maintain an advantage?

Zhang Peng: There are definitely challenges. But precisely because there are challenges, the team feels we have to do it — and we have to succeed. We have that confidence.

Fang Sanwen: The major platforms can invest far more money than you can, so it is hard to compete with them on compute; in terms of data, they also have huge reservoirs of internet content. Does that mean your edge lies in algorithms?

Zhang Peng: The three elements should not be viewed in isolation. On compute investment, of course we cannot match the big platforms — they can afford much more. On data, I would also not assume they can simply take all those data resources and legally use them for training for free. There are legal issues involved. Algorithms and R&D capability are our strengths. If you look at the three elements separately, everyone has strengths and weaknesses. But how you combine them and produce a real chemical reaction — that tests the capability of the team. And even more fundamentally, it comes down to how deeply you understand AGI and AI at the level of first principles. Let me give one example: a major platform also began working on large models relatively early, but after a period of investment, its team was asked how to commercialize it, was pushed hard into commercialization, failed, and was then replaced. The big firms do not have unlimited patience either; they have performance requirements. So there is no need to overstate the supposed omnipotence of the big platforms.

Fang Sanwen: It sounds like this is a market that takes courage to enter. Are you a courageous person?

Zhang Peng: Our team has a lot of courage.

Fang Sanwen: Your business model is built mainly around the enterprise market. What are you doing on the consumer side?

Zhang Peng: We thought about that very early. Why should we even divide things into B2B and B2C? What is the principle behind that distinction? Nobody can explain it clearly. At the commercial level, people say B2B and B2C products differ in form and payment model. But from the perspective of product and technology, if you go back to first principles, there is no essential difference, because whether you are serving enterprises or internet users, in the end you are serving people. People will only pay if they recognize the value and get real gains from the technology and the product. The difference lies in the payment logic and the decision-making logic of B-side and C-side customers. But AI is productivity at its core, and payment depends on the value added through gains in productivity. Without that, nobody pays. So the consumer side is not our current focus. It is like electricity: whether the user is an individual or a company, what is the real difference? There is none. In both cases, people pay because it is useful.

Fang Sanwen: So for now, commercialization is still mainly on the enterprise side?

Zhang Peng: The future is highly uncertain, which is why I keep saying that the biggest challenge in this era comes from human beings themselves. When faced with something new, people can only linearly extrapolate from the past to predict the future, and they can never predict things that lie outside their existing frame of reference. A lot of problems ultimately come from that. Zhipu should keep moving forward with the AGI ideal. When the market needs a certain form, we will become that form. At this stage, we believe this model is a good fit for us, so we will keep moving down this path. As for the much more distant future, we cannot predict it, and there is no need to artificially limit ourselves.