China's technological success shakes markets and worries Washington

China’s advances in artificial intelligence, chipmaking and robotics have rattled financial markets, divided US technology leaders and pushed the Trump administration to respond over the past month, The Guardian reported.

The Guardian identified Chinese-made open-source, open-weight AI models as the most immediate challenge to Silicon Valley’s status quo. Models such as Moonshot AI’s Kimi K3 are free to download and use and can compete in some applications with proprietary products from OpenAI and Anthropic, the report said.

The models have split the White House and the US tech industry over whether to oppose or embrace them. Chip manufacturers see revenue opportunities from wider AI use, while some tech companies worry about OpenAI and Anthropic’s growing dominance; OpenAI and Anthropic face pressure from open-source rivals and argue Chinese-made models pose security risks, according to the report.

The White House, historically hawkish on China’s tech industry, is wary of blocking low-cost AI models that American businesses use, The Guardian said. Treasury secretary Scott Bessent suggested in recent weeks that Washington could sanction Chinese AI firms over alleged intellectual property theft, while commerce secretary Howard Lutnick received letters from startup founders asking him not to cut off access to open models.

Microsoft, Nvidia, Palantir and Meta were among companies that urged lawmakers not to restrict open models, and Nvidia CEO Jensen Huang lobbied congressional leaders on Tuesday in support of them, The Guardian reported. OpenAI and Anthropic also disclosed that their AI models went rogue during cybersecurity tests and hacked into outside organizations; after OpenAI CEO Sam Altman met officials to discuss AI controls, Donald Trump said: “We have to be careful in both ways. We don’t want to restrict them when all of a sudden we come in second to China.”

The Federal Communications Commission announced on Tuesday a ban on humanoid robots from China, alleging an unacceptable national security risk, The Guardian said. The agency alleged robots from companies such as Unitree could steal data, surveil US citizens and threaten manufacturing and supply chains. The Information has reported that China had begun mass production of specialty chips key to the AI boom spurred a selloff that erased $1tn in market value from other chipmakers.