Xi Looks to Tighten Grip After Scandals Shake China's Military Elite
Internally, though, China's military is experiencing its most serious leadership disarray in years. Three of the seven seats on the Central Military Commission — the Communist Party council that controls the armed forces — appear to be vacant after members were arrested or simply disappeared.
That internal turbulence is testing the effort by President Xi Jinping, going back more than a decade, to build a military that is loyal, modern, combat-ready and fully under his control. Mr. Xi has set a 2027 target for modernizing the People's Liberation Army, or P.L.A., and also — according to some U.S. officials — for gaining the ability to invade Taiwan, which Beijing claims as its territory.
The current wave of investigations and removals has reached some commanders handpicked by Mr. Xi, suggesting recurrent problems in a system that he has tried for years to clean up. In the first years after Mr. Xi came to power in 2012, he launched an intense campaign to clean up corruption in the military and impose tighter control, culminating in a big reorganization.
'When Xi Jinping sees his own men making mistakes, he is likely to be especially furious,' Joseph Torigian, an associate professor at American University who has studied Chinese leaders' relations with the military, said of Mr. Xi. 'Control over the military is so existential. It's inherently explosive. That's why any sense of stepping out of line has to be crushed.'
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CNBC
22 minutes ago
- CNBC
Trump says he asked for 20% cut from Nvidia, calls H20 an 'obsolete' chip
President Donald Trump on Monday said that he initially asked Nvidia for a 20% cut of the chipmaker's sales to China, but the number came down to 15% after CEO Jensen Huang negotiated with him. The comments came after news broke over the weekend that Nvidia agreed to pay the federal government a 15% cut in return for receiving export control licenses that will allow it to once again sell the H20 chip to China and Chinese companies. Nvidia's Huang visited Trump in the White House on Friday. "I said, 'listen, I want 20% if I'm going to approve this for you, for the country,'" Trump said in a press conference in Washington. Trump said that Nvidia's H20 is an "old chip that China already has" and is "obsolete." He compared the H20 chip to Nvidia's current fastest artificial intelligence chip, which is called Blackwell, and said that he wouldn't allow those to be sold to China without significant downgrades, such as a 30% to 50% reduction in performance. "The Blackwell is super-duper advanced. I wouldn't make a deal with that," Trump said, adding that it was possible to make a deal for a "somewhat enhanced in a negative way" version of Blackwell. "That's the latest and the greatest in the world. Nobody has it. They won't have it for five years," Trump said. One reason for the U.S. export controls is fear that providing advanced chips to China could allow the foreign power to leapfrog the U.S. in AI capabilities. Many have said that could pose a threat to the national security of the U.S. Trump said that China already has chips with some similar capabilities to the H20. Huang has said that it is better for U.S. national security if Chinese AI developers use U.S. technology, and that denying them access to Nvidia chips would actually encourage the Chinese chip industry to develop and catch up. "He's selling a essentially old chip," Trump said. "Huawei has a similar chip." The H20 is a Chinese-specific chip that has had its performance slowed down. It is related to Nvidia's H100 and H200 chips that are used in the U.S. The H20 was introduced after the Biden administration implemented export controls on AI chips in 2023. In April, the Trump administration said it would require a license to export the H20 chip, and in May, Huang said that "effectively closed" the market off to Nvidia. Huang said that Nvidia was expecting to sell about $8 billion in H20 chips in the July quarter before sales were stopped. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," an Nvidia spokesperson told CNBC on Monday. Trump on Monday also said that Huang plans to visit him again to negotiate export licenses for the Blackwell chips. "I think he's coming to see me again about that," Trump said. A White House official confirmed to CNBC that AMD, the second-place AI chip maker, will also pay 15% to receive an export license for its China-focused AI chip, the Instinct MI308.
CNN
22 minutes ago
- CNN
The world's biggest company got caught in the middle of Trump's AI war with China
Tech giants Asia China Donald TrumpFacebookTweetLink Follow Nvidia, the world's most valuable company, has found itself caught in the middle of President Donald Trump's historic trade war with China. The result: an extraordinary concession from a $4.5 trillion corporation that will give the United States a percentage of every high-end AI chip sold in China. The deal, which AMD also signed for some of its chips, could split the difference between two competing Trump administration goals: maintain America's AI dominance while securing a critical trade agreement with China. It could also give the White House billions of dollars to spend as it wishes. Nvidia and AMD have agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for licenses to export their technology there. The White House in April blocked the export of certain AI chips to China, including Nvidia's H20 chips and AMD's MI308 chips. The deal with the Trump administration allows the companies to obtain export licenses to restart sales of those chips in China, a US official told CNN. The Financial Times first reported the story Sunday. Nvidia previewed the deal last month, when it said it would resume sales of the H20 chip to China after the Trump administration expressed openness to allowing the export of certain AI chips again. But the 15% payment was a surprise. Trump said Nvidia was initially asked to pay a 20% cut, but they negotiated the rate down to 15%. The deal came together after Nvidia CEO Jensen Huang met with President Donald Trump on Wednesday, the official said. Although the export licenses were granted Friday, no shipments have yet been made. 'We follow rules the US government sets for our participation in worldwide markets,' a Nvidia spokesperson said in a statement. 'While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.' AMD has not responded to CNN's request for comment. Governments, including the United States, have taken control of companies in the past when they were considered to be of strategic importance to national security. During the financial crisis in 2009, the United States took control of General Motors and Chrysler, and the proceeds of those stakes went directly into the US Treasury after the government sold them for a profit. But it's not clear that the US government has ever demanded a percentage of a company's business without taking an equity stake – or if it's even legal to do so. The US Constitution forbids taxes on exports. To get around that, the deal's terms have been structured as a voluntary agreement, so it won't be considered a tax or a tariff, a US official said. Instead, Nvidia and AMD will voluntarily send funds to the US government. The companies will have no say whatsoever on how the US government deploys that money after it is sent. 'It's hard to identify any historical precedent for this sort of arrangement,' said Sarah Kreps, law professor and director of the Tech Policy Institute at Cornell University's Brooks School of Public Policy. In recent years, the US government has sought to restrict China's access to advanced American technology in an effort to slow its progress on AI and let the United States get farther ahead. But the White House's reversal on export controls may be an acknowledgement that China is advancing in AI regardless, so American companies might as well be allowed to benefit. It could also give the White House another way to raise revenue for the US government, along with tariffs. 'It seems like there's been some vacillation within the administration about and toward China, and I think that reflects the internal divide within the administration between the China hawks and the economic pragmatists,' Kreps said. 'It seems like increasingly, the economic pragmatists are holding sway.' That approach would align with arguments from Nvidia's Huang, who has said that restricting sales of American AI chips is bad for US national security. Chinese developers could simply undermine US leadership by creating their own alternatives if they can't buy American technology, according to Huang, who has met with Trump repeatedly in recent months. The White House agrees with Huang, believing it's better to have China locked into a US-made chip sold through legitimate channels than to force China to the black market, a US official said. China has been able to subvert existing channels to obtain restricted chips anyway. Big questions remain about where the 15% commission idea emerged and what it could mean for national security. A US official said that the payment allows the administration to maintain control of the export process and bring in revenue for the US government in the process. Still, it's not clear that the penalty for Nvidia and AMD will effectively limit the flow of the chips or erase any potential national security issues. 'If there's a legitimate national security concern about exporting these chips to China, then I don't see how the payments to the US government address those risks. In fact, they don't at all,' said Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies. 'And if there's not a sufficient national security risk or they can be adequately mitigated … then the US government should just get out of the way and expect nothing in return.' Nvidia released the H20 chip last year as a way to maintain access to the Chinese market — which made up 13% of the company's sales in 2024 — in the face of US export controls imposed by the Biden administration. But the chips are widely believed to have contributed to DeepSeek, an advanced Chinese AI model that shook Silicon Valley upon its release earlier this year, raising concerns that China was further ahead on AI than previously understood. After the Trump administration barred H20 sales to China in April, Nvidia said it took billions of dollars in charges and lost revenue because of the export controls in the first quarter and projected a similar outcome in the second quarter. So, even if it has to fork over 15% of those sales to the White House, resuming shipments of the H20 to China could mean billions more dollars in revenue for Nvidia — which became the first publicly traded company to top $4 trillion in valuation last month. Shares of Nvidia (NVDA) rose as much as 0.5% on Monday. Trump on Monday called Nvidia's H20 chip 'obsolete,' saying that China 'already has it in a different form.' But some experts disagree with Trump's characterization of the chips. 'These H20s are still state of the art,' CSIS's Kennedy said. Although they're less advanced, in some ways, than other Nvidia chips, 'they also come with elements that make them extremely sophisticated and valuable,' including their memory capabilities. 'I think suggestions that they are obsolete understate the value to user,' he said. Nvidia likely reasoned that there is enough Chinese demand for the chips to make the 15% commission to the White House a worthwhile trade-off for its business, according to Kreps. 'You have to do a calculation based on what was lost from the export controls,' she said. Trump on Monday left open the possibility that Nvidia could export its super high-end Blackwell chips for a higher price. The Trump administration had closed the door on the export of that technology to China — even after reversing course on the H20. However, Trump on Monday said that he'd consider allowing Nvidia to sell the Blackwell chip. 'The Blackwell is superduper advanced. I wouldn't make a deal with that, although it's possible,' Trump said. 'I'd make a deal a somewhat enhanced in a negative way. Blackwell, in other words, take 30% to 50% off of it, but that's the latest and the greatest in the world. Nobody has it. They won't have it for five years.' Trump said Huang will return to the White House in the future to discuss selling an 'unenhanced' version of Blackwell. 'I think he's coming to see me again about that, but that will be a unenhanced version of the big one,' Trump said. 'You know, we will sometimes sell fighter jets to a country and we'll give them 20% less than we have.' Questions from Beijing about the security of American AI chips also raise uncertainty about just how successful Trump's commission policy could be. China could choose not to buy US tech firm Nvidia's H20 chips, the social media account Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said on Sunday. It claimed that the chips could have 'backdoors' that impact their function and security, following previous similar claims from China's cybersecurity administration. Nvidia has repeatedly denied that its products have backdoors. However, that statement could be less an indication that China won't buy American chips and more a signal to Chinese tech companies to continue innovating in semiconductors even if US shipments do resume, Kennedy said. For the Trump administration, the cost-benefit analysis is that it opens up the flow of mid-tier chips to China while giving the administration a key bargaining chip in its ongoing trade talks, a US official said. Treasury Secretary Scott Bessent has called Nvidia export controls a 'negotiating chip' in the larger US-China trade talks. But China knows that, and its posturing over supposed security concerns with the H20 chip this weekend suggests that it won't be won over so easily — even if it wants the chips for its market.
News24
22 minutes ago
- News24
North Korea furious over South Korea-US military drills
North Korea will react with 'resolute counteraction' in the event of provocations from upcoming joint military drills between South Korea and the US, its defence chief said on Monday in a state media dispatch. The warning comes as Seoul and Washington are set to carry out their annual Ulchi Freedom Shield exercises, aimed at containing the nuclear-armed North, from 18 to 21 August. North Korea - which attacked its neighbour in 1950, triggering the Korean War - has always been infuriated by US-South Korean military drills, decrying them as rehearsals for invasion. 'The armed forces of the DPRK will cope with the war drills of the US and (South Korea) with thoroughgoing and resolute counteraction posture... at the level of the right to self-defence,' North Korean defence chief No Kwang Chol said in a statement carried by the Korean Central News Agency. The US stations around 28 500 troops in South Korea, and the allies regularly stage joint drills they describe as defensive in nature. Seoul and Pyongyang have recently appeared to be heading toward a thaw in relations, with the two sides removing propaganda loudspeakers along the border. Seoul has said North Korean troops have begun dismantling propaganda loudspeakers used to blare unsettling noises along the border, days after Seoul's new administration dismantled its own. The two countries had already halted propaganda broadcasts along the demilitarised zone, Seoul's military said in June, after the election of President Lee Jae Myung, who is seeking to ease tensions with Pyongyang. Relations between the two Koreas had been at one of their lowest points in years under former president Yoon Suk Yeol, with Seoul taking a hard line toward Pyongyang, which has drawn ever closer to Moscow in the wake of Russia's invasion of Ukraine. Lee has taken a different approach to dealing with the North since his June election, including requesting civic groups cease sending propaganda leaflets over the border by balloon.
