Australia Tackles Diplomatic Row Over Chinese-Owned Port
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Newsweek
12 minutes ago
- Newsweek
US Navy Ship 'Expelled' From Disputed Waters, China's Military Says
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. China's military says it drove U.S. Navy destroyer the USS Higgins from waters near Scarborough Shoal in the South China Sea on Wednesday morning. Two days ago, a collision occurred between Chinese ships seeking to disrupt a Philippine Goast Guard mission at the disputed feature. Newsweek reached out to the U.S. Seventh Fleet and the Chinese Foreign Ministry via emailed requests for comment. Why It Matters China claims sovereignty over most of the South China Sea, home to overlapping claims by the Philippines and several other states. Scarborough Shoal, one of the most hotly contested features in China's territorial dispute with the Philippines, sits within the U.S. treaty ally's exclusive economic zone. While China effectively seized control of waters around the atoll in 2012, the Philippines has since 2024 increased its patrols there to assert its claim and deliver supplies to local fishermen. Clashes at Scarborough and other South China Sea flashpoints have raised questions over whether a miscalculation could trigger Manila's Mutual Defense Treaty with Washington—and potentially a conflict between the two superpowers. What To Know In a statement posted to Chinese social media, the People's Liberation Army Southern Theater Command said the guided-missile destroyer USS Higgins had "illegally intruded" into the territorial sea around Scarborough Shoal, calling it a serious violation of China's sovereignty and security. The command "deployed forces and monitored and expelled it in accordance with law and regulations," the statement added. Arleigh Burke-class guided-missile destroyer USS Higgins (DDG 76) pulls away from Nimitz-class aircraft carrier USS George Washington (CVN 73) after conducting a fueling-at-sea while underway in the Pacific Ocean on November 7, 2024. Arleigh Burke-class guided-missile destroyer USS Higgins (DDG 76) pulls away from Nimitz-class aircraft carrier USS George Washington (CVN 73) after conducting a fueling-at-sea while underway in the Pacific Ocean on November 7, 2024. Mass Communication Specialist 3rd Class Lucas J. Hastings/U.S. Navy A territorial sea extends 12 nautical miles (about 13.8 miles) from coastlines and high-tide features such as Scarborough Shoal. In 2016, an international arbitral tribunal rejected China's expansive South China Sea claims. The tribunal did not rule on sovereignty over the shoal; it recognized traditional fishing rights for Filipino and Chinese fishermen at Scarborough. The U.S. Navy had not released any information on the alleged patrol near Scarborough Shoal as of time of writing. The Navy frequently deploys sea and air assets in international waters to challenge claims that Washington believes infringe on the freedom of navigation. China maintains patrols by the U.S. and other Western militaries in the region threaten peace and stability. During Monday's confrontation, a China Coast Guard ship slammed into a Chinese Type 052 destroyer while pursuing a smaller Philippine Coast Guard patrol boat that was part of a government mission to deliver food and fuel to fishermen. Footage shows the collision severely damaging the coast guard cutter's bow. Ship-tracking data shared by the maritime analysis group SeaLight showed Chinese vessels on Tuesday sailing in a grid-like pattern consistent with search-and-rescue operations—suggesting personnel may have been thrown overboard by the impact. Chinese Foreign Ministry spokesperson Lin Jian said the Philippines had "seriously harmed peace and stability at sea." What People Are Saying The Philippines Department of Foreign Affairs wrote in a statement: "The Department is seriously concerned by the dangerous maneuvers of two vessels of the People's Liberation Army Navy and the Chinese Coast Guard and their unlawful interference with a routine humanitarian operation for Filipino fisherfolk in and around the territorial sea of Bajo de Masinloc, which is a longstanding and integral part of Philippine territory." Bajo de Masinloc is the Philippines' name for Scarborough Shoal. In China, it's known as Huangyan Island. Raja Krishnamoorthi (D-IL) ranking member of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, wrote in a statement this week: "China's campaign to dominate the South China Sea by force threatens stability, peace, and prosperity across the Indo-Pacific, as the Philippines and other nations defend their legitimate interests. Beijing must comply with international law and immediately end its coercive maritime actions." What's Next The Philippine Department of Foreign Affairs said it would lodge a diplomatic protest against China over its actions at Scarborough Shoal.
Axios
40 minutes ago
- Axios
What investors see in the sale of AI chips to China
Nvidia and AMD can sell their AI chips to China for the low price of 15% of their revenue, paid out to the U.S. government. Investors are unfazed. Why it matters: Shareholders are focusing on the revenue opportunities that come with more access to Beijing, not on the unprecedented involvement of the Trump administration in Nvidia's business dealings. What they're saying: "There's way more upside," Daniel Newman, principal analyst and CEO of The Futurum Group, tells Axios. Catch up quick: The Trump administration previously backed export controls on Nvidia's H20 chips, which are "orders of magnitude" less powerful than Nvidia's Blackwell chips, Newman says. A month ago, the administration signaled that it was shifting course on these controls, but did not issue the licenses required for sales to be possible. That appeared to change after Nvidia CEO Jensen Huang met with President Trump. Nvidia walked away with promises of licenses so long as the chip giant cut the U.S. government a check for 15% of its China revenue. Zoom in: Nvidia stock is up nearly 0.5% since the news broke Monday, with investors and analysts bullish on the deal. The lifting of the export controls could lead to a $15 billion revenue windfall for Nvidia. Both Nvidia and AMD have pricing power, given the strength of demand for AI chips in China, according to a note from Bank of America. That means the 15% expense could be passed on to Chinese customers. Between the lines: While the deal could lead to billions of dollars in additional revenue for the U.S. government, it's not just about the money. It's also about access to rare earth magnets, Newman says. The U.S. has powerful AI chips that China wants. China has rare earth metals the U.S. wants. When the administration first changed course on export controls in July, Commerce Secretary Howard Lutnick told CNBC that selling the "fourth best" AI chip to China wasn't material. Lutnick also said the export control rollback was tied to a rare earths deal, though those details have not fully materialized. Yes. but: Export controls are typically put in place for a reason: in this case, national security concerns. The 15% revenue split, first reported by the Financial Times, includes an anonymous source quote that points to the security concerns: "What's next — letting Lockheed Martin sell F-35s to China for a 15% commission?" Situational awareness: Beijing is urging local companies to avoid buying chips from American companies because of its own security concerns. Newman says that may be political theater – an effort for China to keep the upper hand in ongoing negotiations. Chinese companies will likely still want access to the best possible chips. Be smart: In just January of this year, investors feared China outpacing the U.S. in the AI arms race given the reported success of DeepSeek.
Time Magazine
42 minutes ago
- Time Magazine
What to Know About Trump's Nvidia Deal and China's Response
The world's most valuable company is now at the center of President Donald Trump's trade war with China. Trump said Monday that he has cut a deal with chipmaker Nvidia, allowing it to sell certain artificial intelligence chips to China in exchange for a cut of the revenue, which would go to the U.S. government. Trump said he also negotiated a similar deal with chipmaker Advanced Micro Devices (AMD). The deal is a marked departure from an effort by the U.S. to restrict China's access to advanced semiconductors over concerns that they would be used to advance the country's military technology. Washington began restricting exports of some semiconductors to China in 2022, although Nvidia was able to export a specially made-for-China chip, the H20, which is deliberately slowed down. In April, the Trump Administration announced that it would require a license to export the H20 chip, abruptly curbing the shipment of $2.5 billion of H20 revenue from China in the fiscal quarter ending April 27. The announcement spurred months of lobbying by Nvidia CEO Jensen Huang, who committed a $500 billion investment from Nvidia to make AI servers in the U.S. Last month, Nvidia announced that it would resume sales of the H20 to China after Trump and Huang met in the Oval Office, and the Commerce Department began licensing the chips for export last week. But the unusual deal is not just a return to the previous status quo—rather, analysts and lawmakers warn that it could open the doors to a 'pay-to-play' trade policy. Here's what to know. What the deal means for Nvidia The deal, which was first reported by the Financial Times, involves allowing exports of certain AI processors to China in exchange for Nvidia and AMD paying 15% of the proceeds to the U.S. government. 'I said, 'Listen, I want 20% if I'm going to approve this for you,'' Trump said at a White House press conference on Monday, adding that Huang negotiated that number down to 15%. 'For our country, for the U.S., I don't want it myself,' Trump clarified about the kickback. Trump said the deal was limited to Nvidia's H20 chips, which he said are 'essentially old,' and a similarly slowed down MI308 chip for AMD, but he indicated that a similar deal may be in the works for more advanced chips. 'The Blackwell is super-duper advanced. I wouldn't make a deal with that,' Trump said, referring to Nvidia's most advanced chip for AI. 'Although, it's possible I'd make a deal on 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.' Nvidia said in a statement to media outlets, 'We follow rules the U.S. government sets for our participation in worldwide markets.' It added, 'While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.' China urges firms not to use the less-advanced chips The Chinese government has reportedly discouraged local firms from using Nvidia's H20 chips. The guidance did not outright ban use of the chips, but it said that they should not be used in particular for national security-related work. Some Chinese companies have reportedly made plans to reduce their orders of Nvidia chips after the government asked firms to justify why they buy Nvidia H20 chips over domestic chips, such as those by Chinese firm Huawei, which the U.S. has imposed strict export controls on. But analysts have said that the American chips, even in their slowed down form, are world-class and will continue to be sought after by companies. Although Trump characterized Nvidia's H20 chips as 'obsolete' and said that China 'already has it in a different form,' he also noted it 'still has a market.' Beijing in July raised security concerns with Nvidia, while Chinese state media reports in recent weeks have also highlighted these concerns. 'The H20 is not a military product or for government infrastructure,' Nvidia told Bloomberg. Nvidia export controls have also been used as a 'negotiating chip' in U.S.-China trade talks, Treasury Secretary Scott Bessent said in July. The deadline for the U.S. and China to reach a trade deal was Aug. 12, but the two countries extended their truce by 90 days in order to continue negotiations. Should Chinese firms purchase fewer chips from Nvidia, Trump's much-touted deal—and any further attempts to use chips as a bargaining chip—may hold less weight. Deal raises legal concerns Nvidia's H20 chips are believed to have been used in developing Chinese company DeepSeek's open-source AI model, which caused a panic in the U.S. over whether China's AI technology was more advanced than previously believed. It prompted former President Joe Biden to further curb exports of AI chips to China, before the Trump Administration placed an effective ban on the H20 exports in April. The loosening of those restrictions for essentially a sales commission arrangement has drawn criticism over both national security risks and legality concerns. The White House said the details of the deal are still being worked out. 'The legality of it, the mechanics of it, is still being ironed out by the Department of Commerce, and I would defer you to them for any further details on how it will actually be implemented,' White House Press Secretary Karoline Leavitt said Tuesday, adding that the deal could be expanded to include other companies. 'I am concerned by reports that the U.S. government will be taking a cut of the proceeds from the sale of advanced H20 and equivalent chips to China,' Rep. John Moolenaar (R, Mich.), the head of the House Select Committee on the Chinese Communist Party, told the Financial Times. 'By putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee,' said Rep. Raja Krishnamoorthi (D, Ill.), the ranking member of the House select committee on the CCP. Bernstein analyst Stacy Rasgon said the deal sets a bad 'precedent' for other companies. Rasgon told Bloomberg on Monday that the 15% cut in order to sell to China for the chipmakers makes financial sense for the companies and is better for the U.S. in order not to lose its competitive edge in the Chinese market but also that 'it feels like a very slippery slope.''It raises concerns, certainly for many national security minded folks, of—are we now selling export control licenses?' Owen Tedford, a senior research analyst at Beacon Policy Advisors, told the Hill. 'Is there a way that Nvidia will be able to buy licenses to sell more advanced chips than they're currently able to?' 'It raises questions about how—and I think this gets to some of more general concerns with the Trump Administration—just, policy feels like it's for sale in some ways, like policy outcomes,' Tedford added. 'If companies are big enough or strong enough, they can basically buy the policy that they want from the Trump Administration.'
