• US Treasury Secretary Scott Bessent announced that US and Chinese officials will meet in Shenzhen in about two months for further AI talks, following eight hours of negotiations in New York.
  • Washington proposed a formal AI dialogue and a notification mechanism for AI incidents with national-security implications; China's response was restrained.
  • The talks come ahead of the Trump-Xi summit and as a trade truce deadline looms on November 10, with limited scope for tariff relief.

US Treasury Secretary Scott Bessent said the United States and China will hold high-level talks on artificial intelligence in Shenzhen in roughly two months, following marathon negotiations in New York over the weekend. The announcement signals a potential thaw in bilateral engagement on the technology that is reshaping global economic and security dynamics, even as the two nations remain locked in a broader strategic rivalry.

Bessent, along with US Trade Representative Jamieson Greer and Chinese Vice Premier He Lifeng, met for approximately eight hours on September 20-21 to prepare the ground for a summit between President Donald Trump and President Xi Jinping in Washington this week. The meeting was described as "frank, in-depth and constructive" by Chinese state media Xinhua, which acknowledged discussions on AI but did not explicitly endorse Washington's proposals.

The centerpiece of the US proposal is an AI-related notification channel that would let the two governments communicate about incidents or risks with national-security implications. Bessent framed the idea as moving from opacity toward greater transparency between the world's two leading AI powers. "We want to avoid bifurcation of US and Chinese AI systems," he said, according to people familiar with the matter.

Fragile Progress

China's public response was restrained, with no formal commitment to the notification mechanism. Still, both sides agreed to continue engagement, and the next high-level encounter is expected at the Asia-Pacific Economic Cooperation forum in Shenzhen in November, where Trump and Xi are slated to meet. The location underscores China's ambition to be seen not just as a manufacturing hub but as a technology and innovation power.

The AI discussions are part of a broader economic agenda that includes tariffs, rare-earth minerals, and market access. Negotiators are considering a narrow process to identify non-sensitive goods for potential tariff cuts, with US categories including energy, agricultural products, and medical devices, and Chinese categories potentially covering consumer and low-tech goods. However, the scope remains limited and far from a comprehensive normalization of trade.

The existing US-China trade truce is set to expire on November 10. Reuters reported that it has kept second-term Trump tariffs at roughly 20%, while the administration rebuilds some measures under other legal authorities after a Supreme Court ruling affected tariffs imposed under national-emergency powers. A limited extension is seen as more likely than a major deal.

Corporate sectors are watching closely. US frontier-AI firms like OpenAI and Anthropic are affected by market access and security rules, while Chinese developers such as Alibaba (BABA) benefit from open-weight models that are gaining traction for their lower cost. Semiconductor and AI-infrastructure companies remain exposed to export controls, which Greer said were not on the agenda for the proposed AI notification mechanism.

Manufacturers reliant on critical minerals are also in focus. China's rare-earth magnets and other materials are vital inputs for technology and industrial production, and the US says deliveries remain insufficient despite earlier commitments. Any improvement in flows would support US manufacturers; further restrictions could accelerate supply-chain diversification away from China.

Political Risk Management

The proposed AI dialogue is seen as a form of risk management, not evidence that strategic rivalry has eased. Washington wants guardrails for powerful models, including preventing malicious non-state actors from using advanced AI. Bessent has argued for safeguards and for AI firms to bear liability for what they develop and generate.

But major issues remain outside the initial safety-notification proposal. US export controls on sophisticated AI chips and semiconductor-manufacturing equipment were specifically not part of the talks on the AI mechanism. The agenda also includes China's performance on critical-mineral commitments, agricultural purchases, market access, and US concerns over fentanyl precursor chemicals.

Unresolved matters from the May Trump-Xi meeting include China's pledge to raise annual US agricultural purchases by $17 billion and to purchase more than 200 Boeing (BA) aircraft, according to Reuters. Those commitments have yet to materialize fully.

The discussions take place amid broader geopolitical tension, including US pressure on Iran, where China is an important buyer of Iranian oil and a major diplomatic partner. US auto groups have also pushed the administration to preserve an effective ban on Chinese vehicle sales in the US on national-security grounds, underscoring that economic engagement remains politically contested.

Industry experts are divided on the potential impact. George Chen of The Asia Group expects future talks to confront more sensitive topics including AI weaponization, safety principles, critical-infrastructure protection, and cyberattack prevention, but says low mutual trust will limit cooperation. Others see even modest AI safety communication as a way to reduce the chance that a major AI-enabled cyberattack or infrastructure failure is misunderstood as deliberate escalation.

Chinese open-weight AI models are becoming more attractive to some US users because of lower costs relative to closed systems offered by firms such as OpenAI and Anthropic. That commercial competition makes dialogue over open versus closed models unusually relevant. China is also sending a business delegation alongside He Lifeng, mirroring a US CEO delegation that accompanied Trump to Beijing in May, suggesting both sides are testing whether commercial deals can stabilize a strategically fraught relationship.

Update: An earlier version of this article misstated the location of the upcoming US-China AI talks. They are scheduled to take place in Shenzhen in about two months, not in Washington.