US-China AI Decoupling Manageable for Trade, But Tech Curbs a Wild Card: Citi
SCMP · 1 SOURCESabout 1 hour ago2 MIN
Summary
As US-China tech tensions escalate ahead of President Xi Jinping's planned state visit to the United States in September, Hong Kong-based analysts at Citi Research have assessed the impact of Washington's latest restrictions on China's artificial intelligence sector. Led by Yu Xiangrong, the analysts released a Friday note arguing that US tariffs and export controls are unlikely to materially disrupt China's AI exports, pointing to the fact that direct trade in the sector was already suppressed at the aggregate level. The research suggests that while some measures, particularly those targeting open-weight AI models, represent a genuine wild card for the global technology landscape, the overall impact on bilateral trade remains limited.
Key Points
- Citi Research, led by Yu Xiangrong based in Hong Kong, estimated that a full AI decoupling scenario could place up to 9.2 percent of China's exports at risk, though this would likely be manageable
- Chinese AI-related exports to the US fell 4.1 percent year-on-year between January and June, shaving 0.5 percentage points off overall export growth
- Beijing weathered President Donald Trump's Liberation Day tariffs last year despite America accounting for 14.7 percent of total exports at the end of 2024
- On Thursday, Trump signed a proclamation imposing tariffs of up to 100 percent on certain imported drones and components, citing national security and cybersecurity risks
- Washington has targeted Chinese artificial intelligence models, advanced robotics, and optical transceivers while expanding its forced labour blacklist, prompting Beijing to retaliate by targeting US firms
Why It Matters
The findings suggest that while US-China tech tensions continue to sharpen, the direct impact on bilateral trade may be limited due to existing suppression of AI-related commerce. However, restrictions on open-weight models represent a genuine wild card that could reshape the global AI landscape and affect Hong Kong's position as a key financial hub bridging mainland China and international markets .
The findings suggest that while US-China tech tensions continue to sharpen, the direct impact on bilateral trade may be limited due to existing suppression of AI-related commerce. However, restrictions on open-weight models represent a genuine wild card that could reshape the global AI landscape and affect Hong Kong's position as a key financial hub bridging mainland China and international markets .