US Commerce Secretary Howard Lutnick sought to quell fears in Senate testimony on Wednesday that American technology was aiding China’s military, but drew scepticism given the US president’s willingness to sell advanced semiconductors.
Lutnick asserted before the powerful Senate Appropriations Committee that US President Donald Trump was striking a “delicate balance” on the technology transfer issue given his cordial personal relationship with Chinese leader Xi Jinping, claiming that China had not bought any advanced chips “as of today”.
“There is a delicate balance in the relationship with China. President Trump has the best relationship with President Xi, and he balances that,” he said, adding that “I understand that balance, but the president understands it the best.”
Hoping to be what he described as “crystal clear”, Lutnick said the US was not “selling our best chips to China under any circumstances”.
“I would tell you, they have not bought any as of today,” he added.
But Gregory Meeks of New York, the top Democrat congressman on the House Foreign Affairs Committee, speaking in the other US legislative chamber, issued a scathing critique of what he framed as the administration’s lax enforcement of outbound technology curbs.
“The very fact we are holding this mark-up is an admission that the Trump administration has completely dropped the ball on export controls,” Meeks said, speaking at a committee mark-up for a slate of chip-related bills.
This followed testimony on Tuesday by Navy Admiral Samuel Paparo, commander of the US Indo-Pacific Command, that giving the PLA access to more advanced AI chips would improve their war-fighting capability at the expense of US service members.
But Lutnick argued that advanced US chips were not reaching the PLA because Beijing had prioritised the development of home-grown technology.
“My understanding is their cloud companies want to buy these chips. [The] Chinese central government has not let them ... because they’re trying to keep their investment focused on their own domestic industry,” he said.
However, Senator Chris Coons, a Democrat from Delaware, pushed back against Lutnick’s claim in a heated exchange.
“We’re giving them incredibly powerful chips that they don’t otherwise have access to,” the former divinity student said. “We’re not talking about a commercial interest.”
Coons said the Nvidia H200 chips that the administration approved for export in January were six times more powerful than the previously approved H20s and significantly more powerful than anything the Chinese were making.
“What makes you confident that any chip sold to a company ... will stay out of the hands of the PLA?” Coons added.
The administration seemed to be walking an increasingly thin tightrope this week between national security and economic diplomacy, just weeks before the “America first” president arrives in Beijing for a high-stakes summit with Xi, as it defends its decision to allow limited sales of advanced AI chips to China.
The H200 mystery: orders without shipments?
The administration greenlit Nvidia’s H200 after Trump’s October summit with Xi in South Korea. As outlined, the US tech giant would pay an “export fee” of 25 per cent of sales to the US government.
Nvidia CEO Jensen Huang said recently that Chinese customers had placed orders. But Lutnick claimed on Wednesday that zero units had actually changed hands.
Lutnick attributed the delay not to US intervention, but policy decisions related to self-sufficiency in Beijing.
The former Wall Street millionaire maintained that the US was keeping Nvidia’s newest architecture, Blackwell, strictly off-limits to maintain a generational gap where China was always behind.
“We are not even selling that best scale of chips, meaning they’re called Blackwell, not even that brand this is multi-years ago,” he said.
The House Foreign Affairs Committee on Wednesday also advanced a bipartisan package of more than 15 bills including the MATCH Act, which would tighten oversight of chipmaking tools and significantly increase civil penalties for export violations.
Meeks said in a statement: “Congress should not be legislating sweeping or overly detailed technological requirements,” adding that lawmakers had delegated that responsibility to the Commerce Department’s Bureau of Industry and Security.
He said the agency under the Trump administration had been “a picture of dysfunction and delays that are setting US businesses back in our strategic competition with China”.
Beijing summit to focus on ‘non-sensitive goods’
As US domestic concerns grow louder, the administration is framing the May 14-15 summit in Beijing as an opportunity to move past “sensitive” sectors and focus on traditional trade.
US Trade Representative Jamieson Greer told the House Ways and Means Committee that during the trip: “We will be trying to have a proactive agenda and talk about areas where we should be trading, areas where we should be selling to them, and we can be buying from them.
“These are non-sensitive goods. That’s where we’re going to focus our conversations,” he said. -- SOUTH CHINA MORNING POST
