As tensions escalate ahead of a planned summit between Chinese President Xi Jinping and U.S. President Donald Trump in Washington this September, economic and technological disputes between the world’s two largest economies continue to intensify. Recent developments highlight growing friction over issues including artificial intelligence, advanced robotics, trade restrictions, and concerns related to forced labor.

In mid-July, the Chinese AI startup Moonshot AI introduced Kimi K3, a large language model featuring 2.8 trillion parameters. This release drew swift criticism in Washington. White House Office of Science and Technology Policy director Michael Kratsios accused Moonshot AI of employing model distillation techniques reportedly derived from Anthropic’s Claude Fable model, suggesting intellectual property infringement. U.S. Treasury Secretary Scott Bessent warned that Chinese firms engaging in what he described as “industrial-scale distillation attacks” could face sanctions or be placed on the U.S. Entity List.

China’s commerce ministry strongly rejected these claims, describing them as manifestations of “AI hegemonism” and pledging to protect the rights of Chinese companies. The Communist Party’s theoretical journal Qiushi echoed this stance, labeling U.S. actions as hegemonic and calling for joint resistance against what it termed “AI hegemonism.”

Last week, the U.S. Federal Communications Commission (FCC) further expanded its Covered List to include advanced robotic devices and connected power inverters of foreign origin, effectively banning the import and sale of new equipment in these categories. The FCC cited security vulnerabilities in these technologies that could be exploited to disrupt systems or manipulate data. China’s foreign ministry condemned the move, accusing the U.S. of broadening national security justifications to suppress Chinese enterprises and warning that such protectionism would harm both American businesses and consumers.

On Thursday, Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer engaged in a video conference wherein China expressed “serious concern” over the latest U.S. economic and trade restrictions. Bessent emphasized Washington’s expectations that Beijing fulfill its commitments regarding rare earth elements and U.S. agricultural imports.

In a related development, the U.S. Department of Homeland Security expanded its entity list under the Uygur Forced Labour Prevention Act, adding 43 Chinese companies across sectors including food, cotton, pharmaceuticals, metals, and lithium production. The legislation aims to block products believed to be made with forced labor from the Xinjiang Uygur Autonomous Region from entering the U.S. market. China’s commerce ministry denounced the sanctions as “economic coercion,” rejecting allegations of forced labor and warning of disruptions to global supply chains.

Additionally, reports indicate the FCC is preparing a ban on imports of Chinese-made optical transceivers used in fiber-optic data centers, aiming to prevent the use of such devices in cyber-theft or sabotage, with implementation expected later this year.

Beijing responded on Wednesday by imposing new export controls on drones and related technologies destined for the U.S., subjecting shipments to rigorous case-by-case review citing national security and non-proliferation concerns. Simultaneously, six U.S. companies were added to China’s countermeasures list, prohibiting Chinese firms and individuals from engaging in trade or cooperation with them. Beijing accused these companies of supporting U.S. sanctions related to Xinjiang, while a seventh firm was blacklisted for assisting the FCC in measures deemed to threaten China’s sovereignty.

These actions, occurring amid preparations for high-level talks, underscore the growing complexity and fragility of U.S.-China economic and technological relations.