Bessent-He Talks Set to Address Economic Competition and AI Policy
The US Treasury Secretary Scott Bessent is set to discuss AI and rare earths with China's Vice Premier He Lifeng in a move that highlights the growing economic competition between the two nations.
The talks, which are expected to take place before the meeting between President Donald Trump and Chinese President Xi Jinping on September 24, will cover AI policy, trade, and industrial regulations. The agenda indicates that AI has become an integral part of the broader economic link between the countries.
Bessent stated that there may be opportunities to limit their mutual threat by avoiding shared risks and bifurcation of their systems. He emphasized the need for both parties to maintain a certain level of communication, citing Chinese open-weight models as a new competitive front.
The US is concerned about the growing commercial value of Chinese open-weight models, which are being used in various industries due to their lower prices compared to closed-type models from American labs. According to CSIS, Chinese solutions comprised 41% of Hugging Face downloads in the last year, and Z.ai's GLM-5.2 model is competitive with top US models.
The gap in capabilities between US and Chinese AI models has narrowed significantly since 2025, with Stanford's 2026 AI Index showing that the top US model was only 2.7% ahead of the top Chinese model in March. The use of Alibaba's Qwen model by the National Archives website has also raised concerns about the security risks associated with relying on foreign technology.
Rare earths, which are essential for advanced manufacturing, have become a key area of contention between the two nations. China introduced export limitations in 2025 that severely impacted defense, semiconductor, and automotive supply chains before the US and China reached an agreement to suspend these restrictions for a year. The US has taken action through financial support, production agreements, and price subsidies to establish alternative sources, but it will take years for new vertically integrated mine-to-magnet supply chains to emerge outside of China.