Xi-Trump meeting; US to sell Nvidia B30A chips to China?; Birth of the 15th Five-Year Plan recommendations
The United States is reportedly considering whether to permit sales of NVIDIA’s forthcoming B30A chip to China, following lobbying efforts from NVIDIA…The B30A would be more than 12 times as powerful as the H20 — a chip that requires an export license to China and has been approved for export in only limited quantities. It would also exceed the United States’ current export control performance thresholds by more than 18 times. - IFP
Summary of today’s top items:
1. Xi-Trump meeting - Xi and Trump will meet at 11 a.m. local time in South Korea on Thursday. The PRC side confirmed the meeting Wednesday, saying the two will meet to “exchange views on bilateral relations and issues of mutual interest 就中美关系和双方共同关心的问题交换意见”.
The PRC side has started to purchase soybeans again and Trump told reporters that Nvidia’s modified Blackwell chip, the B30A, will be on the agenda. This paper from the Institute for Progress (IFP) is an excellent primer on why approving sales of those chips is a bad idea. The chip, according to the IFP, is more than twelve times more powerful than the H20 and it blows past the U.S. export thresholds by roughly eighteenfold. On price–performance it sits at parity with America’s top-end chips, delivering about half their throughput at roughly half the cost. Huawei does not expect to field a domestic chip in this class until the fourth quarter of 2028, best-case.
If Trump does tell Xi he approves the B30A, and the Chinese start placing orders, then we will know that the ban on purchasing H20s was more of a ploy to hold out for the much better B30A than a sign that Xi is confident enough with indigenous chip development that he believes the PRC no longer needs large quantities of the much better Nvidia chips.
This is what I wrote on the topic last month:
If Xi has decided to block future purchases of any Nvidia AI chips, then we can look back on the April Politburo study session as an obvious indicator - April Politburo Study Session on AI is bad news for Nvidia:
Xi Jinping emphasized that to seize the initiative and gain the advantage in the AI field, breakthroughs must be achieved in fundamental theories, methods, tools, and more. We must continuously strengthen basic research, concentrate resources to overcome challenges in core technologies such as high-end chips and foundational software, and build an independent, controllable, and collaboratively functioning AI foundational hardware and software system [集中力量攻克高端芯片、基础软件等核心技术,构建自主可控、协同运行的人工智能基础软硬件系统]. We should use AI to lead a paradigm shift in scientific research and accelerate technological innovations and breakthroughs across various fields.
The PRC wants to decouple from US technology, for obvious reasons, and it wants to accelerate the pace of that decoupling. We should not be surprised if such a clear signal from the top leads bureaucracies and industries to move faster than many expected.
If the PRC says no to the better Nvidia chips, then that should shut the door on the latest variant of the “China fantasy” that Nvidia, Howard Lutnick and other officials have been pushing that Nvidia should be allowed to keep selling to China so that the PRC remains “addicted” to US technology and products.
There is a long history of the failure of that argument when it comes to technologies the PRC has deemed strategic, and there is little reason to believe it will not fail again, especially given the patchwork of US semiconductor export controls and the increasing marginalization of those in the US government, at least those who have not already been purged, who advocate for closing many of the glaring loopholes in those semiconductor export control policies.
For Nvidia, this is a binary situation. If this is a PRC ploy to get the US to allow exports of the better chips, beyond the gray market smuggling that is ongoing, then the company can add China revenue and market opportunity back into its earnings guidance, and that should help the stock. But if Trump approves exports of the B30 or the full Blackwell and the PRC government still does not allow its companies to buy them in bulk, even though they are better than anything the PRC firms have or will be able to produce for many years, then the China market really is closed to Nvidia.
I wish I could tell you what the answer is, but I do not know, nor does anyone with whom I have spoken in the last few weeks. If I had to bet, I would put the odds of this being a ploy for the better Nvidia chips slightly higher than those of a full closure of the China market to the company.
Earlier today I published this week’s episode of Sharp China, in which we have a long discussion about what to expect in the Trump-Xi meeting in a few hours, and why any deal will at best lead to near-term stabilization in the US-China relationship but will not address the underlying drivers of the intensifying structural contradictions. You can listen to it here: Sharp China: A Basic Consensus on Arrangements to Address US-China Concerns; The New Five-Year Plan Sounds Familiar; Nexperia as an Object Lesson.
2. US tech for China security services - The AP has another installment in its excellent series on US firms and US government policies have helped the PRC build up its formidable surveillance technology systems. Today’s article highlights the crazy loophole in the chip export control regime that allows PRC end users to access the most advanced US chips through overseas cloud services. The cloud loophole has been known for years, but armies of lobbyists, skilled export control lawyers, and feckless legislators have kept it open, and it will no doubt remain open into the foreseeable future.
3. The birth of the 15th Five-Year Plan proposals - On Wednesday Xinhua published a long explainer about the creation “Proposals of the CPC Central Committee on Formulating the 15th Five-Year Plan for National Economic and Social Development”. These post-Plenum reports are always an interesting look into what the Party wants people to know about the drafting process. It is a long document and I have posted a full translation here.
The explainer notes that changes in the external environment in April had an impact on the drafting. The primary change of course was Trump and his April 2 “tariff liberation day”:
Adjusting with the times and changing with the situation—因时而动，因势而变——
Since the beginning of this year, the adverse impact of changes in the international situation has gradually deepened, external suppression and containment have escalated, and the challenges facing China’s development have become more complex and severe.
今年以来，国际形势变化的不利影响逐渐加深，外部打压遏制不断升级，我国发展面临的挑战更加复杂严峻。
General Secretary Xi emphasized that to plan economic and social development for a period of time, we must understand the overall environment.
习近平总书记强调，谋划一个时期的经济社会发展，必须弄清楚大环境。
On April 10, the working team of the drafting group held a special meeting to discuss responses to changes in the external situation and to adjust the drafting approach and framework structure...
4月10日，文件起草组工作班子召开专题会议，讨论应对外部形势变化，调整文件起草思路和框架结构。