Analysis

In 1935, the CCP finished the Long March, the party elite’s escape from its nationalist opponent, the governing Kuomintang (KMT). The CCP frequently holds up the Long March as an example of its ability to succeed despite overwhelming odds against success. Yet, Xi Jinping’s recent evocation of this history, and in particular its lessons about enduring hardship, suggests that senior CCP leaders are nervous about China’s future and the need to survive future struggles. 

Xi appears to be expressing increasing concern about the need to persevere in the face of adversary. He is likely conveying messages to two separate audiences. First, he is telling party elites about his lack of confidence in their work (which is why he recently purged 34 central committee members). Second, he is making a broader plea to China’s population to show patience during rough economic times and declining opportunities. 

Despite bravado and language about China’s "rejuvenation," Xi’s own words suggest a growing pessimism within the party about China’s future and the challenges ahead. Given the party’s usual optimistic tone about China’s future, exemplified by the Long March’s message of overcoming adversary through perseverance, this pivot towards a more subdued tone and need for “full and rigorous party self-governance” speaks to how political, economic, and social challenges appear to be increasingly weighing on Xi. 

At the recent Fifth Plenum, for example, Xi restated his apparent ongoing unhappiness with the party, highlighted by the ongoing purges and investigations into senior party members. This is against the background that he appears to be setting himself up as the CCP’s undisputed leader for life. He is 15 years into his current position with no public plan for his succession, which means that he needs to find ways to maintain control over the party and bureaucracy while shifting blame for China’s problems onto others. This is a common dilemma for all dictators: though they concentrate power and authority, they cannot accept personal responsibility for poor results, as this would undermine the legitimacy of their position. 

Xi’s words also speak to a growing anxiety that seems to be percolating among party’s top leaders. Concerns about slowing economic growth, the potential that China will lag in the AI race, and that the party could begin to lose its grip on Chinese society all appear to be more front and center for party leaders than they were a few years ago. 

The additional dilemma for Xi is that concentrating power at the top of the party often leads to worse economic outcomes: anxiety about economic decline weakening the party’s legitimacy leads to a feedback loop of tightening political control which in turn undermines private sector growth. At the Fifth Plenum, for example, the party emphasized that it wants more influence over private companies, particularly tech firms, by enforcing party organizations to monitor how these companies are enacting the CCP’s wishes. Despite being nominally about ensuring growth, Chinese tech companies will be increasingly under the guise of the party, with potentially major ramifications for companies that intend to use Chinese AI models or other technologies. 

This leadership apprehension should raise alarm bells for US companies doing business in China. If the top of the CCP is afraid of declining economic fortunes, then the rewards for foreign companies in the Chinese market are likely to diminish. Even for companies without direct engagements in the PRC, a slowdown in China will have global ramifications for market stability.

Analysis

The US Treasury Department signaled its aspirations to further restrict US investments in China’s tech industry. Earlier in October, the department fined a US company, Amidi LLC, for failing to report an investment by its PRC-based subsidiary in a Chinese robotics and AI company. That was a fine based on expanded reporting requirements under its Outbound Investment Security Program (OISP). On October 22, however, Treasury proposed an expansion of OISP–dubbed the Comprehensive Outbound Investment Security (COINS) Act–to further restrict US investments in PRC technologies fields. 

This proposed expansion will disrupt US investors and companies with investments, assets, or even supply chains in the PRC. Proposed restrictions will expand the definition of “prohibited industries” to cover five sectors: AI, quantum, supercomputing, semiconductors, and hypersonic systems. Biotech will also likely be included on the list, which could dramatically reshape how US venture capital and pharmaceutical companies, among others, invest in new drugs. Companies involved in the listed industries need to be watertight regarding their potential exposure to the PRC from investments to subsidiary ties to supply chains. 

Combined with increasingly restrictive measures by a range of US federal departments and agencies, including Commerce, Defense, the FCC, Homeland Security, and State, the message from the administration is clear: Corporate investments and engagements in Chinese tech will be increasingly off limits to US companies. 

These proposed rules are also notable in that they are not a pre-investment check or approval whereby Treasury will approve or block an investment. Rather, they require companies to self-report under threat of fines or other legal consequences for transgressors. This will place the regulatory and compliance burden on companies. The consequences of non-compliance are likely to be increasingly severe, from fines to regulatory punishments.

Analysis

On Oct 16, China’s Ministry of Commerce announced new restrictions on more than forty technologies, including AI (foundation models, AI agents, information processing), biopharmaceuticals, and solar energy. This tightening of restrictions is targeted rather than catch-all in nature, as is Beijing’s typical strategy, and focuses on restricting foreign access to items where Chinese companies have a competitive advantage. 

Just days later, on Oct 22, the US Treasury Department proposed expanded restrictions on outbound investment in sensitive technologies in China and several other countries, including Russia and North Korea. The proposed rules cover AI, supercomputing, biotechnology, and hypersonic technologies, building on legislation enacted in December 2025 (which itself was the codification of a 2023 Biden administration measure). These new restrictions are noteworthy because they restrict not just the transfer of physical technology and knowledge, but also the movement of capital. This makes sense. Research and development in key technologies requires significant investments. If technology is a front in the cold war with China and China’s allies, then the US government cannot permit American investors to fund America’s adversaries.

Amid these dueling export control regimes, the battle for capital is also playing out via an increasing number of advanced tech IPOs. OpenAI and Anthropic both have announced their intentions to go public. Anthropic posted $16.3B in profit in the first half of 2026, but recorded a more than $80B net loss over the same period, highlighting the capital intensive nature of the industry and illustrating the role of investments in tech development. OpenAI has made a confidential filing but is likely facing the same financial challenges as Anthropic. Both listings are being closely followed in China, as the capital injections they would bring both companies could give them a competitive edge.

The question becomes whether the AI battle will be won by sheer quantities of capital or by more targeted development plans. The US outspends China by more than five times on AI and related infrastructure, but the gap in computing is only two to one. This suggests that while capital may be giving the US the edge, those advantages are not proportional to their investments. China has instead focused on the “fast follower” approach to model development, with a priority placed on the quick adoption of AI across the real economy. Moreover, China knows that it is punching above its weight, and uses this fact to promote the superiority of its approach globally.  In short, while the AI battle cannot escape questions of capital requirements, capital investment alone may not be sufficient to determine the outcome of the contest between US and PRC companies.

Analysis

The White House is on track to ban imports of Chinese robotics. While imports are still permitted (at least for now) a recent announcement directs the US Secretary of Commerce and US Trade Representative to alert the White House if or when it sees the need to ban robotics imports. Following a ban on PRC humanoid robotics imports earlier this year, the White House is staying consistent in its view that PRC robotics is intertwined with national security concerns. As with moves to further restrict US investments in China’s tech industry (see On the Hill above), restricting robotics imports adds to the message that the US government will continue to treat the Chinese tech industry as a threat, and this will affect both US investments in and imports from the PRC. 

US government agencies will continue to demand heightened government scrutiny of US businesses involved with China’s tech sector because of the potential harm to US national security. The CCP has not helped to mitigate this reasoning. As discussed above (see From Zhongnanhai) the CCP is leaning more heavily on PRC-based tech companies to deliver the party’s priorities, which in turn heightens the risk that these companies are carrying out the CCP’s directives. Moreover, because the CCP considers the United States a threat, the US government similarly considers CCP directives to be threats to the United States.

US companies, including those importing Chinese robotics products, are likely unaware of this threat, or unwilling to pivot their suppliers to non-PRC alternatives, either because it is more expensive to do so or because alternative suppliers are not as good, or simply do not yet exist. Despite these restrictions, the US government is unlikely to show flexibility. National security concerns will likely dominate discussions in Washington regarding compliance and regulatory requirements for PRC robotics imports.

This means that a robotics ban, while intended to incentivize US companies to shift to less-threatening suppliers, will dramatically reshape US industry in the short term. PRC-made robotics, for example, are used throughout the medical profession, with alternatives likely to drive up costs for healthcare providers and, by extension, patients. 

Moreover, US companies that extensively collaborate with PRC-based robotics companies, like Meta, will likely need to rethink their business model as such collaborations will get more challenging to maintain. The downstream effects of the proposed ban, while likely to proceed, will therefore have far-reaching consequences for a range of US industries. Reacting to these new restrictions will cause a massive rethinking in how corporate supply chains are no longer insulated from questions of national security.

Analysis

US officials believe that an executive from a Singapore firm suspected of routing advanced chips to China worked for Beijing while keeping close company with Nvidia CEO, Jensen Huang. Nvidia denied the diversion claims but that denial requires skepticism, especially given Nvidia’s heavy lobbying of the White House to loosen restrictions on the sale of advanced chips to China. Nvidia, as with other private companies driven by strong, short-term financial incentives to sell, is highly unlikely to self-regulate in the name of US national security. Furthermore, private companies lack expertise and interest in counter-espionage. Nvidia is no exception; the billions spent developing the trade secrets that generate their profits pale in comparison to the resources spent to protect those secrets. 

Nvidia CEO Jensen Huang never received a defensive briefing. Nvidia continued selling advanced chips that ended up in China. Nvidia made money. Jensen Huang made money. The president was reportedly briefed a year ago on this threat and chose to do nothing, apparently valuing chip revenue and quiet trade talks over preventing the transfer of US critical technology to China. 

The US economy gained from this revenue, but only in the short term. In the long-term, the CCP will use Nvidia’s chips to advance its military capabilities at the expense of the United States, and that will increase US defense costs, as US forces must face a more capable PRC adversary equipped with more powerful US-made chips. Moreover, Nvidia’s Chinese competitors will use illicitly acquired chips to advance their technology to try to put Nvidia out of business. In sum, Nvidia’s preference for high profits this year will mean higher R&D costs, more competition, lower margins, and higher security costs in the future.

The lesson here is that our system lacks the legal framework, political will, and the resources to shield companies from foreign espionage. For US companies: the cavalry is not coming to save you. And if your distributor in Singapore–as with other locations–is taking delivery of sensitive technology, treat Singapore as a layover on the way to Shenzhen.

For companies that haven’t already done so, Nvidia’s example highlights the need to establish and fund an insider threat team. Recognize that IP theft and economic espionage are fundamental facts of business life, and teach it at business school and in economics classes.  Make defense of your trade secrets an integrated habit, not a resented cost center. As Jensen Huang’s case highlights, PRC state actors are targeting US companies through a variety of techniques, including through building personal relationships with corporate insiders. Failure to monitor and mitigate such threats risks a potentially catastrophic financial, compliance, and reputational fallout.