China to roll out free preschool education, chikungunya outbreak, and U.S. trade talks
The State Council released guidelines to gradually expand free preschool education, while authorities in Guangdong battle a chikungunya outbreak with nearly 8,000 cases reported so far.
Welcome back to What’s Happening in China, your weekly China brief.
If you’re in the northern hemisphere, I hope you’re having a reenergizing summer, ideally not too hot, and free of wildfires or floods.
Faced with a declining birth rate and the pressures of a rapidly aging population, the PRC began loosening its one-child policy on January 1, 2016, and fully scrapped all restrictions in July 2021 in an effort to boost births and slow population decline. Continuing this push, the government announced last week an annual child care subsidy for children up to age 3, and on Tuesday, the State Council released guidelines to gradually expand free preschool education starting this fall.
These measures may give the country a short-term birth rate boost, and while important, I’m skeptical they will significantly encourage people to have more children, not only because of the economic climate, but because cultural attitudes have changed.
For weeks, authorities in the southern city of Foshan, Guangdong Province, have been battling an outbreak of the mosquito-borne chikungunya virus. Nearly 8,000 cases have been reported so far. The response has included spraying insecticide across streets, residential areas, and construction sites, releasing fish that eat mosquito larvae, deploying larger mosquitoes to prey on virus carriers, and using drones to spot standing water where mosquitoes may breed. Most cases have been mild, and no deaths have been reported.
Amy Hawkins, reporting for The Guardian, warns that “the authorities have also been resurrecting surveillance and reporting measures which hark back to the zero-Covid era, in which people’s daily lives were strictly monitored and controlled.”
What also concerns me is that we don’t know what insecticides are being deployed and whether they’re safe for humans and local ecosystems.
Eager to have a meeting with paramount leader Xi Jinping, Trump has lately softened his tone toward China. As Washington and Beijing continue negotiations for a trade deal, U.S. Commerce Secretary Howard Lutnick said this week that a “90-day extension of a US-China tariff truce is likely.” Still, reacting to Trump’s recent threats of additional tariffs over imports of Russian oil—China is the largest global buyer of Russian fossil fuels—the Chinese Foreign Ministry said Friday that “It is legitimate and lawful for China to conduct normal economic, trade and energy cooperation with all countries around the world, including Russia,” adding that the country “will continue to adopt reasonable energy security measures in accordance with our national interests.”
The leaders may be “enjoying” their annual summer retreat in Beidaihe, but the country, and the world, don’t stop.
Let’s jump into it.
— PC
Through the Lens
In Focus
I. On the AI chip war
Huawei’s domestically produced AI chips, known as the Ascend series, might seem like the obvious solution to China’s compute challenges. But there’s a catch: Chinese tech firms don’t want to use Huawei’s chips, which lag behind their foreign counterparts, for training their AI models. In 2024, Chinese companies bought around 1 million Nvidia H20 chips compared with an estimated shipment of 450,000 Huawei Ascend 910B chips.
Only a handful of state-backed companies in China have used Huawei chips to train their models, including iFlytek, SenseTime, and China Mobile. Chinese companies are dragging their feet on switching to domestic AI chips despite pressure from Chinese central government agencies to do so.
Chinese AI developers overwhelmingly prefer using Nvidia chips—even severely performance-degraded ones—and go to great lengths to access them. Many of China’s top AI models today are still trained on Nvidia’s hardware, including DeepSeek’s V3 model and Moonshot’s Kimi K2 model. In anticipation of the U.S. ban on Nvidia’s H20 chips, ByteDance, Alibaba, and Tencent rushed to spend $16 billion to stockpile roughly 1.3 million to 1.6 million H20 units.
[…]
Why are China’s AI developers so reluctant to switch from Nvidia to Huawei, even as their access to Nvidia chips becomes increasingly constrained?
First, Nvidia’s degraded chips for sale to China still outperform Huawei’s chips in some important dimensions. Huawei’s Ascend 910B chips use older HBM2E memory technology, offering only two-thirds of the memory capacity and 40 percent of the bandwidth of Nvidia’s H20 chips.
Huawei’s newer Ascend 910C chips, which are ramping up production this year, offer 80 percent of the H20’s bandwidth but still use the older HBM2E memory standard that is two generations behind the most advanced AI chips. This gap in memory performance is particularly important given the rise of reasoning models and inference, where memory bandwidth plays a vital role.
A second key reason why Chinese tech companies can’t easily quit Nvidia is the same reason American tech companies can’t, either: CUDA. Nvidia’s parallel computing platform, launched in 2006, has accumulated and is tightly integrated with PyTorch, the dominant AI framework, creating a mature software ecosystem that locks developers into Nvidia’s AI systems.
For Chinese tech firms, switching away from Nvidia means rewriting code, abandoning this industry-leading infrastructure, and losing access to the applications in CUDA libraries built up over years by global developers. Huawei’s alternatives—its CANN platform and MindSpore framework, launched in 2018 and 2019—are newer, less mature, and plagued by technical issues including bugs, crashes, and overheating.
[…]
The U.S. needs a more sophisticated approach to export controls. The reversal of the H20 chip ban by the Trump administration was a step in the right direction. At the same time, the White House’s new AI action plan correctly recognizes that winning the AI race with China depends on making the U.S. tech stack, including its AI chips, the dominant platform for global AI development.
Semiconductor export controls are not as simple as tightening the valve on a tap. China’s AI chip dilemma is not just a hardware problem but an ecosystem one. Huawei now has access to many of the key resources it needs to develop advanced AI chips, including financing and talent. But it’s missing a large and dedicated customer base that is committed to co-refining the software and hardware Huawei offers.
A smart approach to export controls would focus on setting a performance threshold for AI chips that can be sold to China based on a window between U.S. and Chinese hardware capabilities. The performance threshold should be high enough to outperform China’s domestic hardware options to ensure Chinese developers remain on U.S. platforms. At the same time, it should be low enough to maintain a significant performance gap with hardware systems available to American developers.
Ideally, this performance threshold would include a buffer, such as a 50 percent performance advantage over Chinese hardware systems on key metrics, in anticipation of improvements in Chinese hardware offerings. A regular yearly update, with ad hoc changes for unexpected developments, would likely be sufficient to adjust for advances made in Chinese AI chips while providing enough policy stability for industry participants.
The overarching policy goal is clear: Ensure the U.S. continues to lead the world in AI. By constraining China’s access to cutting-edge chips without pushing Chinese AI developers to make the leap to China’s own domestic chips, the U.S. can use export controls to help make this a reality.
Read: Huawei's Chips Are an Unpopular Alternative to Nvidia for Chinese Firms (Foreign Policy)
Related:
US licenses Nvidia to export chips to China, official says (Reuters)
Nvidia says its AI chips do not have 'kill switches' after China claim (CNBC)
Tech war: Huawei to open-source AI chip toolkit to take on Nvidia’s proprietary platform (SCMP)
China hits roadblock in drive for ‘national champions’ in chip industry (Financial Times)
US Charges Chinese Nationals With Nvidia Chips Export Breach (Bloomberg)
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