NEWS AND ANALYSIS:

The Trump administration will allow artificial intelligence microchip maker Nvidia to sell advanced chips to China, undoing curbs that sought to prevent U.S. technology from helping China’s military buildup.

Nvidia announced on its website Monday that it has been given assurances that new requests for exports to China of its H20 AI chips will be approved.

The announcement followed a meeting at the White House between President Trump and Nvidia CEO Jensen Huang.

Commerce Secretary Howard Lutnick said the lifting of the advanced chip restrictions was a concession made in exchange for China’s announced resumption of sales of rare earth shipments needed by U.S. manufacturers.

In April, the administration announced a crackdown on exports of AI chips produced by Nvidia and Advanced Micro Devices (AMD) over concerns the chips will be used for China’s rapid military buildup, which includes integrating artificial intelligence into its weapons systems.

Nvidia is a world leader in AI chips and is the first company to be valued at more than $4 trillion. Its chips are key elements of cutting-edge data centers that train AI models and operate AI applications.

Rep. John Moolenaar, Michigan Republican and chairman of the House Select Committee on the Chinese Communist Party, said he is concerned about allowing exports of H20 chips and will seek clarification from the Commerce Department on the decision.

Rep. Raja Krishnamoorthi of Illinois, the committee’s senior Democrat, said the loosening of export controls “would not only hand our foreign adversaries our most advanced technologies, but is also dangerously inconsistent with this administration’s previously stated position on export controls for China.”

Beijing used the decision to lift Nvidia chip exports to attack what a Foreign Ministry spokesman called America’s “politicizing, instrumentalizing and weaponizing tech and trade issues and malicious attempts to blockade and keep down China.”

“These actions will destabilize the global industrial and supply chains, and serve no one’s interests,” Lin Jian told reporters.

China expert Gordon Chang criticized the loosening of the export controls, which has been defended on the basis that China already has its own advanced chips.

“No,” he said. “China still has a critical dependence on Nvidia’s chips. Chinese reports of its ability to make advanced chips are exaggerated. Washington’s officials are again falling for Beijing’s hype.”

China cut off exports of rare earth minerals in March during the early stages of the U.S.-China trade war.

The ruling Chinese Communist Party declared several years ago that China was seeking to become a dominant supplier of rare earth minerals that are key elements in high-technology manufacturing, including cell phones, weapons, vehicles and more.

Mr. Lutnick, the Commerce secretary, told CNBC the administration’s strategy is to sell Chinese companies certain AI chips to create dependence on U.S. technology.

Also, he said, the H20 chips are not Nvidia’s most advanced ones but a fourth-tier product.

“We don’t sell them our best stuff, not our second best stuff, not even our third best,” he said.

“The fourth one down, we want to keep China using it. We want to keep having the Chinese use the American technology stack, because they still rely upon it.”

Chinese President Xi Jinping said in a speech in June that the world is undergoing a technological revolution and that high technology is the main arena for international competition.

China’s capacity for original innovation in technology remains “relatively limited,” certain technologies are “constrained by external factors,” he said.

“In response to these challenges, we must heighten our sense of urgency, intensify efforts to advance innovation, and strive to secure the strategic high ground in global technological competition and future development,” Mr. Xi said.

Japanese defense minister’s warning

The international community is facing the greatest trial since the end of World War II, with China posing a major threat to regional stability, according to Japan’s Defense Minister Gen Nakatani.

“The existing order of world peace is being seriously challenged, and Japan finds itself in the most severe and complex security environment of the post-war era,” Mr. Nakatani said in introducing Japan’s annual defense white paper.

“China has been swiftly increasing its national defense expenditures, thereby extensively and rapidly enhancing its military capability in a qualitative and quantitative manner and intensifying its activities in the East China Sea, including around the Senkaku Islands, and the Pacific,” he said.

North Korea’s missile and weapons of mass destruction buildup and Russian military activities, including with Chinese forces, are also major concerns in Tokyo.

In response, Japan’s military is engaged in a fundamental reinforcement of defense and military capabilities to protect the Japanese people and the nation’s sovereignty, the minister said.

New military capabilities include integrated air and missile defenses, drone weapons capabilities, and command-and-control and intelligence systems.

The Japanese military is also upgrading its ties to the 35,000 U.S. troops in the country by creating a joint force headquarters with them.

Other deterrence and military response capabilities with the United States are also being added.

The annual report “Defense of Japan 2025” reveals key military reinforcements, including the purchase of 400 Tomahawk land-attack cruise missiles, capable of hitting targets up to 1,550 miles away.

Japan is also deploying its own short-range Type-12 anti-ship missiles.

Missile defenses are also being bolstered with the addition of Aegis anti-missile ships and a U.S.-Japan cooperative “Glide Phase Interceptor” that will target enemy hypersonic glide vehicles.

New drones include the U.S.-made MQ-9B SeaGuardia, a long-endurance unmanned aerial vehicle.

Japan also plans to develop unmanned aircraft that will accompany next-generation fighter aircraft.

The defense report stated that Chinese incursions near the uninhabited Senkaku islands are increasing, including an incident in May when four Chinese Coast Guard ships entered the waters surrounding the Senkakus and a Z-9 anti-submarine helicopter entered Japan’s airspace after flying off one of the vessels.

“China has been relentlessly continuing its unilateral attempts to change the status quo by force around the Senkaku Islands, leading to a matter of grave concern,” the report said.

Space Force preps in the Pacific

Hundreds of Space Force Guardians are holding the new service’s largest ever military exercises in Hawaii this week, in drills aimed at preparing for “orbital warfare.”

More than 700 guardians, along with other U.S. military and international troops, are taking part in an international exercise called Resolute Space 2025, the service announced.

The goal of the exercise is to practice operating in a contested environment “against high-end threats on short notice,” according to a statement announcing the exercise.

The exercise will practice the use of “space-based and space-enabled capabilities to include, but not limited to, space electromagnetic warfare, space domain awareness, orbital warfare, and navigational warfare,” the statement said.

“Resolute Space sends a clear message: Guardians are prepared to fight and win in space shoulder to shoulder with our joint and allied partners,” said Gen. Chance Saltzman, chief of space operations. “By training at this unprecedented scale, we’re sharpening warfighter instincts, strengthening combat credibility, and proving our commitment to deliver peace through strength in the face of any challenge.”

The goal of the exercise is to build skills for guardians to deter and, if necessary, defeat adversary aggression that threatens the U.S. and its allies and partners.

Few details of the exercise taking place are made public, including what kinds of weapons are being used.

The Space Force was formed in 2019 and has a single declared weapon system – an electronic jammer that can disrupt enemy signals between satellites and ground stations. The Space Plane that conducts extended space deployments is said to be a potential weapons platform.

Military officials have said that the Space Force was restricted from developing space weaponry during the Biden administration.

That is changing under the Trump administration. The Golden Dome missile-defense system plans to deploy space-based missiles that can knock out enemy missiles.

The Space Force did not respond to a request for what weapons were being used in the Hawaii exercise.

Space Force Col. Jay Steingold, the exercise director, said the drills are focused on readiness and training and incorporate live, synthetic, and virtual space warfighting skills.

The exercises are mainly taking place at Joint Base Pearl Harbor-Hickam and that location suggests the simulations will be carried out against China’s space warfare troops.

China has an array of space warfare capabilities that include anti-satellite missiles, lasers, jammers, cyberattack capabilities and robot satellites.

Other parts of the exercises are taking place at Peterson, Schriever, and Buckley Space Force Bases in Colorado. Other locations in the U.S. and abroad are also involved.

Gen. Saltzman and other service leaders have discussed deploying offensive space weapons, including electromagnetic arms and direct attack systems using both kinetic and non-kinetic means.

Resolute Space is part of several Air Force exercises now underway that began July 8 and included a total of 12,000 airmen and guardians and more than 350 aircraft.