They’ve Lost the Plot
China is neither a friend nor an ally. It is not a trading partner. It is an aggressive nation against whom we are in a cold war.
On the day the Justice Department arrested several men for trying to smuggle NVIDIA chips into China, the president announced the United States would permit NVIDIA to sell its advanced graphics processing units to China. The United States, by most estimates, right now has a computing advantage over China of 32 to 1. Giving China these chips will reduce the advantage to 1.3 to 1.
When the Justice Department announced the arrests, the lawyers made the point that this is a national security issue. Whoever controls AI development will control the future. China has more power plants and engineers than us. But we have the computational power and brains China lacks. Now, for a 25% cut of the sales proceeds, the United States will allow China access to NVIDIA’s advanced chip sets, just not their most advanced chip sets. China wants these chips because China has struggled to develop its own.
To get a sense of the absurdity of the transaction, NVIDIA will ship the chips from Taiwan, where they are made, to the United States for a “security inspection,” then pay a fee that will be structured to avoid looking like an export tax, which is banned by the Constitution, then ship the chips to China.
Down in Florida, orange growers are struggling against Huanglongbing (HLB), a fungus brought over from China in the early 2000s, also called orange blight or citrus greening disease. It is killing the orange groves in Florida. In June, a Chinese plant scientist at the University of Michigan and another Chinese scientist were arrested by federal agents for trying to smuggle Fusarium graminearum into the United States. That would be wheat blight, which could wipe out midwestern wheat crops.
In November, three additional Chinese scientists were arrested at the University of Michigan for trying to smuggle other biological pathogens into the United States. In 2023, federal agents discovered a Chinese biolab in Los Angeles. People tied to the Chinese Communist Party were involved in the operation. A congressional committee found “the illegal biolab contained thousands of samples of labeled, unlabeled and encoded potential pathogens, including HIV, malaria, tuberculosis and Covid.” The lab also contained Ebola and, again from the House investigation, the “biolab contained nearly a thousand transgenic mice, genetically engineered to mimic the human immune system. Lab workers said that the mice were designed ‘to catch and carry the COVID-19 virus.’”
Now, after an illegal Chinese biolab was discovered in Los Angeles and almost a dozen Chinese scientists have been arrested for trying to smuggle biological pathogens into the United States and China has so thoroughly hacked our telecommunications networks that governmental officials are being told not to use land line phones and cell phones for sensitive communications, the President will permit NVIDA to sell China chips and all but erase one of our competitive advantages against China.
China is neither a friend nor an ally. It is not a trading partner. It is an aggressive nation against whom we are in a cold war. It has compromised our power grids, our telecommunications infrastructure and attempted to wreak havoc on our agricultural products.
This feels like a surrender under the disguise of business deals. The president has not just talked more openly about abandoning Taiwan. Earlier this week, he tried to rein in the Japanese Prime Minister, who, in a strident tone, argued strongly for defending Taiwan. In the latest national security strategy memo, news reports suggest the longer report circulating in the White House envisions a world where the United States partners with Japan, China, Russia and excludes Europe from world affairs. What part of hacking our telecom grid and smuggling pathogens into the United States suggests China wants to be our partner, as opposed to our master?
I understand the President is concerned about NVIDIA stock. The company single-handedly makes up about 10% of the S&P 500. Disrupting it means undermining the stock market. But the president has imposed tariffs for national security concerns and those tariffs have hurt the economy. Giving NVIDIA a pass to give China an advantage makes no sense unless the president has lost the plot.
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