CNBC's The China Connection newsletter: Trump and Xi face a test over AI control

• China leads in AI adoption with 33% public wariness versus 50% in the U.S., driving faster integration into daily life and business operations
• Chinese universities (Zhejiang and Shanghai Jiao Tong) now surpass Harvard in scientific performance rankings, with DeepSeek and other AI startups emerging from these institutions
• Both nations face rising stakes as Anthropic releases cyber-focused models and China's DeepSeek reduces dependence on U.S. chips, prompting discussions of a potential global treaty to regulate military AI use

Summary: Trump-Xi Summit to Address AI Control and Cooperation

Key Development: U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to meet in Beijing May 14-15, with artificial intelligence cooperation expected to be a major discussion point amid growing comparisons to the Cold War-era arms race.

Main Themes:

China has prioritized AI control from the outset, while the U.S. is only recently focusing on regulation seriously. Beijing's cybersecurity regulator issued new guidelines Friday for safe agentic AI use. Both nations face escalating stakes: U.S.-based Anthropic recently deployed cyber-focused models with "destructive potential," while China's DeepSeek has reduced dependence on U.S. chips.

Experts suggest potential cooperation on "a global treaty to regulate the use of AI in the military," with implications for all humanity beyond bilateral interests.

Divergent Adoption Patterns:

Public attitudes differ sharply: 50% of Americans express wariness about AI versus 33% average in other G7 countries. U.S. concerns center on job displacement and educational cheating. Conversely, Chinese students and businesses are rapidly embracing AI integration in daily life, from street-level monitoring in Hangzhou to widespread commercial adoption.

Stanford researchers noted the "U.S.-China AI model performance gap" is narrowing, with Chinese universities (Zhejiang University, Shanghai Jiao Tong) surpassing Harvard in scientific performance rankings. DeepSeek and other tech startups have emerged from these institutions.

Other Developments:

• The U.S. declined China's invitation for CEO-senior leader meetings, fearing optics of closeness to Beijing
• BYD passenger EV sales dropped for an eighth consecutive month in April amid intensifying competition
• Iran discussions may delay progress on tariffs and rare earths

Upcoming: Alibaba earnings May 13; Baidu results and China economic data May 18.