U.S. can hold AI talks with China because ‘we are in the lead,' Bessent tells CNBC as nations plan safety protocol

• The two countries agreed to create an AI safety protocol focused on best practices and preventing non-state actors from accessing advanced AI models
• Bessent anticipates major advances in large language models from Google's Gemini and OpenAI, while the U.S. continues restricting advanced semiconductor sales to China
• This marks the first visit by a sitting U.S. president to China since 2017, with China emphasizing Taiwan as a 'red line' issue for bilateral relations

Market Summary: U.S.-China AI Talks and Trump-Xi Summit

Key Developments:

U.S. Treasury Secretary Scott Bessent confirmed that the U.S. and China will establish an AI safety protocol during the Trump-Xi summit in Beijing on May 14-15, 2026. Bessent emphasized that productive AI discussions are possible because "we are in the lead" in AI development, stating the dialogue wouldn't occur if China held the advantage.

AI Industry Impact:

The two nations, described as "AI superpowers," will create protocols for best practices to prevent non-state actors from accessing advanced AI models. Bessent anticipates significant advances in large language models from Google's Gemini and OpenAI. U.S.-based Anthropic recently released Claude Opus 4 with enhanced capabilities to select business partners.

Semiconductor Restrictions:

Washington continues limiting China's AI advancement through restrictions on advanced semiconductor sales, primarily affecting Nvidia chips. Reports indicate cleared sales of Nvidia's H200 AI chips to major Chinese tech firms, though Bessent noted "a lot of back and forth" on the matter. Nvidia CEO Jensen Huang accompanied Trump to China.

Taiwan Tensions:

President Xi warned that Taiwan issues could push nations into "conflict" if mishandled. Bessent indicated Trump would address Taiwan "in the coming days," emphasizing Trump's understanding of the sensitivities involved.

Broader Context:

This marks the first visit by a sitting U.S. president to China since 2017. Prior to the summit, Bessent met with Chinese Vice Premier He Lifeng in South Korea and visited Japan, discussing economic relations, trade issues, critical minerals, and investment agreements.

Market Implications:

The AI safety protocol could impact major tech companies including Google, OpenAI, and Nvidia while potentially reshaping U.S.-China technology competition dynamics.