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US Eyes Sanctions as China Launches 1GW AI Center

7/22/2026

37 8 Full Breakdown

Summary

Bessent Probes AI

Treasury Secretary Scott Bessent said the Trump administration will probe Chinese AI models for distillation theft and may sanction them.
White House Policy Director Michael Kratsios accused Moonshot AI of using Nvidia Blackwell chips and AI models in violation of export rules.
The United States and China will hold AI talks in September while Congress advances bills to sanction firms that distill U.S. models.

Summary

Z.AI Opens Center

Z.AI (formerly Zhipu) completed a 1-GW AI data center built solely with Chinese chips and began partial operation.
The facility’s power equals electricity for about 750,000 homes.
After being added to the U.S. Commerce Department’s entity list in January 2025, Z.AI can no longer obtain Nvidia silicon.
China plans to invest roughly 2 trillion yuan ($295 bn) over five years to make AI data centers 80 % domestically sourced despite chip shortages.

History

Historical Context

After the U.S. added Huawei to the Entity List on 15 May 2019, it labeled SMIC a military end-user in September 2020 and placed the fab on the Entity List in December 2020. The sanctions spurred SMIC’s 7-nm chip in Huawei’s September 2023 Mate 60, showing China’s push for self-sufficiency. Today the Treasury’s move against Z.AI’s data center and Moonshot AI’s Nvidia Blackwell chips echoes that escalation.

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Bessent Probes AI

Treasury Secretary Scott Bessent said the Trump administration will probe Chinese AI models for distillation theft and may sanction them.
White House Policy Director Michael Kratsios accused Moonshot AI of using Nvidia Blackwell chips and AI models in violation of export rules.
The United States and China will hold AI talks in September while Congress advances bills to sanction firms that distill U.S. models.

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