China has issued temporary export permits to rare-earth suppliers serving the three largest US automobile manufacturers. (AI image)
China is emerging as an indirect beneficiary of America’s massive artificial intelligence spending surge, even as Washington steps up efforts to curb Chinese technology access, according to a report cited by the South China Morning Post. The US has close to $2 trillion worth of data centre projects planned or underway, with a large share of that spending tied to semiconductors, servers and other equipment critical to AI infrastructure.This wave of investment is fuelling a sharp rise in US imports of electronic goods, much of it coming from Asia. While Taiwan and South Korea remain the most visible beneficiaries due to their strength in advanced chips, China is also gaining through its entrenched role in regional supply chains.
China’s indirect gains
Even as direct exports from China to the US have declined amid tariffs and geopolitical tensions, its exports to other Asian economies have increased. This suggests China remains deeply embedded in Asia’s technology supply chains and continues to benefit from US demand indirectly. Components such as printed circuit boards and AI server assemblies, where China has strong manufacturing capabilities, are helping it stay relevant in the ecosystem.The US imports far more computers and key components than it produces domestically, relying heavily on Asian suppliers. Taiwan, anchored by Taiwan Semiconductor Manufacturing Company, dominates advanced chip production, including semiconductors used by leading AI firms. South Korea contributes memory chips and electronic equipment, while Japan and Singapore supply specialised high-end components, as per the report.
But there is limit to this ‘America upside’ for China
Despite these gains, China’s position in the supply chain remains relatively downstream compared to economies exporting cutting-edge semiconductors. Analysts say this limits how much it can ultimately benefit from the AI boom, states the report. At the same time, Washington continues to tighten restrictions on Chinese technology firms. Recent moves under consideration include curbs on Chinese telecom companies operating data centres in the US, alongside broader limits on access to networks and infrastructure, claims the report. Experts warn that while China may continue to see short-term spillover benefits, these could taper off as US-China tech decoupling deepens. Over time, supply chains may reconfigure to reduce reliance on Chinese inputs.The global nature of technology manufacturing means China remains difficult to fully exclude. Even as political tensions rise, the AI boom is proof of how interconnected the industry still is and how economic gains can flow through unexpected channels.
