Opinion China this week | US to revoke Chinese students’ visas, European businesses register low confidence in China

The announcement also comes amid a fragile peace in US-China ties, after both countries’ representatives met in Geneva earlier this month and agreed to lower their tariffs on each other. This week, US Treasury Secretary Scott Bessent said their trade talks “are a bit stalled,” and that US President Donald Trump and Chinese President Xi Jinping may speak to each other “at some point”. On Friday evening, Trump alleged that China had violated the agreement. “So much for being Mr. NICE GUY!” he wrote in a social media post.

There was another development on the US-China front on AI. Last week, as we detailed in our tracker, NVIDIA CEO Jensen Huang stressed the need for his AI chip company to increase its footprint in China. Its activities have been curtailed due to the US government’s policy on restricting the sale of advanced AI chips. Some new restrictions have been reported in recent days.

Here is a closer look at these developments:

1. US to ‘aggressively revoke’ Chinese visas

The press release from US Secretary of State Marco Rubio said the new visa policies “will also revise visa criteria to enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.” According to the South China Morning Post, the Chinese embassy in Washington, DC has lodged a démarche, a form of official diplomatic protest.

During Trump’s first term, a similar directive was issued in 2020 against Chinese post-graduate students. It covered any student associated with an entity in the People’s Republic of China (PRC), which implemented or supported the country’s “military-civil fusion strategy”. The term was defined as “actions by or at the behest of the PRC to acquire and divert foreign technologies, specifically critical and emerging technologies, to incorporate into and advance the PRC’s military capabilities.”

In September 2020, Reuters reported that 1,000 visas from China had been cancelled following the policy, which remained in place during the Joe Biden administration.

UPSHOT: Around 277,000 Chinese students are currently in the United States for higher education, forming a 24 per cent share of the total foreign students. China is also the largest source of foreign students at Harvard University.

The visa announcement comes on the heels of recent government action against the enrollment of foreign students at Harvard, which also included a reference to China. US Department of Homeland Security Secretary Kristi Noem had said in a letter, “This administration is holding Harvard accountable for fostering violence, antisemitism, and coordinating with the Chinese Communist Party on its campus.” However, there was no clarity on what specific instances this referred to.

Espionage and the theft of intellectual property have been cited in the past to justify restrictions against Chinese students. A few incidents have been reported in the latter category, but they comprise a small share of the total students from China, who are also a major source of revenue for universities.

2. US restricts software for designing semiconductors

A Financial Times report this week said the Trump administration has “told US companies that offer software used to design semiconductors to stop selling their services to Chinese groups”. These included companies such as Cadence, Synopsys and Siemens EDA.

It marked “a significant new effort by the administration to stymie China’s ability to develop leading-edge artificial intelligence chips, as it seeks a technological advantage over its geopolitical rival,” the report said. In 2024, Synopsys reported almost $1 billion in China sales (about 16 per cent of its revenue), and Cadence said China accounted for $550 million or 12 per cent of its revenue.

A spokesperson from China’s Ministry of Commerce said on Thursday that China has repeatedly raised concerns with the US, “regarding its abuse of export control measures in the semiconductor sector and other related practices. China once again urges the US to immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva.”

UPSHOT: Controls on tech exports to China, part of the larger AI policy, were advocated under the Biden administration as well. But thanks to its large-scale investments in science, technology and research over the years, and conducive state policies, China is now at the forefront of AI development.

NVIDIA’s Huang recently said China was “The home of the world’s largest population of AI researchers”, and described the Chinese tech company Huawei as “quite formidable.” Notably, Huawei has been blacklisted in the US since 2019.

There may be some merit in the view that restricting technology to China has aided the growth of indigenous industries. However, supporters of the US government’s policy argue that AI development would have happened in China, regardless. While an American company may have lost some of its market share, it is in the service of the country’s larger strategic goals.

3. European businesses lacking confidence in China, finds survey

The results of a survey by the European Union Chamber of Commerce in China were released on Wednesday, showing a record 73% (+5 percentage points) of respondents saying that doing business in China became more difficult year-on-year in 2024.

The European Business in China Business Confidence Survey 2025 was the 22nd edition of the annual survey. Around 52% of respondents reported that the business environment in China had become more politicised in 2024 – “a reflection of escalating geopolitical tensions.” The respondents answered the questions before tariffs were announced.

The official press release summarised its findings thus: “European business confidence currently sits at or around record low levels for many key metrics, despite several policy initiatives geared towards strengthening the economy and improving the business environment for foreign investment having been launched over the past two years. Nevertheless, an increasing share of respondents report onshoring of activities into China, demonstrating the continued competitiveness of Chinese supply chains in this regard.”

UPSHOT: The data captures the period before the tariffs were introduced, and it still points to negative sentiments about doing business in China.

EU-China trade stood at $785.8 billion in 2024, with Europe importing more than $586 billion worth of goods. Since 2022, the year-on-year growth has decreased.

China has acted on the trend and engaged in some outreach. Bloomberg reported earlier this month that the Chinese government has “offered delegations rare, unscripted access to senior policymakers and showered them with assurances of improved conditions, according to European business groups.” But some of the tensions were also a result of the changing nature of the ties.

Wang Yiwei, professor of international relations at Renmin University in Beijing, and a former diplomat, told Bloomberg, “The biggest obstacles of deepening economic ties lie in Europe’s anxiety from the decline of the bloc’s competitiveness.” He added, “China and Europe’s economic relations have shifted from one of complementary to one of systemic competition.”

An important sector in this regard is Electric Vehicles. Europe has slapped tariffs on Chinese companies, such as BYD, amid their low prices and market growth at the cost of local manufacturers. In April, BYD outsold Tesla in Europe for the first time.