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July 29, 2026

ICAS Bulletin (online ISSN 2836-3418, print ISSN 2836-340X) is published every other week throughout the year at 1919 M St NW, Suite 310, Washington, DC 20036.
The online version of ICAS Bulletin can be found at chinaus-icas.org/bulletins/.

- What's Going On? -

U.S.-China Manage Friction Ahead of Xi's Planned State Visit

Secretary Marco Rubio attends the ASEAN Regional Foreign Ministerial meeting in Manila, Philippines, July 23, 2026. (Official State Department photo by Mateo S. Melendy)
  • On July 1, Wang Yi warned Marco Rubio in a phone call to handle the Taiwan issue with “utmost caution”.
  • During a prime-time address on July 16, President Trump revived his accusation of China interfering in the 2020 U.S. election. While the address was aimed at his domestic audience ahead of the midterm elections, these comments risk derailing the stability generated from May’s summit and Xi’s planned state visit to the U.S. in September.
  • Against the backdrop of the speech, Rubio stated on July 20 that the scheduled state visit remains on track. Shortly afterwards on July 21, Trump downplayed his allegation of China possessing U.S. voter data. 
  • On July 22, Wang Yi met with Marco Rubio on the sidelines of the ASEAN summit. Wang highlighted the importance of stability, and identified the responsibility of the two sides as to “eliminate interference and overcome obstacles”. Rubio also told reporters the need to identify areas of cooperation between the two states to “lay the groundwork for a very positive visit”.
  • On July 22, China’s Vice Foreign Minister Ma Zhaoxu visited the U.S. where he had in-depth exchanges on building U.S.-China strategic stability with senior American figures. On July 25, FBI’s director Kash Patel met China’s Minister of Public Security Wang Xiaohong in Beijing to discuss crime crackdown.
  • Meanwhile, on July 24, the U.S. imposed new 301 tariffs of 10-12.5% on 60 trade partners as its 10% global tariff expired. While the Ministry of Commerce condemns the 12.5% duty China receives, it also holds off on retaliation as the rate stays within the 20% ceiling previously negotiated by the two countries.

Associated News References:

“China Says US Pledged to Cap Replacement Tariffs at 20%”, Bloomberg, July 27

“China Condemns US Over New Section 301 Tariffs – but Holds off on Retaliation”, South China Morning Post, July 27

“FBI Head Kash Patel Meets China Security Chief Wang Xiaohong in Beijing on Crime Crackdown”, South China Morning Post, July 25

“Vice-Foreign Minister Visits US, Meets Senior Officials”, China Daily, July 24

“Wang Yi and Marco Rubio at ASEAN Discuss Xi’s Planned US Visit, South China Sea Clash”, South China Morning Post, July 22

“Trump Minimizes Chance of China Punishment Over Election Claims”, Bloomberg, July 21

“Rubio Says Xi Still Set to Visit US After Trump Speech – Bloomberg”, Bloomberg, July 20

“Trump’s Fiery China Allegations May Threaten Superpower Truce”, Reuters, July 17

“China Urges US to Handle Taiwan Issue ‘With Utmost Caution’”, Reuters, July 1

New Flash-Points in the South China Sea

Ships identified by the Philippine Coast Guard as Chinese research vessels are seen from aboard a Philippine Bureau of Fisheries and Aquatic Resources (BFAR) plane on June 15, 2026 in Scarborough Shoal, South China Sea. (Photo by Ezra Acayan/Getty Images)
  • On July 12, 10 years after the arbitration ruling regarding the South China Sea, 14 nations led by the Philippines, U.S., and the U.K. issued a joint statement rejecting the “destabilizing” actions in contested waters. In a separate statement, the EU also reaffirmed the 2016 ruling, claiming it “final and legally binding”.
  • In response, China’s Ministry of Foreign Affairs issued a strongly worded statement condemning the U.S.-led coalition, asserting China’s “historic rights”, and blaming the U.S. and its allies for its military deployments in the region. Beijing also reasserts its claim that the ruling is illegal “from the start to finish”.
  • On July 10, China Daily posted an AI-generated video showing a monkey dressed in Filipino costumes which was subsequently condemned as racist by Manila. China’s foreign ministry said the video does not represent China’s official position.
  • On July 20, Manila accused Chinese Coast Guard (CCG) personnel of injuring a Filipino sailor in the Second Thomas Shoal, whereas Beijing claimed that the incident was provoked by the Philippines. The CCG stated that two rubber boats belonging to an “illegally stationed” Filipino vessel rammed the Chinese patrol boat, and that Philippine personnel “maliciously attacked Chinese law enforcement personnel”. 
  • Condemning China’s actions, the U.S. termed them as “aggressive and dangerous”. Following his meeting with Wang Yi, Rubio stated that the clash was “very negative and benefits no one”.
  • Following the incident, China and the Philippines summoned each other’s envoys, marking a rare diplomatic summon despite frequent clashes between the two nations.
  • Just three days later on July 23, , another confrontation flared in the Scarborough Shoal in which the CCG claims to have driven away two Philippine government vessels after they ignored warnings and entered Chinese jurisdiction. The Philippines stated that the CCG fired a water cannon on a Philippines fisheries vessel. The confrontation took place a day after Wang Yi’s warning that China-Phillippines bilateral relations are at a crossroads.
  • Amid the conflicts, Vietnam, the Philippines, and China launched a joint search-and-rescue operation after a Vietnamese cargo ship carrying 62 people sank near the Chinese-controlled Fiery Cross Reef on July 26. Vietnam later thanked Beijing for its swift assistance, and the Philippine Coast Guard said the operation was carried under bilateral cooperation with Vietnam.
  • On July 27, Philippine President Ferdinand Marcos Jr. used his State of the Nation Address to reaffirm the 2016 arbitration ruling as “final and binding,” pledging to defend it through peaceful and legal means. The speech also contained veiled criticism of China, as the president pushed back against the recent China Daily video.
  • The Philippines, Japan, and the U.S. conducted their latest round of joint defense exercises in the South China Sea from July 21-25. In response, the PLA deployed air and naval forces to patrol the South China Sea on July 26 and stated that the drill threatened regional stability.

Associated News References:

“Philippine president vows to uphold South China Sea ruling in key speech”, AP News, July 27

“Philippines, Japan, US Complete Exercises in South China Sea”, Bloomberg, July 26

“Search for 17 missing crew after Vietnamese cargo ship sinks in South China Sea”, AP News, July 26

“China, Philippines clash again at Scarborough Shoal, a day after Wang Yi warning”, South China Morning Post, July 23

“Philippines, China summon each other’s envoys over South China Sea incident”, Reuters, July 21

“U.S. condemns China after Philippine sailor injured at disputed shoal”, CNBC, July 20

“Philippines accuses Chinese coast guard of injuring Filipino sailor in disputed shoal”, AP News, July 20

“Philippines protests Chinese state media’s ‘racist’ video depicting Filipinos as monkeys”, Reuters, July 17

“Beijing hits out as US-led coalition marks 10th anniversary of South China Sea ruling”, South China Morning Post, July 12

“Nations reaffirm ruling invalidating China’s claims in South China Sea”, AP News, July 12

AI Threatens U.S.-China Engagement

A visitor takes photos of robots at the 2026 World AI Conference on July 20, 2026 in Shanghai, China. (Photo by Long Wei/VCG via Getty Images)
  • On July 16, major Chinese tech firms declined to meet with a bipartisan delegation from the US-China Economic and Security Review Commission during its early-July fact-finding trip to China. While signaling the firms’ growing caution, the Commission’s Vice Chairman Mike Kuiken called the refusal itself “a data point.”
  • As Beijing’s support of open-source AI is at odds with its security goal, during the Shanghai World AI Conference (WAIC) on July 17, Chinese President Xi Jinping leaned hard into AI’s safety risks despite supporting open-source collaboration. 
  • On July 21, it was reported that the U.S. and China would hold talks on AI in September led by the U.S. Treasury Secretary Scott Bessent. This talk would mark the first meeting between the two countries on AI under the Trump Administration.
  • One day prior to the APEC Digital and AI Ministerial Meeting on July 22, White House science advisor Micheal Kratsios accused Chinese startup Moonshot AI of covertly distilling Anthropic’s Claude Fable 5 model to build its Mini K3 system, and of illicitly accessing restricted Nvidia GB300 chips through servers in Thailand. 
  • Treasury Secretary Bessent followed by warning that “sanctions and Entity List designations will be on the table” for large-scale distillation of U.S. models, raising the prospect of Moonshot facing Huawei-style restrictions. Moonshot has denied the allegations, attributing Mimi K3’s gains to original architecture changes.
  • On July 23, the U.S., China, and 19 other APEC economies adopted the “Chengdu Statement” at the APEC Meeting, the first ministerial-level agreement backing open-source AI development paired with “strong security assurance,” though it stopped short of binding commitments.
  • On July 25, DeepSeek suspended its second fundraising round after founder Liang Wenfeng grew frustrated that leaked remarks about China’s reliance on Nvidia chips and its AI gap with the U.S. went viral.
  • In the U.S., businesses are increasingly divided over how to compete with China’s rapid advances in open-source AI. While OpenAI and Anthropic urged Washington to tighten restrictions on Chinese AI models over intellectual property and national security concerns, Microsoft, Nvidia, Meta, and other technology firms argued that preserving open-source ecosystems is essential for innovation and maintaining U.S. competitiveness.
  • On July 27, China’ Commerce Ministry accused the U.S. of “AI hegemonism” and threatened unspecified countermeasures, rejecting the distillation allegations as lacking factual or legal grounds.

Associated News References:

“US accuses China’s Moonshot AI of stealing Anthropic’s Fable to build Kimi K3,” Reuters, July 30

“China accuses US of ‘AI hegemonism’, threatens countermeasures over potential probes,” Reuters, July 27

“Chinese tech firms’ ‘snub’ to US Congress advisers highlights growing AI caution,” South China Morning Post, July 26

“Silicon Valley Splits Over Closing the Borders to Chinese A.I.”, The New York Times, July 25

“DeepSeek Said to Tell Backers of Funding Pause After Viral Posts,” Bloomberg, July 25

“U.S., other nations back open-source AI with ‘strong security’ at China summit,” CNBC, July 24

“EXCLUSIVE: US, China to hold AI talks in September, sources say”, South China Morning Post, July 22

“Full text: Keynote speech by Chinese President Xi Jinping at opening ceremony of 2026 World AI Conference”, Xinhua, July 17

In Other News

(“Evening Kowloon. Hong Kong.” by Bernard Spragg. NZ, Public Domain Dedication (CC0))

Associated News References:

“US Congressional Group Plans Annual Visits to China After Trade Trip”, SCMP, July 28

“Brazil Sees a Trump-Led Effort to Tilt Election Against Lula”, Wall Street Journal, July 27

“China places former deputy chief of securities regulator under investigation”, Reuters, July 24

“China Adds 14 EU Entities to Export Control List Over Russia-Related Sanctions”, Reuters, July 24

“Ford Actively Helping the Rise of China’s Auto Industry,” Select Committee on the CCP, July 23

“PLA conducts live-fire drills in Taiwan Strait after Beijing calls Lai speech ‘reckless’”, SCMP, July 23

“EU Lawmakers Arrive in China for High-Stakes Talks to Manage Mounting Tensions”, SCMP, July 21

“Trump Order Targets China-Linked Military Mineral Supply Chains”, SCMP, July 21

“China Signals US Restored Hong Kong Privileges Trump Had Revoked,” Bloomberg, July 17

“China Posts Slowest Quarterly Growth Since 2022 as Investment Slumps, Fanning Stimulus Calls,” CNBC, July 15

- What Are We Reading? -

Three themes stood out in Washington’s China policy discussions over the past week. The first centered on how the Iran conflict is reshaping the global balance of power, with analysts debating whether the war has accelerated the emergence of a more multipolar order, strengthened China’s diplomatic position in the Middle East, and exposed new limits to U.S. influence. The second focused on the evolving security architecture in the Indo-Pacific, as commentators examined how China’s growing power would affect the diplomatic ties within the region as well as how the countries would hedge against Beijing or Washington. Finally, discussions returned to the long-term U.S.-China competition, with experts debating whether the United States still holds the strategic upper hand and arguing that preserving advantages in areas such as AI, biotechnology, economics, and trade will require closer coordination with allies rather than unilateral competition.

 

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- What's Happening Around Town? -

Past Events

          July 16 hosted by CSIS

          July 17 hosted by Atlantic Council

          July 20 hosted by Brookings Institution

          July 21 hosted by Stimson Center 

          July 21 hosted by ASPI

          Jul 22 hosted by ASPI

          July 23 hosted by PIIE

Upcoming Events

         July 29 hosted by ASPI

         July 29 hosted by IIF 

         July 30 hosted by CSIS

         July 31 hosted by USCBC

         August 4 hosted by CSIS

          August 4 hosted by Hudson Institute

         August 4 hosted by USCBC

- What ICAS Is Up To -

BCCC Commentary

The Strategic Reserve Beyond the Oil Tank
By Zhangchen Wang
July 20, 2026

China’s response to the Strait of Hormuz crisis shows that oil-importing countries can strengthen energy security from the demand side. Since the United States and Israel launched attacks on Iran on February 28, severe restrictions on tanker traffic through the Strait of Hormuz have caused a major disruption to global oil supplies. At its worst, the disruption removed as much as 14 million barrels per day from the global market and pushed Brent crude to a peak of roughly $126 per barrel in April. The crisis could have become far more severe, and analysts suggest that China’s sharp reduction in crude oil purchases was one of the most important factors limiting further upward pressure on global oil prices. China’s crude imports fell to 7.12 million barrels per day in June, 41.3 percent lower than a year earlier and the lowest level since October 2016.

Continue Reading

MAP Commentary

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Strategic Waterways Under Pressure Series: The Bering Strait: Managed Openness at the Arctic Gateway
By Nong Hong
July 17, 2026

As Arctic shipping becomes increasingly viable, the Bering Strait is emerging as a critical test case for Arctic governance. The central concern is not the formal possibility of closure, but whether this narrow and environmentally fragile international strait can remain functionally accessible as vessel traffic increases while emergency-response capabilities remain limited.

In this practical, rather than legal, sense, the Bering Strait illustrates what may be described as conditional passage. It remains legally open and, unlike the Strait of Hormuz, is not subject to coercive obstruction. Yet navigation is shaped—and at times constrained—by geographic conditions, ecological vulnerability, Indigenous subsistence activities, and regulatory requirements. The relevant question is therefore how that right can be exercised safely and sustainably.

 

ICAS In the News

On Friday, July 24, 2026, Senior Fellow Sourabh Gupta was interviewed by CGTN World Insight on U.S.-China-ASEAN relations.

  • “It’s heartening to see other parts of the world picking up the slack and deepening their cooperation particularly in the trade and investment arena. And I think that even if Washington wants to defect from the system per se, there is enough happening among many of the countries in the industrialized world as well as in the Global South. China and ASEAN being a particular growth center which is shouldering the burden of global trade liberalization.”

On Thursday, July 23, 2026, Senior Fellow Sourabh Gupta was quoted in SCMP on understanding of China and its diplomatic and policy priorities

  • “Unless presented coherently, systematically and consistently, these translation initiatives will, more or less, lack purchase and resonance within the consuming community”

On Thursday, July 23, 2026, Senior Fellow Sourabh Gupta was quoted in SCMP on preparations for President Xi’s White House visit in September.

  • “The Board of Trade is certainly a concrete deliverable. As for the Board of Investment, discussions have more or less been black-boxed. There seems to be measurable little to show by way of forward progress.”

On Thursday, July 23, 2026, Senior Fellow Sourabh Gupta was quoted in SCMP on the state of U.S.-India trade negotiations.

  • “[New Delhi’s trade concessions to Washington were premised on] a stable and comparably favourable tariff rate”.
  • “[India] creates too few industrial sector jobs and hence needs a protected agriculture sector as a fallback for livelihood-linked reasons”. 

On Monday, July 20, Senior Fellow Sourabh Gupta was quoted in Xinhua on U.S.-Iran tensions.

  • The key factor driving the renewed round of fighting is Washington’s attempt to subvert Iran’s control of the Strait of Hormuz, and thereby diminish Iran’s leverage over oil prices
  • [Sourabh Gupta] argued that any attempt by Washington to take control of the Strait of Hormuz or Iran’s oil export terminals would come at a heavy military and economic cost, making it more likely that the two sides will eventually return to negotiations to resolve issues that cannot be settled through military means.

On Friday, July 17, Senior Fellow Sourabh Gupta was quoted in SCMP on Trump’s claim of Chinese election interference.

  • “This is a last-gasp effort,” arguing that Trump was using the foreign adversary narrative to push election-related legislation that lacked sufficient support in Congress.
  • “This is just water under the bridge,” adding that issues such as Taiwan, export controls and tariffs would carry far greater weight in shaping ties between Beijing and Washington.
Senior Fellow Sourabh Gupta on CGTN World Insight on July 24, 2026
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